CF Apple Computer

As of October, the bill for materials of the 8GB model was about $149.18, and with expenses for manufacturing, assembly and testing, the total costs runs about $155.04. With a retail price of $299, the device’s profit margin of 92.9% is typical for the iPod line. “The iPod touch likely represents the future of the high end of the iPod line,” analyst Andrew Rassweiler said.

“But despite its functional and physical outward resemblance to the iPhone, and the fact that its internals borrow heavily from the iPhone, the iPod touch is no iPhone clone, and has its own unique design.” The iPhone and Touch share the same Samsung video and applications processor, as well as stacked on-package memory, and power management circuits. However, the products differ in other ways.

Advanced packaging for its components is found in the Touch, and iSuppli said it was the first time they had seen some of this packaging in any of their product teardowns. Instead of two printed circuit boards, the Touch only has one. Other differences include a different spot for the location of the touch-screen circuitry, as well as different circuitry for the WLAN functionality. iSuppli estimates that the first generation of the iPod Touch would have a lifespan of about one year.

During that period, about 8.5 million of the devices are expected to ship. Of course, these estimates could change depending on whether or not Apple refreshes the Touch along with the release of the 3G iPhone, or follows a different release schedule than it has with iPods in the past. “The touch, along with the nano, may drive Apple’s HDD-based iPods close to extinction in the near future,” said Chris Crotty, senior analyst, consumer electronics, for iSuppli.