Apple's new 2GB and 4GB iPod nano players are a lot smaller because they use flash memory but according to CNET they cost quite a lot more to make.
Right now a 1GB of flash memory costs $45 in volume. This means the 2GB iPod nano which sells for $199 contains around $90 worth of flash, while the $249 4GB nano containts $180 worth of flash memory. It's possible Apple got it a little bit cheaper but probably it wasn't lower than $40. This means the 4GB version still costs them more than $160 worth of memory.
The previous iPod mini generation with the same amount of storage costs about half as much, according to iSupply.
Nonetheless, Kim said that Samsung, or any flash memory maker, would have strong motivations to give a customer like Apple large discounts. An oversupply of flash memory currently exists; thus, a contract with a customer that will consume quite a bit of factory output insulates a manufacturer. The 45 percent margins also give Samsung lots of wiggle room.
The analysts believe Apple will probably never go back to hard disk drives for its small iPod nano lineup.