Apple's 2GB iPod nano costs $98.18

Research firm iSupply took an Apple iPod nano MP3 player apart and investigated how much it costs Apple to build the device. They claim the $199 2GB iPod nano costs Apple $90.18 in materials and $8 to assemble it. This leaves them with a profit margin of about 50%, excluding marketing and distribution costs.

iSupply claims this is pretty consistent with the margins on Apple's earlier iPod versions.

They also took a Mac mini apart and figured it would cost about $283 in material and manufacturing, leaving a gross margin of 44% before marketing and distribution costs.

"Historically, Steve [Jobs] won't accept anything less than 20% gross margin on any product," says Creative Strategies analyst Tim Bajarin. "In the rare cases when the gross margins have dropped below that, it has been a fluke." Apple has sold some 16 million iPods in the first nine months of fiscal 2005, and 21 million since its inception. Thus far in fiscal 2005, the iPod has brought in $2.6 billion in revenue, accounting for about 25% of Apple's total.

Read more at BusinessWeek.