Whaaaa??? Apple doesn't manufacture iPods?!

Video iPod Small“Who makes the Apple iPod? Here’s a hint: It is not Apple.”

With those 12 words, University of California Berkeley-professor Hal Varian begins an excruciatingly detailed look at where each of the 451 parts that make up the iPod come from and how the countries that supply these parts figure into the United States’ trade deficit.

I hate to ruin such a gripping plot line for you, but the end result is that it’s hard to tell where everything comes from because, for instance, Japanese companies like Toshiba — who supply hard drives for the iPod — get the parts for their hard drives from different companies in different countries.

The ultimate reveal happens in the third to last paragraph, where Varian states:

“Ultimately, there is no simple answer to who makes the iPod or where it is made. The iPod, like many other products, is made in several countries by dozens of companies, with each stage of production contributing a different amount to the final value.”

He then goes on to say that Apple pockets $80 from the sale of each 5G iPod, but that it’s OK for them to pocket the $80 because they invented the iPod, even though they don’t manufacture it.

Here’s a super-condensed version of the article for you: Apple doesn’t make the iPod, but they make $80. Other companies make the iPod. Nobody knows for sure who all of these other companies are. These companies, however, are not Apple. Apple just designed the iPod, so they get to keep the $80 each time an iPod sells.

An iPod Has Global Value. Ask the (Many) Countries That Make It. [New York Times Online]