Apple gave its popular flash-based music player a makeover last month when it launched its second-generation iPod Nano. Sitting in the middle of the overall iPod lineup, the gen 2 Nano comes in 2-, 4- and 8-Gbyte capacities, corresponding to music storage of roughly 500, 1,000 and 2,000 songs, respectively.

What's changed in the second go-round? Starting with the most visible elements, Apple reconfigured the enclosure design, ditching the two-piece stainless-steel tub/plastic front case in favor of a one-piece, anodized-aluminum shell. Apple likely made the casing change to address complaints that the front plastic case in the previous design was easily scratched. As an owner of the original Nano, I can attest to a fairly fragile cosmetic finish to the otherwise robust design. The new aluminum body forms a cocoon into which electronics are densely packed. The housing's end caps can be pried off, and, after a series of (very small) screws are removed, the core electronics can be slid out of the end of the enclosure tube.

The enclosure construction was borrowed loosely from Apple's now-discontinued iPod Mini. The microdrive-based Mini required a substantially larger case, and the electronics packing was not quite to the level of density seen in the second-generation Nano, but the techniques remain similar. As with the Mini, other than protective end caps, a clear acrylic window for the LCD (here a 176 x 132-pixel thin-film-transistor display) and the scroll-wheel assembly are the sole disruptions to the continuous enclosure surface.

Along with mechanical redesign, Apple made some significant changes to the product's supply chain while keeping selected design elements fairly constant. A transition away from PortalPlayer as the core media processor is perhaps the biggest switch.

An Apple-labeled ASIC, the S5L8701- B05, comes from Samsung and is responsible for all audio and still-image decoding. Other than the Apple proprietary markings on the Nano's CPU, labeling tells of an ARM core within the Samsung chip, under 6 x 6 mm in die size, and packaged in an underfilled ball grid array package similar to the Nano's PortalPlayer-based predecessor. Unlike the first-generation design, which had a separate NAND controller component from SST, the Samsung CPU appears to have integrated the NAND interface directly, reducing cost and complexity.

The Samsung processor is served by 1 Mbyte of SST flash for some or all of the code store, while a Qimonda (formerly Infineon) 32-Mbyte SDRAM provides system working memory and also possibly acts as a buffer for song data pulled from NAND flash. Based on inspections of other Gen2 Nanos, Samsung is known to be a supplier for the 32-Mbyte SDRAM.

Aspects of the design that have been carried over from the first Nano include the Cypress scroll wheel controller (CY8C21001A) and the use of a revised Philips chip for power management (PCF50635). A part from Wolfson (WM8750S)--also revised from the original Nano--was selected for the audio codec and headphone amplifier. The latter two parts--like the Samsung media CPU--were private-labeled for Apple, presumably in an attempt to cloud supply chain identities.

Other power-management parts more clearly marked included a dc/dc converter from National Semiconductor (LM34910B) (Data Sheet, White Paper) and a Linear Technology LTC4066, which is responsible for charging the wafer-like 2.2 x 33 x 55-mm lithium-ion-polymer battery via the Nano's USB interface.

The battery itself is estimated to supply about 330 milliampere-hours of capacity at the standard single-cell 3.7 volts, which equals 1.2 watt-hours of total available energy.

From a cost perspective, more money gets put toward the internal NAND flash memory than the new Samsung processor, a part likely sourced to Apple for around $5. Even in the lowest-density 2-Gbyte-capacity Nano, the Hynix HY27UV08AG5M four-chip stacked NAND (housed in a single TSSOP package) contributes perhaps $20 in cost, though this depends heavily on pricing discounts assumed for Apple and timing of contract buys.

Similar to the SDRAM, multisourcing also plays a role with NAND flash. Toshiba and Samsung are both known additional suppliers of NAND flash in the new Nano family, with the higher-density memories of the 8-Gbyte model using stacks of TSSOP packages, each of which contains its own multidie stacks internally. Toshiba appears to use A TSSOP package-stacking technique from Staktek (Austin, Texas), based on visual evidence and Staktek's publicly provided information.

Add it all up and the 2-Gbyte second-generation Nano is estimated to have a direct production and materials cost in the range of $65, inclusive of the accessories (earbuds, USB cable, dock adapter). Assuming a slight premium for higher-density NAND stacks, we estimate the 4- and 8-Gbyte versions would have a materials and production cost in the range of $87 and $132, respectively. With retail prices of $150, $200 and $250 for the three models (2 Gbytes, 4 Gbytes, 8 Gbytes), gross margins look good, ranging from 56 percent at the low end to 47 percent at the high end. Of course, other indirect costs related to product development, marketing, shipping and any software licenses are absent from these figures, but the story remains pretty positive no matter what.

Assuming a relaxation in pricing for the higher-density NAND, margins will improve more quickly for the top-end model.

Whether the latest Nano will make a splash equal to its predecessor's remains to be seen. Consumers may be suffering a bit of iPod fatigue, and rapid evolution of the product family may be taxing buyers' ability to keep up with frequent product refreshes and upgrades. But that's a market question that can only be answered with time. For now, Apple still rules the audio player roost with yet another nicely designed--and seemingly profitable--iPod model. n

Component Focus
Apple's facelifted Nano gets no rest on pressure to miniaturize. To shoehorn the electronics into the slender aluminum shell requires more than just thin chips.

Foxconn and subsidiary Foxlink play important roles in the battle of the bulge, providing low-profile connector assemblies for the docking connector and headphone jack assembly along with the flex circuit, which serves for the Nano's capacitive scrollwheel.

In a noteworthy aspect of passive component selection, the Nano retains tantalum capacitors to manage noise on both the audio section of the design and in filtering for the switching supply. Since the product quality rests on audio quality, the extra measure (and slightly higher cost) of adequate capacitive filtering pays big dividends to make sure the Nano experience doesn't fall flat once the tunes start playing.

For a more complete parts list, click here.

By David Carey, president of Portelligent. The Austin, Texas, company produces teardown reports and related industry research on wireless, mobile and personal electronics (www.teardown.com).