Second red iPod shows charity can pay

November 3, 2006, 7:42 AM UTC
Fortune


Redipod

Demand is high enough for the red iPod nano that Apple Computer (AAPL) is pushing out an 8-gigabyte ($249) version just three weeks after the company announced its 4GB ($199) model.

The iPod nano (PRODUCT) RED Special Edition is Apple’s contribution to

a marketing sensation led by U2 lead singer Bono, who now has an

impressive track record with special edition iPods. (The special

edition U2 iPod has done well enough that Apple has sold it for years,

and the black casing has influenced the mainstream iPod design.) Apple

will donate $10 from the sale of each iPod to the Global Fund to help

fight HIV/AIDS in Africa.

Greg Joswiak, VP of iPod product marketing, said in a press release

that customer response to the rede iPod has been “off the charts,”

which lined up with rumors earlier this week that the red iPod is so

successful that Apple is contemplating a red MacBook.

Do the math, and the red 8GB nano is poised to add to Apple’s Christmas

cheer. According to a September report from researchers at iSuppli, the

components in a 4GB nano cost Apple about $72.24, a savings of $17.73

from the previous design. (That certainly makes it easier for Apple to

give $10 to charity out of the profit.) Since Apple is the sole direct

seller of red iPods, it will collect a higher margin on them. And

there’s also the trickle-down benefit – since shoppers have to go to an

Apple store (physically or online) to buy a red iPod, there’s a good

chance they’ll pick up some high-margin accessories while they

browse.

The 8GB nano only further sweetens the profit picture for Apple. While it’s not

clear exactly how much Apple pays Samsung for 8GB of NAND flash memory

vs. 4GB, the leftover profit is almost certainly enough to cover the $10 contribution to Global Fund.

Finally, as a side benefit, the updated nano fits in with those holiday colors. Red – and of course, plenty of green.