The article dissects the iPod Nano, to estimate the cost of its viscerals. It claims Apple earns over 50% margines on each Nano sold. Its collaboration with Cypress Semiconductors (for touch wheel), PortalPlayer (for audio-chips), and Samsung (for flash memory) seemed to have greatly cut costs. Samsung is said to be giving discounts of over 40% to Apple.
The market is rife with the feeling that there is going to be major consolidation with only 2-3 players remaining.