Apple's new iPod nano doesn't just maintain the company's reputation for cutting-edge design - it keeps profits healthy, too.

Research firm iSuppli this week revealed the results of a tear down analysis it conducted using the 2GB iPod nano.

It claims the $199 product costs Apple $90.18 in parts and $8 in assembly, leaving a healthy 50 per cent mark-up on the retail price.

"That's consistent with the margins on earlier iPod versions and serves as a reminder of what a profit machine the iPod family of products has become for Apple since it was introduced in 2001," Business Week reports.

iSuppli's analysis also reveals that Synaptics technology has been abandoned in favour of components from Cypress Semi, who now produce the parts that form the "basis of the Click Wheel" used in all iPods, bar the iPod shuffle.

Old iPod partner PortalPlayer is supplying the audio chip, while Apple's favourable deal with Samsung for flash memory puts competitors in peril.

Apple reportedly acquired 40 per cent of Samsung's flash memory output at a huge discount.

This means others in the flash-based music player market must pay more for their memory, and also means they have problems finding the supplies they need.

iSuppli analyst Chris Crotty asks: "How do you compete if you can't get the memory you need?"

"And even if you can get it, you're not able to sell the volume needed to negotiate a better price."