The Apple iPod portable MP3 player combines style and skillful engineering in a small package. At $399, it is not cheap, but iPod's 1,000-song capacity and automatic file synchronization with Apple's iTunes software deliver a nifty overall package.

Let's look at what's going on inside the iPod that sets it apart from the crowd. The iPod enclosure combines a stainless-steel lower shell and a dual-plastic top casing, the latter co-molding clear resin for the viewing window with white resin for the decorative/ structural plastic. The halves are held together with a sturdy snap-lock design likely to outlast the electronics in any drop test. The navigation wheel assembly uses a ball-bearing axle and optical "chopper" for smooth menu selections with contactless construction.

Inside the 2-cm-thick iPod, a 5-Gbyte Toshiba 1.8-inch hard disk has been stacked with a 3-mm Sony lithium polymer battery and system electronics. Four screws firmly fasten the electronics, display and control interface assemblies to the front plastics. Battery and hard drive are added to the stackup using compliant adhesive strips for a snug fit and some shock resistance for the disk. The result is a little 185-gram brick with scant dead space remaining in the enclosure.

Subtle design details highlight Apple's "battle of the bulge." For example, the frame for the navigation wheel assembly has cutouts for nesting high-profile components, shaving a few millimeters from the product thickness.The heart of the circuitry is the PortalPlayer PP5002, which contains an ARM processor core and all MP3-decoding circuitry. And 32 Mbytes of Samsung DRAM provide the memory buffer for 20 minutes of "skip protection" and longer battery life. The Toshiba disk is dormant during much of the time the iPod is in use, as music data is extracted from the DRAM buffer.

A megabyte of Sharp flash memory stores system operating code. A Texas Instruments chip is dedicated to the IEEE 1394 data interface (Click Here for a Related White Paper). This Firewire link serves as both data and battery-charging interface-a nice touch. Audio output is via a Wolfson chip that supports both D/A conversion and the headphone driver amp. A 160 x 128-pixel monochrome LCDwith white-LED backlight shows a playlist that is readable in a range of lighting conditions. Manufacturing cost for the iPod is likely driven by the hard drive, which carried roughly a $200 street price in the first quarter. With a sub-$50 contribution from other components, manufacturing cost hovers around 50 percent of the retail price. Modest initial margins will improve as disk prices drop, but in the end iPod may be as much a hook to sell Macs as a profit generator in itself.

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DAVID CAREY IS CEO OF PORTELLIGENT (AUSTIN, TEXAS; WWW.PORTELLIGENT.COM), WHICH DOES TEARDOWN REPORTS ON PORTABLE ELECTRONICS SYSTEMS.