SCOTT JAGOW: A brand new 60-gig iPod costs 400 bucks. Multiply that times the 30 million iPods Apple has already sold this year and that's some cash cow. Apple's not the only one making money on these delicate devices. I mean, how many people break these things every day? Adam Allington has more.
ADAM ALLINGTON: What do you do when your $350, U2 Edition iPod breaks one week after the warranty is up? Buy a new one? That's seems to be what Apple would like you to do since the cost of sending an iPod in for repairs is often only marginally cheaper then buying a new one.
Mike Fuerstenberg makes his living off that cost ratio. He runs Portatronics, a small shop on Manhattan's Fifth Avenue where he repairs all things iPod.
MIKE FUERSTENBERG: What trouble do you experience with this one?
CUSTOMER: It's skipping songs.
FUERSTENBERG: OK, so the skipping songs on this generation is in general caused by a defective connection.
FUERSTENBERG: A lot of iPods are chewed up by dogs. Then I had Nanos that fell into teacups, which is sort of drastic. I've had some of them that were run over by cars and completely smashed.
In recent months Mike and a growing number of tech-savvy entrepreneurs like him have started cracking open their iPods to discover its secrets. What they found is this: iPods are relatively basic machines and there's a buck to be made by undercutting Apple.
FUERSTENBERG: I think I am able to have this business because there is no official repair system for iPods. I got into iPod repairs by replacing my own battery and then I started replacing my friend's iPod batteries. Then the next step was to start advertising the service on Craigslist.
Mike is one of the few iPod repair guys to keep a storefront. Most of the others operate exclusively from online services like Craigslist. People come to him with all manner of iPod problems and business is booming. The typical cases are things like dead batteries, broken screens, defective hard-drives. Or people like this guy:
CUSTOMER: My name is Andre Maximum. I'm from Harlem. I basically use the iPod when I'm in the gym, when I'm on the train. I dropped it and, you know, it just didn't work after that. And since Apple will charge me $300 to fix it, I figured I'd come to somebody that's a little cheaper.
So, they're breakable, they're not cheap and Apple doesn't want to fix them. Are people going to keep buying iPods? You bet, says Bryan Chaffin, editor of MacObserver.com.
BRYAN CHAFFIN: The question of iPods cost to durability ratio is a subjective one. Certainly Apple has had a couple of hiccups along the way with things like battery life, but by and large customers are saying with a resounding "yes" that iPod is worth the price and please give me more.
Mike: I'm just swapping out the battery on a third generation iPod, just pop off the back plate and undo the hard drive. Anda€¦(fade down and under before going to zero)
FUERSTENBERG: So many people, now they're used to having an iPod, so they miss their iPods really quickly when they break. So they're forced to buy a new one. And just the option to get it repaired for maybe another $100, $150. For me that's the main reason why iPod repairs work.
With iPod sales expected to top out at 40 million units in 2006, up from 22 million in 2005, it's a safe bet Mike's shop won't be slowing down anytime soon.
I'm Adam Allington for Marketplace.