Outsourcing has become such a hot button topic, that sometimes we often overlook the upside. While not a supporter of the trend, I did find one example where outsourcing/offshoring did come in handy. And that example is the most beloved toy of the 21st century, the IPod. The elegant digital music player which has become a must have accessory is as global a product as you can find. It was crafted and designed in United States, its innards were done somewhere in India, and it is made in the Far East.

bq. Realizing that the MP3 market was still in its infancy, Apple developed a layered design chain tuned for an early-stage market to create the iPod. Even more unusual for Apple, it relied on a platform and reference design created by a third party, PortalPlayer, of Santa Clara, Calif. Founded in 1999, PortalPlayer has a stellar cast of Silicon Valley executives and investors, including renowned venture capitalist Gordon Campbell.

The mp3 encoder and controller chip that power the device come from Santa Clara, California-based company called PortalPlayer. (Thanks to a gag order, Portal Player it seems cannot talk about it.) (Other components include a Wolfson Microelectronics Ltd. stereo digital-to-analog converter, a flash memory chip from Sharp Electronics Corp., a Texas Instruments 1394 firewire interface controller, and a power management and battery charging IC from Linear Technologies Inc, a Toshiba hard drive and a Sony planar lithium battery. How do I know this? Well this article says so!) PortalPlayer integrated a lot of the silicon stuff and delivered a system on a chip solution that powers most IPods today.

PortalPlayer has a massive operation in India – about 100 engineers who work on firmware and other embedded systems. “”We serve a rapidly growing consumer electronics segment which can often have unpredictable and cyclical demand. By moving to the ODC model, we will give our customers access to a highly skilled development team that is capable of scaling up or down as demand shifts, and yet will allow us to maintain the lowest possible overhead cost,” Portal Player CEO said in a press release. It was one of the reasons, the company has been able to deliever a lot of different variations of its chipset to the MP3 player market, including many variations of IPod. The team in India worked helped accelerate the chipset development, a key reason why Apple was able to market IPod so quickly. Rapid improvements by the two development teams based in India and SIlicon Valley have been reason why the IPod is in its third generation.

bq. PortalPlayer’s platforms include system-on-chip (SoC) technology optimized for portable music devices. The first was based on dual ARM7TDMI® microprocessor cores to provide twice the performance of alternative devices. The SoC was also designed to directly support virtually all flash media and rotating media including CD-R/W and hard drives. It included on-chip SRAM and cache, an LCD controller and an LCD bridge interface. (Portal Player)

And as bob your head to the beat of Kylie Minogue blasting on the lil white devil, think about this: not always, but sometimes offshoring does offer an upside!