Cheaper nano, shuffles are globally huge deals
Published: Tuesday, February 7, 2006
Somewhat amazingly, one out of every three or four new iPod hardware announcements now takes place via an announcement on Apple’s web site and a press release rather than at a “Special Event,” “Apple Event,” “Music Event,” or trade show. This is only “somewhat amazing” for one reason: iPod launches can and have become spectacles. By comparison, on-paper iPod launches are reserved for the sorts of products that won’t elicit “oohs” and “aahs” from a crowd: the iterative second-generation iPod mini and fourth-generation black-and-white iPod both launched in this way, as did the subsequent capacity-bumped fourth-generation color iPod when it was being redubbed from iPod photo. Today saw yet another such press release unveiling: the introduction of a 1GB iPod nano at $149, and the dropping of iPod shuffle 512MB and 1GB models from $99 and $129 price points to $69 and $99.
Apple’s lack of a formal event for this news is not surprising; many people would have walked out of the room saying “so what?” But for much of the world - millions of people, really - this is much bigger news than the “so what?” crowd might appreciate. As noted in our recent reports from Singapore and Malaysia, even though the iPod has skyrocketed to over 42 million sold through 2005, there are still vast numbers of people who can’t afford iPods, particularly those in developing countries - places that haven’t yet been won over to iPod dominance. Sure, Apple could have released a new screened shuffle at a $99 price point and maintained its existing user base. Instead, making the current shuffle available at $69 has the strong potential to bring a brand new group of super-price-conscious consumers from all around the world into the iPod fold - if the pricing holds internationally, and is marketed correctly. We’ll have to see whether that price retreats back up again to $99 with whatever comes next, but certainly, Apple has the option now to replace the shuffle, or kill it entirely in favor of a $99 512MB nano, should that be necessary.
The shuffle’s price drop isn’t the big news, though. Apple’s profound success at promoting iPod nano as an object of desire has led to an unusual quandry: there’s plenty of demand for nano at its current pricing, but also a huge number of people who can’t afford the $199 entry point, and won’t become iPod owners unless they can get something nano-like. Again, Apple could have introduced a screened 1GB shuffle for $129 or $149. But instead, the company did the smart thing, creating a cheaper nano, capitalizing on the strong interest in that model to capture all of the price-conscious buyers who have held off until now. Of course, this has the side benefit of making life that much more difficult for low-end iPod competitors: nothing looks as good at the $149 price point as a 1GB nano.
So today, the iPod family ranges for the first time from $69 to $399 - the most affordable iPod line-up in history. Next up is the sale of a billion songs through iTunes. We have no doubt that this is going to be a great year for Apple.
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