Apple to make less profits on iPods, but will sell more | iLounge News

News

Apple to make less profits on iPods, but will sell more

MacMinute reports on a story published at SiliconeValley.com describing Apple’s strategy to sell more iPods while making less profits overall.

“In the coming months, Apple will begin to unfurl its strategy of making a little less profit on the average iPod, but selling a lot more of them. A Hewlett-Packard branded version of the iPod is due in a few weeks, and HP will pocket some of the profit from that version. The new iPod mini will bring Apple less profit per sale than previous iPod models, because its parts make up a larger portion of its $249 price tag.

Success for Apple will mean selling so many of the music players that the slimmer profits don’t matter, and paying lower prices for the iPod’s building blocks. Apple will begin to show success or failure in the spring”

« Win an iPod, iPod minis or iTunes gift certificates

Don’t sit on your iPod mini »

Related Stories

Comments

1

A clarification, since many peopls seem to be misunderstanding this story around the web: this does NOT mean “cheaper iPods coming.”

Reduced profits means Apple has LESS ability to lower prices, not more. But they’re accepting low margins on new products like the Mini and HPod because they’ll sell!

Prices will still fall over time, it always happens—but this article is not the reason :)

Posted by Nagromme on March 16, 2004 at 4:01 PM (CST)

2

this is a good move for apple, they can’t stick with their inflated profit margins, like they do with their computers, if they want a large chunk of the digital music market.

Posted by ariza on March 16, 2004 at 4:48 PM (CST)

3

ariza—

largeR chunk, you mean.  They’ve already got a huge chunk.  :D :D

Posted by azdude_15gb on March 16, 2004 at 5:02 PM (CST)

4

“SiliconE Valley”

Not as exciting as it sounds.

For a second there I was hoping…

Posted by SiliconeValley on March 16, 2004 at 6:07 PM (CST)

5

To the contrary, I think this does mean “cheaper iPods coming,” though primarily in the form of price reductions on current models and continued pressure to release new models with more functionality/space, or prepaid song cards, at competitive price points.

Apple can’t sell 40GB iPods for $500 forever if their competitors are allowing 40GB hardware to retail for $270-$370. Search Amazon.com for IHP-140 for reference on this point. They’ve proved that they can maintain a $50-75 price premium on competing products, perhaps more, but $130-230 might be stretching it.

Posted by Jeremy on March 16, 2004 at 6:14 PM (CST)

6

Not all 40 GB players are created equal. GB alone need not dictate price.

Posted by Nagromme on March 16, 2004 at 6:45 PM (CST)

7

“competitors are allowing 40GB hardware to retail for $270-$370.”

I just upgraded my Archos to 80GB.

Total cost: $210
$80 (Archos)
+$180 (80 GB drive)
-$50 (sold 20GB drive)

It’s ugly as all hell, but it is cheap.

However, iPod is a top seller and Archos is not. This is because Archos is big and ugly and iPod is not.

I don’t think your point is justified.

Posted by Ugly Is As Ugly Does on March 16, 2004 at 7:04 PM (CST)

8

Cool.  Cheaper iPods coming.

Posted by george dubya bush on March 16, 2004 at 7:17 PM (CST)

9

if they’re making less profit on each ipod, they have to either sell them cheaper than they cost now, or spend more money per ipod in some other fashion (advertising, a higher-quality redesign, etc.)

if the plan is to increase sales volume while reducing profits, lower prices is really the most logical extension.

Posted by actually on March 17, 2004 at 1:47 AM (CST)

10

I’m suprised at how much of a success this entire thing is, and I begin to think that iPod has something, just something, that transcends style, ease-of-use, and simplicity, making its sales far superior to its competetors.

I fiddle around with computers a lot, and I don’t mind doing a lot of work to get stuff to work (I use a essentially homemade Linux for crying out loud!), and last year, I was seriously considering getting eihter the Creative or Archos player, seeing as how they have more features for less price, but ended up buying the smaller 10gb iPod. The reason? I still don’t know why. Don’t get me wrong, its one of my favourite mobile devices, but I still can’t explain my purchase…

Thus, because of this certain “something,” the iPod will be on top for a long time, and even the new iRiver iHP-140 is going to be a loser marketwise, despite its lower price tag and better features.

Posted by Sraphim on March 17, 2004 at 12:02 PM (CST)

If you have a comment, news tip, advertising inquiry, or coverage request, a question about iPods/iPhones/iPad or accessories, or if you sell or market iPod/iPhone/iPad products or services, read iLounge's Comments + Questions policies before posting, and fully identify yourself if you do. We will delete comments containing advertising, astroturfing, trolling, personal attacks, offensive language, or other objectionable content, then ban and/or publicly identify violators.

Commenting is not available in this channel entry.
Sign up for the iLounge Weekly Newsletter

Email:

Recent News

Recent Reviews

Recent Articles

Sign up for the iLounge Weekly Newsletter

Email:

iLounge is an independent resource for all things iPod, iPhone, iPad, and beyond.
iPod, iPhone, iPad, iTunes, Apple TV, Mac, and the Apple logo are trademarks of Apple Inc.
iLounge is © 2001 - 2014 iLounge, Inc. All Rights Reserved. Terms of Use | Privacy Policy