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CNET: Would $100 iPod compete or cannibalize?

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By Dennis Lloyd

Publisher, iLounge
Published: Tuesday, December 30, 2003
News Categories: Apple

“The widely reported rumors, which Apple declined to address, suggest that the company will unveil an inexpensive iPod that will cover the end of the market dominated by cheaper MP3 players from Creative, Rio and Dell.

The risk in such a move would be undercutting brisk sales of iPods, which now range in price from $299 for a 10GB drive to $499 for a 40GB drive. In Apple’s fourth quarter, ended Sept. 27, sales of the iPod generated $121 million in revenue, up 9 percent from the prior quarter and 128 percent from a year ago. The company has said the iPod business is profitable.

‘I don’t think Apple currently needs to sell a $100 iPod at risk of cannibalizing sales of existing models and sacrificing gross margins,’ said Tim Deal, analyst with Technology Business Research in Hampton, N.H. ‘Apple already has the market lead, so I don’t see the need for (the $100 version) when people are buying $299 and $399 models.’”

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Comments

1

“The widely reported rumors, which Apple declined to address, suggest that the company will unveil an inexpensive iPod that will cover the end of the market dominated by cheaper MP3 players from Creative, Rio and Dell.”

Excuse me?  Dell’s lowest price model is $249, I’d hardly call that the lower end of the market, the 10GB iPod is only $50 more than that.  And Dell nor Creative aren’t “dominating” anything.  None of their players ranked in the top 5 in sales in November.  As usual, CNET didn’t do their homework and they don’t know what they’re even talking about…

Posted by Robert on December 30, 2003 at 5:53 PM (PDT)

2

I totally agree - where I don’t think Apple currently needs to sell a $100 iPod at risk of cannibalizing sales of existing models.  iPod, in many ways, are unique in its design, its size, its pearl white appearance ...  and by changing any of that, it just won’t be the ORIGINAL iPod that we used to know anymore.  I can accept having colour detachable skin for my iPod, but I just don’t see a colour change in the iPod itself.  Just imagine changing a lady’s white wedding dress into purple or blue colour ...  (^.^’) ...
As for the $100 mini iPod or thingy, I hope not ...  the last thing I wanna see is everyone holding one in their hand ... and it just makes iPod or mini iPod damn CHEAP !!!  Do we see a construction working carrying a Louie Vuitton bag to work ?!  Think not ... and HOPE not ...

Posted by Poddy in Love in Singapore on December 30, 2003 at 5:59 PM (PDT)

3

I think the lower cost ipod is a great idea.  I own a 20 gig 3rd gen. but I would love to be able for my 2 teens to be able to have an ipod.  But the truth is, we can’t afford it!  If Apple does offer this new, less expensive model, it will open up this wonderful device to a whole lot of people.

Posted by Bobby on December 30, 2003 at 6:42 PM (PDT)

4

Why not make iPods that everyone can afford?  So what if everyone’s carrying one?  Is it because your self-worth is tied to your music player?

Think different, not stupid.

Posted by kevinmoore73 on December 30, 2003 at 6:43 PM (PDT)

5

Much agreed.  I like the idea of more people having iPods.  I’m not sure how much of an affect it will have on Apple’s profits, but I’m betting they’ll sell a lot of mini pods and still sell a lot of regular iPods. 

I’m sure the mini pods will be dumbed-down so as to encourange those who can afford the real iPods to buy one.

Posted by dethbrakr in Tacoma, WA on December 30, 2003 at 7:03 PM (PDT)

6

it’s shortsighted and dumb to think that lower end iPods will undercut the current higher end models.  as if lower end G5s hurt the sales of the high end model.

Posted by mediahound on December 30, 2003 at 7:31 PM (PDT)

7

The lower end G5 doesn’t cost 1/5 of the higher end model though.

Posted by Jon in Seattle, WA on December 30, 2003 at 7:43 PM (PDT)

8

Some people love the functions of the ipod, but simply don’t like the cost. This idea not only will help sales on the ipod, but also on the itunes music store. Also with the launch of the pepsi deal in february more and more people are going to want ipods and a lot of them are not going to want to pay 300 dollars for them.

Posted by Eman880 on December 30, 2003 at 7:54 PM (PDT)

9

I personally bought what I needed, which was a 20GB model. I knew 10GB would not be enough for me, and the 40GB would be more than I would ever use within reason. There are lots of people who would never even use 10 GB, so of course the miniPod is perfect for them. Apple is simply covering all their bases, because if they don’t, someone else will (and is already).

As far as different colors and whatever, all it does is serve to separate the original iPods from their baby brothers and sisters. If I was holding a green miniPod on the bus, and someone with a white, “real” iPod sat next to me, I’d probably feel a bit of envy, even if they are both branded as iPods.

By the way, it’s “Louis” not “Louie” and that’s an incorrect analogy anyway. wink A Louis Vuitton handbag is a Louis Vuitton handbag no matter who is carrying it.

Posted by monkedsel on December 30, 2003 at 8:26 PM (PDT)

10

I’ve spoken with many people who are holding back on a move to the ipod because of the high price. A $100 ipod will enter a completely different market….that of the casual music listener who may not have a huge collection of music or doesn’t feel the need to have 10 gb or above with them at all times.

Posted by mGee on December 30, 2003 at 8:32 PM (PDT)

11

    Jon, don’t look at percentage difference, look at dollar difference. The lower end model will get everyone that is still stuck to their mini CD or Flash players. There’s no denying that a market for lower end/cost MP3 players does exist. The question that should be asked is- what part of the MP3/digital music market will Apple NOT be in control of?
    As for colors, while white is nice, I think it cost less to produce in one color, which is why Apple chose to do so. Adding a color variety will put the nail in the coffin for competitors, allowing yet another degree of choice and uniqueness for the consumer. Lets face it, if everyone has a white iPod, as fast as people are getting them, there is less style and uniquness to having one. I mean, shirts and cars don’t come in one color, do they? Imagine if you saved enough to get a Ferari, but realized that every one is red? I personally think iPod would look awesome in black, or maybe red (but how will the button backlight work? ^_^). I’m sure Apple won’t stick to such concrete colors. Remember the iMac commercials with them all arranged in a circle, playing “She’s A Rainbow”? I bet that commercial is coming back with the spinning circle arranged iPods!
    Part of Apple’s strategy to “entise” buyers to get the more higher end models might be the availability of color for them. But on second thought, that wouldn’t be consistent. I personally cannot wait for the announcement, so I can decide on whether or not to use the replacement plan to swap for a nice color one! Anyway, thats my 2 cents.

Posted by Sam on December 30, 2003 at 8:37 PM (PDT)

12

More garbage from CNET. This is actually pretty funny. Any article that quotes Rob Enderle must be a joke.

Posted by Atomic Bomb in Mid-Atlantic on December 31, 2003 at 5:32 AM (PDT)

13

I will be willing to bet that the people against this idea are the ones that just plunked down a large amount of dough on the current models when they could’ve waited a month to get one half the price.

You see the same thing happen with any new model of any type of product that is upgradeable. Lesson learned? Live with it.

Posted by ikelleigh on December 31, 2003 at 9:48 AM (PDT)

14

hopefully they can compete

Posted by BIGP in Texas on January 1, 2004 at 11:52 AM (PDT)

15

It’s a no brainer.  You don’t make the money on printers you make it on the ink cartridges!  Apple wins with expanding their base and selling more itune downloads.  I’ve held out until now. I’m taking the plunge and buying a 2GB. Thank you Steve.

Posted by boardhanger on January 1, 2004 at 6:08 PM (PDT)

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