iLounge

21

Altos - I think I was right…

It was pretty obvious - they have a good relationship with Toshiba, why not continue it.

Too bad its so overpriced.  A 2gig version at $99 would have sold millions, and driven iTunes to the top.

Sticking with my 40gig iPod

Posted by Lawrence on January 6, 2004 at 4:26 PM (PST)

22

Well I guess I can’t win them all (or any of them as a matter of fact).

Interesting pricing strategy though:

From Flash to iPod-mini you get a 16x factor for 50$ if you follow SJ’s reasoning on the high end flash players (which Apple salespeople won’t let you forget i’m sure).

From iPod-mini to low end iPod you get a 3x factor for another 50$

This will be heaven for salemen.  I can already hear them :

“Hey, why spend 200$ for 60 songs when 50$ more will get you a thousand ? ”

... saleman lets you ponder the additional invesment. 

Once you’ve convinced youself of the nice bargain you’re making for “just” 50$ (25%), you’re vulnerable to making the next jump much easier. 

Salesman comes back,

“You know most people bust the 1000 song limit within a year but most people have less than 3000 songs in their library.  Think long term, get the full capacity now for just 50$ more”.

You’ve already made the first leap so the second one is easier. The 50$ is now only 20% more than what you were willing to pay. Ponder, ponder…. and Voila! One more iPod sale. 

iPod-mini could actually stimulate iPod sales by leaping then psychological price gap.

250$ is not overly expensive if Apple’s strategy is to sell more iPods.  My guess is that, with a 4GB HD, the margin on iPod-mini is going to be much smaller than on iPods.

If I’m right, Apple’s marketting guys are Brilliant!

The only problem I can foresee is that competing vendors (at least two of them) are preparing new players using the Cornicle drives which might counter Apple’s reasoning if their time to market is short enough.

Posted by altos on January 6, 2004 at 9:43 PM (PST)

23

Lawrence,

Are you certain that Apple is using Toshiba drives in the iPos-minis ?

With two 2GB Cornice drives, my price estimates would still pretty much hold (with 25% margin on drives rather than 40%).

60 + 93 + 93 = 246 $ rounded to 249.

Margins: 24 + 23 + 23 = 70$ (28%)

Posted by Altos on January 6, 2004 at 10:12 PM (PST)