The Mac Night Owl asks, “Does a Cheap iPod Make Sense?”

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The Mac Night Owl asks, “Does a Cheap iPod Make Sense?”

“But the pricing calculations appear to be skewed. Today’s cheapest iPod sells for $299 and carries a 10GB hard drive. Can you really believe that a 4GB version would sell for a third of that price? And if it did, how many folks would still plunk down a lot more cash for the bigger models, unless, of course, Apple added some extra features, such as video display and a color LCD.

Regardless of what Steve Jobs pulls out of his top hat, I am skeptical of a version with flash memory for one simple reason: It’s too expensive. Take a look at the price of, say, a 256MB flash card for your digital camera. I’ve seen retail prices in the $40 range, after rebate, but that’s the low-end. Double that capacity and scale it upward appropriately. So how much do you really expect a full-fledged music player with flash memory of reasonable capacity to cost, especially one as carefully crafted as an iPod?”

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Comments

1

I know a lot of people that would still “plunk down” all that money for the bigger models. Most people at the lounge have a LOT more music than 2 or 4gbs, correct me if I’m wrong.

Posted by dan on December 31, 2003 at 11:11 AM (PST)

2

Well I think that the 2 GB would be priced at $99 and the 4 GB at $199 so it its -almost- doubling for $100.

2-4-10-20-40
99-199-299-399-499

Posted by yuljo on December 31, 2003 at 11:23 AM (PST)

3

Well there’s some reasons a mini ipod would work. An smaller ipod with a better battery would most definitely be a good option. A flash memory based ipod is out of the question, but i’m sure there’s something that can have as much space and still take up a small footprint.

Posted by tetro on December 31, 2003 at 1:48 PM (PST)

4

Don’t assume that Apple can hold the line on its current pricing. The 10GB is good enough (capacity wise) for many people. The 40GB version is good enough for most hard-core music buyers.

Apple can try and sell larger models, but I’m guessing that apple may already be at the point where demand for larger models is soft, even ignorning the fact that more and more competitors are beating them on price per GB.

New features will help, but not much. How many people would really pay $100 for portable video? It’s not like they can watch it all day long (most can listen to music all day long). Even before the appearance of serious competitors the cost per GB at every pricepoint has declined significantly.

So, prices are going to be eroded anyway. Given that, why not do it with something with inherently lower costs, like smaller HDDs and a smaller capacity now and maybe have a chance of protecting the high-end a bit longer.

$100 seems a bit low though, even in 9 months.

Posted by es on December 31, 2003 at 2:19 PM (PST)

5

Go Go Apple

Posted by Pat on December 31, 2003 at 6:11 PM (PST)

6

I agree with MNO; I don’t see how it can be done, price-wise, and why Apple would do it.

Posted by dura on January 1, 2004 at 11:30 AM (PST)

7

My guess is that ... nothing will happne this year eventhough people are talking about this “mini-iPod” thingy ... Sales for the 3G iPod is still going strong, and it would just be stupid for them to introduce a smaller, cheaper, lower profit margin version for this point in time. Therefore, my “prediction” is ... APPLE WILL INCREASE THE PRICE OF iPOD, with the lowest model selling at $350 !!! Wow, I would LOVEEeee to see that happen and the look on people’s face !!! hahaha ...

Posted by Poddy in Love in Singapore on January 1, 2004 at 3:46 PM (PST)

8

I think it’s all about selling the music. So take the model of giving away the ipod and making the money on music downloads at the Apple store.

Posted by surfermac on January 1, 2004 at 4:55 PM (PST)

9

I’d agree with surfermac. If they make their music players more accessable (by a lower cost) they will catch more of the mainstream.

This allows them to push their ACC format, and turn more heads to look at apple for their digital content including itunes music store, and more in the future.

Also, if they want PC users to start “switching” there has to be some product that they try out and say “yeah, the mac is actually simpler than my pc” - or at least make them think twice.

It’s similar to the Xbox - they’re currently selling the hardware at a loss, but recouping their costs by the software.

That’s just my opinion though.

Posted by DimJim on January 1, 2004 at 8:35 PM (PST)

10

I think that a smaller iPod is a great idea to capture market share. True, I just upgraded from a 2g 20gb to a new 40gb, but I’m sure that there are plenty of people that want to have the iPod cool factor for less $$.

Great way for Apple to further bring their great stuff to the world.

Posted by bradlt on January 2, 2004 at 4:06 AM (PST)

11

Except that it’s the other way around, Surfermac & DimJim. There’ve been lots of articles about how itunes music service makes very little profit directly—it was introduced on windows as a way to sell ipods, not the other way around. There’s a rather significant difference between a few pennies profit on a dollar and a 20-30 dollar profit on a 40 dollar game

Posted by JC on January 2, 2004 at 4:59 AM (PST)

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