Informed Guesses on New iPod Family Pricing

The discussion around iLounge this morning: iPod family pricing. There’s been buzz for months that Apple “needs” to reduce the prices of the iPod touch lineup—and possibly all iPods—in order to offset the $199*** 8GB iPhone 3G.

(*** = Not really.)

If we’ve learned anything over the past seven years of iPod releases, it’s that Apple doesn’t drop iPod prices just for the hell of it. It also has a tendency to quietly take things away, like pack-ins, when it does drop a product’s price… except, of course, that there isn’t much left to take away from current iPods, which now ship only with USB cables, headphones, and Dock Adapters. But after a year that saw iPod sales slow down at one point for the first time in years, jumping after an aggressive “buy Mac, get iPod free” deal, price drops seem like they’re in the cards. So what’s going to happen next week?

We’re guessing that we will see legitimate price drops on certain iPod models. It is quite possible that the new lineup will look like this:

iPod shuffle: $49 (2GB)
iPod nano: $99 (4GB), $149 (8GB).
iPod touch: $199 (8GB or 16GB*), $299 (16GB or 32GB*), $399 (32GB or 64GB*).
iPod classic: $199-249 (80GB or 120GB), $249-$299 (120GB or 160GB).

Apple’s numerous hints at a major product transition with a profitability impact suggests that this pricing scenario—at least the iPod nano and touch part—is fairly likely. There are other nano possibilities, such as similar prices to today’s plus higher capacities, but they seem unlikely at this point. And dropping the shuffle altogether is another option, but every time people think that model is dead, Apple keeps it going.

iPod touch 2G: Preserving the iPhone 3G Gap. The real questions relate to the second-generation iPod touch and iPod classic, and then mostly on the capacity to pricing model. Conventional wisdom would suggest that Apple will keep touch capacities the same (8GB to 32GB) and simply drop the prices. This would narrow the nano-to-touch price gap from $100 to $50, giving users the choice of a better screen and the iPhone OS as a small “step up.” It would also disappoint everyone who wants to see 64GB and 128GB touches right now, but this wouldn’t be a huge surprise, and there wouldn’t be a huge capacity gap between the most expensive iPhone 3G ($299***/16GB) and the most expensive iPod touch ($399/32GB).

* = But Apple could introduce a $399*** 32GB iPhone 3G, which would make the 16/32/64GB iPod touch scenario more likely. Your choices would then be:

$199: 8GB iPhone 3G***, 16GB iPod touch
$299: 16GB iPhone 3G***, 32GB iPod touch
$399: 32GB iPhone 3G***, 64GB iPod touch

A tougher call, right? A lot of people would actually go with the iPod touch then over the iPhone 3G. Apple probably doesn’t want that to happen, so our guess is that modestly repackaged, cheaper 8GB, 16GB, and 32GB touches are this year’s pitch.

iPod classic: The Wildcard. What about the iPod classic? Toshiba, Apple’s iPod hard disk provider of choice, now seems to wait for Apple before announcing its latest and greatest 1.8-inch hard disks. Last year, it upped the ante with a 160GB drive, and it might have a surprise this year, too. As leading competitor Samsung hasn’t yet announced a 1.8-inch drive with more than 160GB capacity, our guess is that Toshiba’s in the same boat, and capacity will stay the same while price will go down. One of iLounge’s editors thinks that Apple might drop the 160GB model’s price to $249; this would be a very aggressive move.

Our belief is that the single biggest factor influencing the iPod classic’s price is the presence of Microsoft’s Zune in the marketplace—no matter how much Apple tries to blow the Zune off, it’s concerned that Microsoft could steal sales from the iPod with a hard disk model that offers better pricing or capacity. A 120GB Zune is definitely coming, and apparently for $249. The only question is whether Apple will try to undermine Microsoft with a $199 80GB model and $299 160GB model, go for parity with a $249 120GB classic and $299 160GB model, or unleash some hell with a $199 120GB model and either a $249 160GB model or a surprise $299 version with more capacity. Our money would be split on the first or second options.

We’ll know for sure next week… but what do you think is likely? We look forward to seeing your thoughts in the Comments section below.

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