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.’”