First, I'd like to present the prestigious Jimothy "Well Duh!" Award to these analysts for their remarkable insight.

Yes, as components increase in volume (i.e., popularity), they prices will come down--for ALL OEMs, including Apple. So Creative may be able to lower their prices...and guess what, so will Apple!

But the iPod and its competitors have proven the price alone is not enough to determine the success or failure of a product. The iPod sold quite well, thank you, at a premium to other players. And now that premium is smaller (in many cases, the iPod price is the same as the competitors) with the 4G iPods.

Given the volume of iPods sold, Apple must get excellent pricing with its OEMs, and likely much better than any of the other players. The other players, however, do get a marketing subsidy from Microsoft.

We've already seen Apple put this margin to use in its Cram & Jam promotion. So it has plenty of room to lower prices when the time comes.

We've also seen another side effect: Apple has cornered the market on the leakily-announced 60GB drives. I guess its coming at the next iPod/iTunes (for PC) anniversary.

Well one problem Apple will have is that if every Joe Shmoe on Earth gets an iPod, the cool factor will be destroyed. But if every Joe Shmoe doesn't get an iPod then how will iTMS/AAC become the standard? Simple! Apple should investigate licensing fairplay support only to cheap-ass crappy mp3 players so that anyone can use iTMS. This will allow iTMS/AAC to further expand its presence without Apple having to destroy it's lucarative upper-class iPod image. Plus they will get lots of licensing $$$! And all those low-end mp3 buyers will get hooked on iTunes and then when they are ready to step up... boom iPod. More $ for Apple.

<quote>prices will come down--for ALL OEMs, including Apple. So Creative may be able to lower their prices...and guess what, so will Apple!
</quote>

Guess what, apple won't ...

...just incase you hadn't noticed, competitive pricing isn't exactly one of Apple's great strength.

They conrol the horizontal and the vertical. They have the edge now with the cool factor. Apple will discontinue a product rather than compete....What I telling this to you guys for...you all know this...ya do...ya do...yo..mama,,,

The article is about Flash memory coming down in price and exerting pressure on micro hard drives. OK, this is not surprising, nor is it about Apple or the iPod.

The iPod is simply the most famous device using micro hard drives. Apple uses micro hard drives because for the criteria of capacity and cost, they are the best value. If that dynamic changes, Apple will change its hardware -it a simple supplier decision. Altering a device's architecture to switch storage technology is not particularly challenging engineering.

This doesn't "pressure" the iPod or Apple. It "pressures" micro hard drive manufacturers.

Apple has been cutting the price for the iPod continually - I waited for the 40 gig to come down $100 before I bought it.

I do see Apple releasing a flash based iPod in the future for $99 to $129 as this is a huge market that they won't want to pass up.

I also see continual increases in the importance of TMS. Originally it was designed to sell iPods. One day it will be equal to iPods in terms of profitability and then it will probably exceed the iPod. For me, this changing market is going to be the driving force behind the flash iPod.

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Biff wrote:
Well one problem Apple will have is that if every Joe Shmoe on Earth gets an iPod, the cool factor will be destroyed. But if every Joe Shmoe doesn't get an iPod then how will iTMS/AAC become the standard? Simple! Apple should investigate licensing fairplay support only to cheap-ass crappy mp3 players so that anyone can use iTMS.

Let's see, what sounds better?

256 MB player from Rio for $130

or

4,000 MB player from Apple for $250

or

20,000 MB player from Apple for $300

or

40,000 MB player from Apple for $400

I'm going with 156x the storage for just 3x the price... so I can load OS X on it and boot a machine with it and backup all my stuff.

"Ms. Kevorkian said the one-inch miniature hard drive will play an increasing role in the jukebox device market as more competitors to Apple's iPod resort to the high capacity, small form factor drive.
"The one-inch hard drive's small size and higher capacity will be popular over time.," she said. "The trend we're seeing is hard drive makers are now focusing more of their attention on getting their products in consumer electronics. As this happens and you see competitors to the iPod - like Creative, Samsung, iRiver - use the one-inch drive, they'll be able to compete more aggressively in price, capacity and performance with Apple. That could have an affect on Apple's current dominance in the portable music player market."
One-inch hard drives are currently available in 4 gigabyte capacities and reports are that over the next few years 6, 8 and even 10GB sizes will be available from hard drive manufacturers like Toshiba and Hitachi."

I'm not really sure what they're trying to say here, as Apple already uses the 1 inch HD on the mini. As the 1 inch HD increases in capacity, apple will incorporate those increases to their products as well. Do they thnk that Apple is just sitting on it's hands and not responding to changes and advancements?

Quote

Guest wrote:
<quote>prices will come down--for ALL OEMs, including Apple. So Creative may be able to lower their prices...and guess what, so will Apple!
</quote>

Guess what, apple won't ...

...just incase you hadn't noticed, competitive pricing isn't exactly one of Apple's great strength.

Remember when videotapes started and Sony (Beta), Phillips (V2000) and JVC (VHS) had each their format? JVC wasn't the best quality but they opened the door to everyone for the cheapest price and they won the battle.

  If Apple let's anyone offer an attractive competitor to AAC the whole market will go for it as VHS did (and DOS also). So product price is a nice thing when markets emerge but standards soon rule and those that dont follow the rule always loose... (how many people today use Sony special mini-disk?)

Remember what IP did to Compuserve and Emailer and so many others? So Apple's prices will always be in the upper side of the market, that we know, but they should have studied the basics of markets and standards before they filled the report with *their* standard empty speech like:
- memory chips will be larger in the future for the same price,
- hard drives will be bigger with a reduced price,
- this means product prices will be reduced.
Duuhhhh

Quote

Chorita KaBoom wrote:

I'm not really sure what they're trying to say here, as Apple already uses the 1 inch HD on the mini. As the 1 inch HD increases in capacity, apple will incorporate those increases to their products as well. Do they thnk that Apple is just sitting on it's hands and not responding to changes and advancements?

Quote

Biff wrote:
Well one problem Apple will have is that if every Joe Shmoe on Earth gets an iPod, the cool factor will be destroyed. But if every Joe Shmoe doesn't get an iPod then how will iTMS/AAC become the standard? Simple! Apple should investigate licensing fairplay support only to cheap-ass crappy mp3 players so that anyone can use iTMS. This will allow iTMS/AAC to further expand its presence without Apple having to destroy it's lucarative upper-class iPod image. Plus they will get lots of licensing $$$! And all those low-end mp3 buyers will get hooked on iTunes and then when they are ready to step up... boom iPod. More $ for Apple.

Quote

Guest wrote:
you're kidding right. does anyone really think the iPod is cool because only a select few people own them? The cool factor has always been the design, quality, and user interface. If everyone own an iPod, they would still be cool, if Apple continue to push the design and user interface with new innovations.

If you took Apple's current iPod three years into the future, it would face stiffer competition! The pressure is on! Apple is doomed!

And that pretty much sums up the entire article.

I, for one, would like to see Apple release a flash-based iPod. Indeed, there is a need for one. I know people who have given up their iPods because there are problems with them while exercising. An "iPod Sport" model would address this problem (it could use a specific playlist limited to the size of the flash memory), while introducing Apple to this market while flash memory prices continue to go down.

Do any of these analysts have any credentials other that the fact that they can use MS Office and email? If they have a single journalism degree or technical degree among them I would be amazed!

Critical thinking is clearly not one of their abilities. In three years they won't be able to compete with the next set of morons that come padding through the door!

!!!! (just for emphasis)

Quote

Guest wrote:
Indeed, there is a need for one...

I suspect that as the 1 inch drives increase in capacity a flash based iPod will appear -once prices have reduced enough- just like where new versions of a car keep getting bigger until there is enough space in the segment below for a new car to be introduced beneath it. After all Apple have already done that once. However I find this article confusing. One moment they are saying that 1 inch drives are going to really take off in this market and the next that flash based drives are going to dominate. Seems that they are taking two contradictory stances that have just one thing in common ie that each scenario can be used to suggest a possible threat to Apple's dominace. Real good science and objectivity there chaps.