Lower iPod Pricing to Squeeze Competition, Analyst Believe
TMO Reports - Lower iPod Pricing to Squeeze Competition, Analyst Believe
by , 11:10 AM EST, February 23rd, 2005
Wednesday's updates and lower pricing on the iPod mini and iPod photo are the latest moves by Apple Computer to stay one step ahead of their competition in the ever-growing market of digital media devices, analyst said Wednesday.
Apple announced 4 gigabyte (GB) and 6GB models of its iPod mini starting at US$199, a slimmer 30GB iPod photo for $349, and a 60GB model for $449.
Analysts see the announcements as Apple's way to retain its number one position in the digital music world.
"Pricing is the most significant of today's announcements," Joe Wilcox, an analyst with Jupiter Research told The Mac Observer. "There is only $50 now separating every iPod except the 30GB and 60GB iPod photo. That $50 difference is a great up sell opportunity. So, if someone is looking at a $149 iPod shuffle, they can add three more gigabytes of storage for $50 more."
"Today's announcement of lower pricing clearly shows Apple is looking at the iPod as a mass market product that they are going to drive as much volume sales into as they can," Steve Baker, an analyst with the NPD Group, told TMO. "This is a strategic move to say they are not going to give up their leadership in music players without a fight."
Mr. Wilcox also believes that the $50 difference between most models means Apple has covered the main price points where their competitors could try and fill niches.
"Apple is saying to its competitors, 'If you want to sell against us, it better be under $100 or over $500," Mr. Wilcox commented. "That's going to be tough to beat, given Apple's reputation, at present."
"Some might see these lower prices as a negative," said Gene Munster, an analyst with Piper Jaffray. "But it appears these changes are more offensive than defensive. They want to hold their leadership position and they can do that by lowering prices, increasing capacity and keeping the ease of use as a major competitive advantage."
Greg Joswiak, Apple's vice president of iPod products and worldwide product marketing, told MarketWatch the new iPod models are meant to "turn up the heat" on Apple's competitors.
"We are the leader, and we want to act like the leader," Mr. Joswiak said. "We want to stay ahead of the others."
Mr. Wilcox agrees with Mr. Joswiak's assesment.
"They've got the mind share among consumers and the iPod has this iconic status. Apple knows if they lower prices and increase capacity, their competitors have little else they can say they're better at. Apple has pretty much closed that gap now."
"It is not a typical Apple strategy to stay competitive in pricing," Mr. Munster said. "Now they are saying, 'we're going to lower prices if we have to to drive our sales.' One of the big sticks they have is price and they're using it."
For the third quarter of 2004, the iPod accounted for 92.1% of the market for hard drive-based music players, according to the NPD Group, up from 82.2% a year ago. Players from Creative Technology and Rio were a distant second and third, with 3.7% and 3.2% of the market, respectively. Market share numbers for the fourth quarter have yet to be released.
Apple has sold more than 10 million iPods since introducing the product nearly four years ago. iPod revenue grew to $1.21 billion in the fiscal first-quarter from $256 million a year before and accounted for almost 35% of Apple's $3.49 billion in revenue during the quarter.
Apple's press relations department turned down a request from The Mac Observer for comments by company executives for this story.
Observer Comments
From the article
Apple is saying to its competitors, 'If you want to sell against us, it better be under $100 or over $500," Mr. Wilcox commented. "That's going to be tough to beat, given Apple's reputation, at present."
The iPod shuffle is under $100. OK I know that you can get little MP3 players for $50 but the difference is so small that I would think that the Shuffle has to be leaning on the low end fairly hard too.
where's RC with his typical 'sky is falling' BS.
So predictable, so lame
"It's the beginning of the end. They are dropping prices because of the competition blah blah blah vomit."
All this will do is make more people want one, and after the get one they'll realize why people like them so much.
QuoteMace wrote:
Just before Christmas or next year MacWorld. you will see a $79 shuffle and a $499 iPod video.
Speaking of predictions, ThinkSecret said the new minis would have color screens, which of course didn't happen.
Does this mean Apple has found his contact and is making them pass on false information?
QuoteSmall White Car wrote:QuoteMace wrote:
Just before Christmas or next year MacWorld. you will see a $79 shuffle and a $499 iPod video.
Speaking of predictions, ThinkSecret said the new minis would have color screens, which of course didn't happen.
Does this mean Apple has found his contact and is making them pass on false information?
Only if the Cupertino police report finding an "ex" Apple employee face down in an alley with "squealer" tattooed on his buttocks....
QuoteSmall White Car wrote:QuoteMace wrote:
Just before Christmas or next year MacWorld. you will see a $79 shuffle and a $499 iPod video.
Speaking of predictions, ThinkSecret said the new minis would have color screens, which of course didn't happen.
Does this mean Apple has found his contact and is making them pass on false information?
i like that conspiracy theory.. a few people have brought it up already... imagine also different 'threads' of disinformation seeded like (a)mini color screen (b)ipod photo bluetooth (c)etc...
that way they can trace the rumor-distribution pathway based on where (a) (b) and (c) appears...
iControl - the name for Apple's DEPARTMENT OF RUMOR CONTROL ha ha ha
QuoteGuest wrote:QuoteGuest wrote:
lemmings and pimps buy it.
whatever. are you just bitter that you're missing out on the iPod experience? creative can kiss my azz..
I'm sorry for posting these comments. I'm a hopeless Mac zealot coming out hiding. My parents won't let me out of the house. What's a girlfriend when I've got my basement couch to make love to?
"I'm sorry for posting these comments. I'm a hopeless Mac zealot coming out hiding. My parents won't let me out of the house. What's a girlfriend when I've got my basement couch to make love to?"
Quick, say that a few more times! You just might take away Apple's crushing dominance of the MP3 player market! Man, a couple more jabs like that, and you even could force them right out of business. Here's wishing you better luck than Rio.
http://www.extremeipod.com/article2/0,1759,1711754,00.asp
What a Joke. The Gouge Artists at Apple continue to screw the consumer ( and get away with it). Most Ipod products are outrageously overpriced. You can buy dozens of equivalent if not better clones or offshoots for prices around one half to one fourth. Come on guys quitting praising the outrageous gouge behaviour of Apple. They make lots of money but then so do drug dealers from Columbia.Give the Chinese credit. They are bringing the designs that were ripped off by the fat cat American Co's back to Americans at prices that are fair and reasonable. MArket will bear pricing just ain't going to get it much longer. Apple Fumbled the PC market and they seem to be positioning themselves for another market fumble as they watch the MP3 MP4 players go to the Chinese. Apple will end up where they surely belong.
ABE Said it Best " You can fool some of the people etc etc.
Comments are currently closed. Please email the author instead.
Recent Headlines - Updated November 22nd
- Fri, 7:07 PM
- Games - Soccer Sim Championship Manager 2010 Released for Mac
- 6:47 PM
- Games - EA Publishes Original Monopoly for iPhone
- 6:15 PM
- News - Original Apple I on Ebay for $50K, w/Letter from Steve Jobs
- 6:11 PM
- Games - New iPhone Games: Secret of the Lost Cavern Ep 1, New DJ Nights, More
- 5:47 PM
- Games - Star Trek D-A-C Game Headed to the Mac Next Month
- 4:57 PM
- Product News - TidBITS Releases “Take Control of Syncing Data in Snow Leopard”
- 4:26 PM
- John Martellaro's Blog - Particle Debris (week ending 11/20) Stationery Pads Go Poof
- 2:59 PM
- Free on iTunes - Musée du Louvre, Art Lite, SketchBook Mobile X and More.
- 1:50 PM
- Deal Brothers - Acer P215H bmid 21.5” Widescreen LCD Monitor: $139.99
- 11:24 AM
- TMO Appearances - Jeff Gamet Shares More Holiday Gift Ideas on MacJury
- 10:43 AM
- Product News - Cocktail 4.5 for Leopard Adds QuickLook Cache Clearing
- 10:06 AM
- News - Hack Enables Mac OS X 10.6.2 on Netbooks
The Mac Observer Reader Specials
- TypeStyler For Mac OS X is Now Shipping! Download The Free Fully Functional 60 Day Tryout at www.typestyler.com
OWC: Get the Right Memory for Your Mac Top Quality, Competitive Price, Lifetime Backed Free Expert Support + Installation Videos too! MacBook & mini 8GB, iMac 16GB, Mac Pro up to 32GB. Click here
If you're using a Mac, then you've gotta check out Full Tilt Poker for Mac. This Full Tilt Poker bonus code does the unthinkable, it actually rewards!For the latest Apple products use Ciao, a price comparison website, to find laptops like MacBook Air. Then find the best prices on MP3 players and use our comparison tool to evaluate mobile phones like the Apple iPhone.
Laptop Hardware Provided by TechRestore - Overnight Mac & iPod Repairs.
