Report: Not Enough 4GB iPod nanos; Mixed Mac Retail Results
TMO Reports - Report: Not Enough 4GB iPod nanos; Mixed Mac Retail Results
by , 6:40 PM EDT, October 5th, 2005
Apple Computer Doesn't have enough 4GB iPod nano units to meet demand, according to a research report issued by Off The Record Research (ORR), a brokerage and research firm. ORR also found that iBooks and iMac G5s are selling well, that high-end iMac G5 sales were eating into Power Mac sales, and that some pro buyers are leery of the impending move to Intel processors.
The report is based on interviews with retail buyers (as in purchasers for retail outlets, not consumers), Apple specialty resellers, department supervisors and associates, and in-the-field visits to Apple Stores.
iPod
The picture of the iPod market painted by ORR's report is a complex one, with the firm saying that the iPod nano is selling well, but that Apple has so far not shipped enough 4GB nano units to meet demand. With the 4GB unit at US$249, just $50 more than a 2GB unit, consumers want the extra capacity.
This is especially true in light of the fact that the iPod nano is replacing the larger capacity, hard drive-based iPod mini.
ORR reported that by and large, the release of iPod nano on September 7th has invigorated the MP3 market for both Apple and its competitors. On the other hand, retail buyers are saying that Apple has missed the boat in terms of its product mix in the retail channel.
"People want the black 4GB and we don't have it. It's only $50 more for another 2GB, and they want that," an anonymous source at Circuit City told the firm.
ORR also found that most buyers and resellers think that the flash memory nano is competing more with hard drive digital media devices.
"Although the nano is a flash device," read the report, "it is difficult to say it is taking market share in the flash category because it does not go head-to-head with other flash players, nor is it likely to cross over to the price-conscious flash customer."
Along those same lines, the report said that a price drop on Apple's iPod shuffle product line is expected to drop in the first week of October. Apple has heretofore not announced such a price drop.
Lastly, the firm found that sales of the 20GB iPod were slowing, that remaining inventories of the iPod mini were still selling briskly with those resellers who have them in stock ("One source said some buyers were hunting for minis, as it now is viewed as a collectors item," the report said), and that some specialty Apple resellers expect the nano to boost the iPod's popularity even further.
Mac
On the positive side, iBook sales are trending higher, helped in part by improving supply. The report did say that one reseller surveyed found improving iBook sales were not quite enough to offset declining PowerBook sales.
The iMac G5 is also doing very well, and specialty resellers are reporting strong sales quarter over quarter. Sales are strong enough, in fact, to offset softening sales of the Power Mac G5.
Indeed, some resellers have seen some Power Mac sales going to the consumer-based iMac G5. In addition, the firm said, "Two buyers reported a decrease in pro market or business purchases, which they attributed to customers waiting for the Intel-chip line to arrive in 2006."
ORR specifically noted that this is the first time such concerns have been reported as affecting sales in ORR's research.
Other Points
- Tiger sales are meeting expectations.
- Mighty Mouse sales have been lower than expected, with some customers finding the device not as easy to use as expected.
- The holiday shopping season should be a strong one for Apple.
If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.
Observer Comments
Wed Oct 05, 2005 8:57 pm Subject: the articles on this site have been boring or obvious lately
Didn't the resident Microsoft cultists say that nobody wanted an iPod Nano? Whoops. There goes another one of their fantasies down the toilet. Reality really ought to stop being so mean ot them. All they ask is to be left alone with their delusions, is that so much?
Didn't they also say that the iBook and G5 iMac were tanking? Ouch. It's a bad day for the Kool-Aid drinkers.
Thu Oct 06, 2005 12:14 am Subject: Boring & obvious: Just wait
The nice thing about being an "observer" type site is that you just report on what's out there. Back to school is over, holiday rush hasn't started yet, Katrina is on everyone's mind. So this is a lull in the action. I wish I weren't in Alabama so I could ditch the computer for a while and go watch some leaves up north.
I agree that the mini is a collector's item. I made sure I got a 6gb for $199 at the refurb store instead of the 2gb nano for the same price - 3 times the capacity and only sacrificed the color screen.
Uncle Steve has long said that the iPod was all about the music. I agree, and have 3 times more music. The B&W screen is easier to read, especially in the dark, and the iPod isn't really about photos or games now is it? Steve said so. Too bad the mini is gone, get them while you can.
Thu Oct 06, 2005 2:18 am Subject: Re: articles on this site have been boring or obvious? Nah
This quote says it all:
"People want the black 4GB and we don't have it. It's only $50 more for another 2GB, and they want that."
Apple should've seen that coming. Consumers are not dumb these days, they can see what is and isn't a value. And yet still Apple got caught flat-footed with too many 2 GB Nanos and not near enough 4GBs.
Really, the 2GB should be $179. That might entice some fence-sitters to switch from waiting for a 4GB to actually getting a 2GB, and it would help the volume of sales overall, as the $$$ entry point is lower.
Plus the 2GB would then be more of a high-end flash player competitor, not a low-end hard-drive competitor, price-wise. I think the Nano is a great product and only runs into problems if its priced so high that the consumer perceives it to be a flash player with a hard-drive player price.
Thu Oct 06, 2005 2:45 am Subject: No 4GB nanoes in NZ
QuoteBiff wrote:
Guest, could you post a link to the web site that you run? I'm sure it is filled with less obvious and more interesting articles about Apple. Right?
I go to a bunch of Apple rumor / news sites for my Apple/Mac fix. I usually prefer this one. I'm not trying to put down this site, I just have been disappointed in the news as of late on this one. The other sites (some of which I dislike) have had more interesting articles as of late. That's all. I like TMO in most cases.
Couple of flaws in the $179 2 gig nano argument. The cost per megabit of flash has always been more expensive than the equivalent capacity in a hard drive. Apple probably figured that lower power consumption, higher durability and a killer form factor with a color screen is worth the higher price. As for shortage of 4 gig players, this sounds like a vendor issue. Don't forget apple bought 40% of Samsungs flash capacity. The 2 and 4 gig flash chips probably come from the same wafer and the distribution is a function of manufacturing yields. At the wafer level all the chips are probably the 4 gig size. After processing and at the testing stage thay see how many memory cells work reliabily. If more that 4 gig worth of cells are work are working they cut bond and package that chip as a 4 gig unit. If less than 4 gig worth of cells are working the chip is cut bonded and packaged as a 2 gig chip. If a wafer contains 300 chips and you have 90% yield on the process only 270 chips will be available. If 60% of your total chip population turns out to be 2 gig chips thats 180 2 gig chips available for 2 gig nano production. The other 30% will be the 4 gig nano chips and that half of the 2 gig chips available or 90, 4 gig units. This is probably the most likely scenario as to why there are more 2 gig than 4 gig nano's available. Similiar things will happen when Apple boosts the nano's maximum capacity from 4gig to 8gig to 16gig etc. As the manufacturing process inproves the chip costs will go down as will the cost of the nano's they go into. Look for ipod shuffles to be obsoleted and eliminated from the product line in 9 months time because the price Apple will have to charge for them won't leave anything for business structure support and profit.
Guest,
Wow thats alot of numbers for something you just pulled out of your ass.
Just wondering if you realize the 4GB Nano has 2 flash chips and the 2GB has the same PCB but with one empty space where the 2nd chip gets soldered on? Cause gee whiz that doesn't seem to jive with your post.
Oh and you never did actually mention those flaws in the $179 nano argument. Let's see, for $50 you get the 4GB nano which means that you get a whole extra 2GB flash chip. That means the chips obviously cost Apple a lot less than that. What do you think the margin is on a 2GB nano? Apple could charge $179 is they wanted to!
But hey good job predicting that flash memory prices will drop. That like totally blew my mind!
QuoteGuest wrote:
Couple of flaws in the $179 2 gig nano argument. The cost per megabit of flash has always been more expensive than the equivalent capacity in a hard drive. Apple probably figured that lower power consumption, higher durability and a killer form factor with a color screen is worth the higher price. As for shortage of 4 gig players, this sounds like a vendor issue. Don't forget apple bought 40% of Samsungs flash capacity. The 2 and 4 gig flash chips probably come from the same wafer and the distribution is a function of manufacturing yields. At the wafer level all the chips are probably the 4 gig size. After processing and at the testing stage thay see how many memory cells work reliabily. If more that 4 gig worth of cells are work are working they cut bond and package that chip as a 4 gig unit. If less than 4 gig worth of cells are working the chip is cut bonded and packaged as a 2 gig chip. If a wafer contains 300 chips and you have 90% yield on the process only 270 chips will be available. If 60% of your total chip population turns out to be 2 gig chips thats 180 2 gig chips available for 2 gig nano production. The other 30% will be the 4 gig nano chips and that half of the 2 gig chips available or 90, 4 gig units. This is probably the most likely scenario as to why there are more 2 gig than 4 gig nano's available. Similiar things will happen when Apple boosts the nano's maximum capacity from 4gig to 8gig to 16gig etc. As the manufacturing process inproves the chip costs will go down as will the cost of the nano's they go into. Look for ipod shuffles to be obsoleted and eliminated from the product line in 9 months time because the price Apple will have to charge for them won't leave anything for business structure support and profit.
Uhh... you do know that Samsung manufactures 16 gigBIT chips right? Which comes out to 2 gigabytes per chip. Which means that pretty much everything you just said was wrong.
But hey, nice job BSing there, sort of.
Thu Oct 06, 2005 7:20 pm Subject: You can pry my mini from my cold dead hands
Apple is so F*ing dumb and TMO readers so damn smart ! ('
')
The excess 2GB inventory isn't going to last long …
I'm sure production has shifted from a balance of all 4 models to a predominantly 4 GB/Black schedule.
First thing before they could decide on manufacturing allocations was to market the damn things and see what sold and what didn't … Now they know and the channel is going to see an influx of the most popular model. If I remember well, they had forecast 3 Million a month, so, assuming they had about a half-month supply on hand on the day of the announcement and 2-3 weeks' supply being manufactured, that brings us roughly to today … so I guess, starting tomorrow, the production schedule might switch to 75% 4 GB/Black and 25%/Other, and probably with a larger total daily production ratio, to reflect the extra demand caused by the instant popularity of the device … Same story as with the pink mini when the mini first came out !
Steve's crystal ball can get cloudy sometimes, please give the man a break ! ![]()
Quotejacrav wrote:
Apple is so F*ing dumb and TMO readers so damn smart ! ('')
Well yes, on this one Apple is and TMO readers are.
C'mon, Apple should've seen this one coming. The 2GB is obviously a MUCH WORSE VALUE than the 4GB. This is Apple's fault for taking a higher margin on the 2GB (which, let's face it, they are, since the majority of the cost of the Nano is in the FLASH MEMORY).
Whoever said $179 was a fair price for the 2 gig was dead-on. Apple brought this on themselves with their own rather scatter-brained pricing and inability to see the obvious reprecussions thereof.
[quote=Whoever said $179 was a fair price for the 2 gig was dead-on. Apple brought this on themselves with their own rather scatter-brained pricing and inability to see the obvious reprecussions thereof.
[/quote]
The thing is, who is to say their intention wasn't to just *push* the 4GB models by this pricing policy … The supply was much larger than any previous introduction of a new model, and they still managed to *create* a shortage anyway …
The nano is now assured of tremendous success, as the 4 GB is firmly established as a "must-have" product ( there is a waiting list !) … very cunning, IMO, but a good start to the holiday season, well ahead of the competition !
People on the waiting lists are ever more eager to put their hands on them and will have the advantage of knowing about the "scratched scren syndrome", so they can plan on ordering a sleeve while they wait for their new toy …
(I wish I had known myself, so I would have been a little more careful with mine !!! ![]()
Fri Oct 07, 2005 11:59 pm Subject: Re: Funny & Why Apple Hoped We'd Buy 2 Gig Nanos
Quotejacrav wrote:
The thing is, who is to say their intention wasn't to just *push* the 4GB models by this pricing policy
I doubt it that was they wanted to do. It simply makes no sense.
The real limiting factor/bottleneck for Apple as to how many Nanos they can potentially sell is how many 16 megabit (2GB) flash chips they could procure from Samsung. Thus, Apple could sell TWICE as many 2GB Nanos as they could 4GB.
Apple didn't 'push' the 4GB... on the contrary, they hoped people would buy the 2GB in droves, because they could then sell MORE Nanos without running out of flash chips, and because they priced in such a way that they'd actually make just as money per unit (perhaps a bit more, in fact) from the 2GB as opposed to the 4GB, what with flash memory being quite expensive, even with Apple's 'special deal' with Samsung.
In other words, Apple got GREEDY with the Nano and tried to maximize profits, but it blew up in their face to some extent. What you have right now is a lot of pissed off customers waiting weeks for their 4GB Nanos.
Lord help Apple if the competition ever got strong enough to take advantage of such a misstep by Jobs & Co. Fortunately for Apple, though, they haven't. There simply ISN'T a truly compelling alternative to the Nano, unless you count the last of the Minis being cleared out.
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