January 07, 2004
iPod mini too expensive?
When Steve Jobs announced that the new iPod mini will sell for $249, the Macworld audience got very quiet.
But in that moment, people weren't really thinking about the value of the device, or its chance in the marketplace. They were quietly saying goodbye to the imaginary $99 iPod that so many had hoped to see.
Posted by Sandy at 11:01 PM
The $99 iPod was a creation of rumour and speculation in the weeks leading up to Macworld Expo. How can you compete with fiction? Whether a $99 iPod was technically possible or just wishful thinking doesn't matter. It doesn't exist today. Nothing like it exists.
Alex Salkever says Apple is charging too much for the iPod mini. He crunches the numbers this way:
"The new miniPod will cost $249. That's about $100 more than the rumor sites had posited. It will offer 4 gigabytes of capacity on its hard drive. By comparison, the entry-level iPod now costs $299 and has 15 gigabytes of disk space. The miniPod's cost per gigabyte is $62.50. In the entry-level iPod, it's about $20.So Apple is asking customers to pay three times as much per gigabyte. I have one word for that. Ouch."
He has a point. The cost per megabyte is higher, and Apple did fail to meet people's expectations.
So let's play alternate reality, shall we? What if Apple had done what everyone seemed to expect?
If Apple had released a $99 MP3 player with flash memory, they would be taking it on the chin today for dumping some of the iPod's best features. You would not be able to use it with iSync or iCal to hold notes, contacts and calendars. It would not work as an external hard drive.
Does that device sound good to you? If so, you're in luck -- you have dozens of options. But they're not iPods. They're MP3 players.
Here's what Apple actually did: they added 50% more storage space to the entry-level iPod, bumping it from 10GB to 15GB, and kept the price the same.
Then they built a completely new iPod that's significantly smaller and lighter (3.6 oz versus 5.6 oz), and added one big new feature: the ability to charge the battery with a USB 2.0 connection. That's good news for Windows users, and the entry-level iPod can't do it.
I suspect that the smaller form factor and the USB charging will be enough to sell iPod minis as quickly as Apple can make 'em.
Meanwhile, the price per megabyte of the hard drive inside the iPod mini will drop. Soon enough, tiny hard drives will be more of a commodity and less of a premium product.
We may yet see a $99 iPod from Apple. And it might be this one.
Update: (February 18) Apple comments on iPod mini pricing. Note that the price may be adjusted when the mini ships worldwide in April.
Macheads need to face reality. Apple is first and foremost in the race to make money. Anyone that believes otherwise should see me about buying a bridge in my neighborhood.
Tons of iPod Minis will be bought and the price will eventually drop. For those amongst us with the cash flow and lacking any iPod, it may make sense to buy now. It doesn't for me, but it does for many. I'm already looking forward to the NY expo (whatever it's new moniker) this summer to see how Jobs will improve on this and of course, hardware presentations.
Posted by ronn on January 8, 2004 02:13 AM | Permalink to CommentThis is how it worked on me... I was expecting a $100-$150 iPod. When he announced $249, I thought, "I might as well get a 15 GB iPod." Then I went to the Apple store and walked out with a 40GB iPod.
It came down to this: spend $100-$150 for something smaller and convenient, or just get the big one for it's massive storage size. Is it odd that the 20GB didn't look appealing to me? I don't know, but Steve can add another iPod user to the list.
Posted by Citizen Keith on January 8, 2004 12:00 PM | Permalink to Commentsteven levey in an article on MSNBC quotes Steve jobs saying“I think that one of the biggest customers for the mini is going to be current owners buying a second iPod. They’re going to have both—when I go on a trip I take my whole library with my iPod and when I go to the gym I take the mini.”
......that's streching it a little bit too far don't you think?
Posted by vivek mehta on January 8, 2004 11:19 PM | Permalink to CommentNo, I think Jobs is right -- some people will buy a second or third iPod. It's not in MY budget, but it's certainly one of the reasons the iPod mini will sell.
Posted by Sandy McMurray on January 9, 2004 02:27 AM | Permalink to CommentI think those early buyers of 1st and 2nd Gen iPods may very well buy an iPod Mini. These are the folks that don't care about money and want to garner cool points for being the first to *blah* *blah* *blah* ...
Posted by ronn on January 9, 2004 06:37 PM | Permalink to Commentthe iPod mini is to the iPod what the canon SD100 or S400 is to the A70/80 or S50 digital cameras (or substitute Sony digital cameras, camcorders, or anybody's cell phones). it is smaller, lighter, more stylish, and less capable. it may cost a little less or about the same.
the iPod mini is only lacking in one area - storage capacity. the smaller digital cameras are usually lacking in zoom capability, manual controls, and sometimes megapixel capability. the smaller cameras continue to sell because size and style does matter in a portable device (more than some other capabilities).
by the way, for $100-$150, you can at best get about 256 MB, in a package which is the same size as (or for some, even larger than) the iPod mini. for $100 more, would you want 4GB instead? some will say yes, some will say no.
Posted by kev on January 11, 2004 01:02 PM | Permalink to Comment
I think the silence had little to do with saying goodbye to the $99 iPod, and more to do with Jobs putting a number on the screen $50 more than the one that was already up. If he'd found a $249 flash player to compare the mini against (or if they'd figured out a way to release a $199 mini without losing money left and right) people would've at least clapped. If he'd matched the $199 (even with 2gig drive say) people would've screamed and whooped and taken 5 minutes to shut up.
The presentation built up all sorts of crap about dominating the high-end flash player market, but Apple went and priced themselves right out of it. The Mini's going to do great, lots of people will buy it for the smaller size and pretty colours, but it's not going to get Apple that next 30% Jobs claimed to crave so much. When they manage to get a model below $200 (which shouldn't take long, gotta have something for the next Macworld) then all that market dominance battle babble Jobs blathered will come to light.
He completely set himself up for the fall and has no one to blame for the laughably tepid response but himself.
Posted by Rob Drimmie on January 8, 2004 12:58 AM | Permalink to Comment