First off, I apologize if the following discussion has already happened in other forum threads; I haven't had the time to browse all 2 billion + postings on the iPod.
However, I don't see a forum specifically dedicated to this topic, so here it is!
When I first saw the price of the iPod, it floored me with disappointment. Heck, I could get a 20gig nomad for $399! That definitely shot it clear out of impulse buy range. As one of my coworkers said, "I bet they sell four." One word leapt to my mind: Cube. Once again, it appears that Apple had produced an ultra-nifty, not quite up to snuff digital device that everyone wanted but no one could afford.
As I thought about it more, though, I started to realize that there were a few differences. First, regardless of bang-for-the-buck between the two products, the iPod costs $399, not $1799. Although still expensive, four hundred bucks is definitely more accessable than two grand. Second, the Cube was released after christmas. The iPod is here just in time for christmas, and should be in stores in time for that oh-so-critical day after thanksgiving shopping spree.
Christmas is an interesting time of the year. Its' a time when it's a little easier to splurge a bit on the people who are nearest and dearest to us. When I buy a Christmas present for my wife, I want to give the impression that I've gone the extra mile, made a bit of a sacrifice so that she can have something nice. (Say what you will about the true meaning of Christmas, but I think that this is the case for many) The iPod is a premium product, no doubt about it. It's pretty safe to say that it's the best MP3 player on the market for those who can use it. Thus, the premium price. I think the iPod fills that nitch nicely. Nomad jukebox = pearl earings, iPod = diamond ring.
Moving past the cube comparison, I think when people see the specs, then the price, they do a raw calculation and come up with the fact that, yes, gig for gig, the iPod isn't a very high value product. However, I think the fact that Apple managed to cram a 10 hour battery, headphone amp, mp3 decoder, firewire controller, high quality LCD, AND the 5 gig hard drive into a device the size of a pack of Altoids is a more impressive feat than many are giving them credit for. I don't think people (myself included) can even begin to appreciate the craftsmanship of the iPod until they can touch it themselves. Check out Mike Wiley's preview at
gear.ign.com. Mike Wiley is usually extremely sensitive about pricing issues, but he hardly even mentions it. Why? Because he got the opportunity to play with one.
After the holiday season is when we might see some changes in pricing and incentives. The components in the iPod, especially the hard drive, are expensive. (VST is selling the firefly, which is basically the same thing as the iPod minus MP3 player for $399 too!) As prices for components decline, we might expect to see a $50 price drop on the iPod. However, the real incentive behind the digital hub campaign is to move macs off the shelves, and I'll bet Apple would be willing to take a $50 loss on an iPod if that means they could make a $300 profit on a mac. I think we can expect to see iPod rebates, scaling with the level of your system. (i.e.- $50 rebate for your $799 iMac, $150 rebate for your $3499 Power Mac)
One thing to keep in mind when talking about Apple: they aren't about losing money. When Steve took the reigns, they began slashing prices agressively and saving money where they could get away with it. (Remember when tech support used to be free?) The only fiasco counter to the trend was, of course, the cube. However, the iPod isn't just an Apple product; it's an Apple product designed to sell other Apple products, and that's an important distinction to make. Right now, the market is weak, but Apple is strong because they are capable of making have-to-have devices. There are other factors, but this is one of them. I think Apple recognizes this rare opportunity to capitalize on the misfortunes of others to gain market share and to make a profit doing it. Although it doesn't sound like it, the iPod might be a sound and reasoned move after all. We'll just have to wait and see!
(Note: I am definitely NOT an economist, although I like to think that I've got a basic grasp of the concepts. Nevertheless, I'm sure I've made some gross assumptions and generalizations in my argument. Point these out! Just please PLEASE keep it civil and refrain from personal attacks. Thanks!)
[ 10-24-2001: Message edited by: Aykew ]
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