The iPod Mini Is Not Over Priced
After watching the announcement of the iPod mini, and Steve’s uttering “One more thing…” at the end revealing the 5 colors, I was struck by only one thing: why oh why isn’t it $50 cheaper?
Sure the industrial design is once again, quintessential Jonathan Ive (I think we should really start giving Ive credit for hardware design, and not roll the kudos up to Apple Inc.) Sure the size is incredibly “mini.” Sure the solid-state/buttons are slick.
I believe, initial reaction aside, that compared to other devices of this caliber and function: namely high capacity Flash memory players and Sony minidisc players it is very price competitive. In fact a point made in the Keynote was lost on many: Apple is going after the $200 market, and convincing those buyers that $50 dollars more will buy you a whole lot more. Most commentators are blinded by the fact the 15GB iPod is $50 more than the iPod Mini, odd because Steve Jobs never made the comparison (smartly) and specifically pointed to the lower priced market segment. By all rights the 15GB is a full $100 more than the market Apple is trying to mine.
Why are we so unconvinced by Apple’s market and pricing research team? So easily we forget that the original iPod was roundly dismissed as “too expensive” at its introduction. That, while really well designed and unique, it was just way too high of a price. The original iMac befell the same criticism.
So the iPod Mini has the same criticisms and the same lauded design as the original iPod and iMac in the brief firestorm of comments across the web. The question is, will it be as successful?
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I think it’s way too much. Steve even referenced players that people buy for 100 bucks. Why not introduce a 2 gig model for 149? Or better yet, why not ignore the whole mini thing and just sell the original iPod for 149. Seems to me like everyone at Apple got excited over the mini form factor, and forgot the goal was to make a cheaper iPod, not just a smaller one.
The essential fact remains: for just $50 extra you get an additional 11GB of storage. That is huge and has by now been noted just about everywhere (see http://www.macworld.com/weblogs/mac911/) Budget-conscious people won’t buy the iPod mini, fools will, and I’m guessing that is the market-segment Apple is aiming for. After all, why should Dell get all the fools?
I stand by Apple on this one. I think that people just are missing the point: Mac fans want a cheap iPod. Not a iPod Mini. Apple obviously sees a serious market for a full-featured, small dimension, digital music player.
Apple may bring to market a cheap iPod. But for what? It will only endanger the current strong brand of the iPod. It will be cheap, less features, and be quickly copied by Dell, HP, Sony, and all other commodity hardware vendors.
I believe Apple’s research has recognized that as a company they will never be able to go toe to toe with commodity hardware. They don’t want to, let alone be able to.
Why give consumers sub-par products in the first place? When Apple can produce a $150 player with appropriate functionality and design - it will come out.
oops, let me clarify the first statement I made: Mac fans may want a cheap iPod, but buyers not yet in the Apple/iPod fold is where Apple is shooting - and they seem to be confident there is a substantial market there. They don’t believe that defined market wants a cheap iPod - they want a better digital player than what is currently offered below $250 dollars.
Someday, when prices come down, Apple will more than likely bring out a cheap iPod.
Of note is that Apple made the iSight - comparable in price to other high end webcams, but with better features. The iPod Mini is entirely self-consistent with all other Apple hardware that it hard to see why everyone is surprised it is not.
BMW has three main lines of sedans. In the last few years, they completely redesigned the 5-series and 7-series.
Suddenly, BMW comes out with a newly redesigned, very sex 3-series car, but instead of selling it for $30,000, they announce they will be selling the new 3-series for just $15,000.
What do you think will happen?
One, BMW will sell a lot of 3-series sedans. And two, sales of the 5-series and 7-series will be decimated. At the end of it all, will increased sales of the $15,000 3-series make up for the revenues and profits lost by plummeting sales of the 5 and 7-series? Probably not.
Apple is in the same situation with the iPod mini. The problem right now is that the mini can do EVERYTHING that the bigger siblings can. So the only differentiation is how many gigs and the physical form factor. A $199 mini at this point in time would absolutely decimate sales of the 15, 20, and 40 GB units. Because plenty of people will decide, “Well, 4 gigabytes isn’t nearly as much as 15, but I can live with it for a measly $199.”
As a businessperson, why would you destroy your own product line so? People are criticizing the mini pricing because they are taking a consumer point of view, not a business pont of view. They don’t like the $249 price because consumers always want things to be cheaper; but this line of thinking ignores the fact that at that price, the value of the bigger iPods are preserved.
The situation will change when Apple introduces the 4th generation iPods 3-6 months from now. The 4th gen will feature capabilities that the mini won’t have. Things like a color LCD. The ability to sync with iPhoto and play videos.
At that point, there is enough “value add” on the full size iPods that Apple can drop the price of the mini to $199 without worrying about mini sales sweeping up sales of the much more expensive bigger units.
For most people, $100 isn’t worth having something that simply has more gigs and is bigger to boot. But a video iPod will allow Apple to continue to sell to very high-end while at the same time, forging their way into the sub-$200 market. The conditions just doesn’t exist yet to support anything cheaper than a $249 mini.
And I mean, come on. The first iPod debuted at $399. Did it stay at $399? No, Apple quickly expanded the line and made the entry level model $299. Why will the mini not follow this same pattern? Seems like the same non-forward looking gloom-and-doom that surrounded the iPod launch is now surrounding the iPod mini, all because of false expectations created by rumor sites.
Two things come to mind, actually three:
1. People are forgetting that they’re not just getting an MP3 player (a la iRoq), they’re also getting a fully functional Firewire/USB 2 hard drive ... and all that entails. Look at comperable prices on USB flash keys and you’ll see what I mean. (price, etc.)
2. Many, many, many manufacturers tier their products so that the low end is closer to the bottom of the high end. Car manufacturers do this all the time. The fully loaded Focus Sport just overlaps the bottom end Mustang. Look at other auto companies and you’ll find the same. It’s how they get people who are teetering on the edge to say “what the hell” and buy up.
3. People who like the size, weight and color and want something just a little different that will make other ‘Pod owners a twinge jealous won’t buy up. But now they have an alternative.
4. The price will come down, fast. Regular iPod sales are still hot. In fact, they’re still a pain to get. This does two things: doesn’t cannabilize sales of the big ‘Pod, and provides a better alternative to someone who might have gotten something else instead. Did I mention the price will come down? ‘Pod prices themselves have gone through a bigger/cheaper cycle depending on the price v. size cycle that the drive manufacturer is in - not because of Apple.
oops. that was four, huh?
By the way, I agree with Paul. It’s likely they couldn’t get the price down without a redesign, and that the big ‘Pod will see some expanded functionality and design changes.
I’d also like to point out that whenever you products that are similar, but appeal to different sensiblities, and are close in price, you alway get this kind of pooh-poohing of what’s just a choice of taste/lifestyle. (good example: the closely prices BMW 3 series vs. the Impala SS, both similarly priced. Many Beemer snobs looked down their noses, but I’ll bet anything Chevy sold more of them than BMW sold 3’s that year. And the SS was essentially a modified design going back to the ‘50s Bel Air. You might say “well they’re dumb”, my guess is you’ve never driven an SS. Again, it’s simply a matter of taste. Like the mini’s.
If you check the Educational Store, the mini’s are 30 bucks cheaper. There’s room to shave. Remember folks, they are trying to make money. And not everyone needs 15GB. There’s an awful lot of happy 5GB iPod 1 owners out there.
The people who are outraged are geeks. And geeks, who take the time to write about apple’s latest product offerings and whether the price point is proper (like me, here), really care about things like capacity. To them (us), yes it seems outrageous that you would pay $250 for 4 gigs and $300 for 15.
But, to most people 4 gigs is enough. I assure you that the current style-oriented iPod owners (who Apple is obviously targeting with the mini) did not do a price vs. capacity analysis when they decided to buy the original iPod. It was cool, other people had one, it was small, it held a “bunch” of music. Well… the mini is cooler, it’s smaller, it still holds a “bunch” of music, and… it’s a little cheaper.
All this commentary is meaningful—it shows that no geeks will be buying iPod minis. But who cares?
Nathan is right on target!
I switched to Mac last October, and would have done it sooner had my Mac-owning friends not constantly moaned about how expensive Macs were compared to wintel machines.
Fortunately, after looking at an underwhelming assortment of thin-and-light wintel notebooks at a Best Buy in a mall, I happened to walk past an Apple Store. There it was… thin, light, full-featured. The 12” PowerBook. And, it cost the same as comparable, yet inferior, wintel notebooks I had just looked at! I proudly told my Mac friends I wanted a thin, light and full-featured notebook and was considering a PowerBook and they all told me that PowerBooks were overpriced… G5’s were a better value!
I didn’t want or need a desktop. I didn’t want or need a G5. I didn’t want or need to spend MORE money. Apple would have lost a sale due to its “Mac fans” had it not been for my own visit to an Apple Store.
My point is, Mac fans are at it again. Bemoaning the “high price” of the iPod mini.
Meanwhile, Apple has given consumers (many who’ve never used an Apple product) the choice of not having to pay for storage space that won’t be used. So many Mac fans will tell you that a 4GB iPod mini at $249 is a bad deal because a 15GB iPod can be had for $299. That kind of flawed reasoning leads one to the conclusion that a 15GB iPod at $299 is a bad deal because a 40GB iPod can be had for only $200 more.
More power to Apple for reaching out to an untapped market with the iPod mini. More power to Apple for giving consumers choices. And, shame on Mac fans for having mislead those of us in the wintel world into thinking that Macs were overpriced.
It’s over-priced to me. One way is the price to capacity ratio. The other is that $250 doesn’t SEEM cheap. Things clearly over $100 are purchases not many can get on a whim. So if we’re saving up to get an iPod, may as well save up a little bit more and get an iPod that can store a bazillion more songs.