What Apple Wont Tell You: Get An iPod for $7
As a loyal follower of Apple since 1987 (I know I am a newbie compared to some but 16 years is somewhat significant) I fully support further efforts to stay on the top of the handheld digital music market with the iPod. Let’s be honest here, Apple knows that everyone lusts after the iPod and that everyone that owns one proudly listens to it. And as we have discussed in previous articles, I feel there is an unspoken comradery between iPod users. But cultural dominance is not enough. Apple is missing a golden opportunity to make the iPod the first cultural icon in handheld music since the Walkman. With a slight twist in its marketing strategy, Apple has the opportunity of putting iPods in the hands of everybody that craves it. Here’s the big idea:
With the ever-present debate on the decline of the music industry and the overpricing of CDs, Apple silenced the critics and proved people would be willing to pay for music for the right price. iTunes and the iTunes Music Store seals the deal for Mac and PC users. The only problem is the price of iPods. However, if you go to the Apple Store and pick out a 10GB iPod ($299), on the fourth screen into the checkout process you see a small text link asking if you would like to “Find out how to get your order for $7.00 per month*”
Why is the offer buried under innumerable accessories and more importantly buried to the back after the user has already decided to make the purchase? To advertise the iPod as a $7 a month agreement is incredibly lucrative and in my opinion an untapped strategy for marketing this product. Basically what Apple can say is for the price of 7 songs in the iTunes Music Store you can get the iPod, which can hold 2500 songs.
Dell has released probably a big competitor to the iPod, the Dell DJ 20 Digital Music Player and on their website, it is prominently displayed, “As low as $9/month”. If they can do it legally, Apple can too.
Don’t worry, it won’t make the iPod seem cheap, it would make the iPod the standard. Let’s go slaughter the competition Apple.
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It’s credit! Why make a big deal out of credit? People are putting it on their credit card, so they are already using credit, so why advertise AppleCredit so prominently?
Most of the people who would apply for credit at Apple to purchase an iPod are people who would not qualify for credit—too young, no credit card.
BTW, why would it be illegal?
I love the implicit “we” of the author of this piece and Apple, as if the two of them, together, are going to run out and change the world. “Let’s go slaughter the competition Apple,” he writes, as if he plays any role at all in Apple’s business. Silly.
Kenny, when I mentioned the legality of this issue I was referring to the legal rules to wo which you can advertise a product. Some laws mandate the wording in which a product is advertised.
Paul, all implications of “we” is subjective to you. I in no way meant to mislead people that I have any say in what Apple does.
The real killer strategy would be selling it for $100…
I agree with the strategy of selling iPods cheaper. It will come down to market share as has always been proven.
iPods will have to be competivtive in price to the new players coming out, Dell inparticular.
iTunes is another misguided effort. Mistake: price. $.99 for a song is a rip-off and sales prove it. The price should be $.50. Compare a digital file from iTunes to a CD.
CD: $15
iTunes Album: $10
but, iTunes has cheap distribution, no manufacturing, no art work, and sound quality is POOR (resampled, then compressed) when compared to a CD.
Truth is, the record labels will control prices. It’s a shame the industry settled on such a high price.
Cool stuff, but a bit pricey. I have the iPod, but I will not use iTunes store at unfair prices.
It would be cool for itms songs to be cheaper. However, the RIAA gets more than 80 cents out of those 99 cents (in the end of those 80 cents less than 10 flows to the artist btw). Apple is making a loss on the itms as it is. It seems unlikely apple would have been able to get a better deal. However, the simplicity of the itms is also its downfall. Apple could negotiate deals with independants (which are already in the itms) to sell their stuff cheaper, which could lead to an itms price war eventually. But because they prefer a unified pricing model this isn’t going to happen.
Even if I had access to the itms over here in Europe, I’d probably still buy mostly indie music. The RIAA needs to die, soon.
The real missing link is credit towards album purchase. If you have purchased 2 songs on an album and then you go to purchase the album you should get the original 1.98 subtracted from the purchase price. Likewise, if over time you purchase 10 songs from a 15 song album that cost 10 dollars you should get bonused the rest of the album for fulfilling the purchase price. (I know the math is screwy, but you get it)
I think Gregory makes an interesting point. I think by saying ‘from $7 per month’, a lot of people will ‘think different’ and work it into their budget. There are a lot of money conscious people out there, and there are also a lot of people who don’t like credit cards for various reasons (such as interest rates…). If people knew they could get an iPod for $7 per month, it would make a lot of people realise that it is within reach.
I have always thought Apple should reconsider the way they market their products, and price things. They really need to challenge people. Most still believe that you can’t get software for Macs, and that macs are only for people who don’t know how to use computers (because of the simple UI). Most people feel that they are way too expensive and beyond their reach. Why get a mac if you can get a pc with the same features, pay half the price and get a bunch of extras? Sure - we know why, but the general public don’t. They need to appeal to the average home user, instead of the already converted mac fans, and the arty professionals. The switcher campaign was a good start, but they need to be more agressive with advertising.
I’m in Australia. I never see ads for Apples in the newspaper,or magazines other than those for graphic designers or ‘MacWorld’. I have never in my life seen an ad for an apple product on TV. I see ads for DELLs and Pentiums everyday in printed publications, tv and radio though. It’s a wonder people know they exist. I would LOVE to see Apple become a household name, and something no family should live without.
I think that Apple has a good reason to avoid this strategy.
First of all, have you done the math on the $7 deal? MBNA America offers the deal, and it’s an incredible rip-off. They have an agreement where you only pay interest (no principal) on the loan for the first 24 months, then you pay a larger minimum payment. That means that after paying $7 for 2 years, you haven’t paid a cent on your iPod loan. Assuming you pay $10/month after 2 years, you’ll have it paid off in a total of 76 months for a total of $686.96 in payments (for a $299 ipod; the interest rate is 25%!). By the time you pay it off, the current iPod will probably be the size of a quarter, hold 1 zillion songs, cost $50, and automatically sync with the digital music player in your flying car
But much more importantly, during these six years in which you’re paying off your iPod, what happens when it breaks? the iPod has a 90-day warranty. That’s covers you for the third payment out of 76. There are going to be some very angry people who are stuck paying $7/month for the next 73 months on an iPod that doesn’t even work!
I agree that the credit option should not be advertised - it will be Apple Credit that will boost the already high-priced player to even higher levels. Great, if you like gouging your customers.
The real killer is the price. However Mr. Jobs has two reasons for not dropping that price:
1. Erases the profit margin. The larger capacity players are the bread and butter, covering the slim margins on the smaller. Apple makes money on the hardware, not anything else (unlike the PS2 model)
2. Compromised Product. Apple tends not to want to compromise on design or features, which I believe they would if they dropped the price - either in capacity, industrial design, etc.
Apple has a fine line, they are not a Sony with massive marketing or business partners to make the iPod into the next Walkman. Even Sony has failed more often than not - BetaMax, mini-cds, and many other formats and devices. Apple is the current market leader… an unfamiliar position.