Comments on: MWSF 2004 http://wordparts.com/2004/01/08/mwsf-2004/ Fri, 21 Nov 2008 19:20:53 +0000 http://wordpress.org/?v=2.0 by: adam http://wordparts.com/2004/01/08/mwsf-2004/#comment-170 Tue, 30 Nov 1999 00:00:00 +0000 http://wordparts.com/2004/01/08/mwsf-2004/#comment-170 Here's another point about the iPod mini - if they priced it any lower than $249, it would remove some incentive (not to mention profits) to buy the $499 iPod. If you look at Apple products with multiple price points (powerbooks, G5s, iPods) you will almost always see this: Top of the line product costs $x Bottom line product costs $1/2x So the cost of the iPod mini is just keeping with Apple's previous pricing strategy. I think Apple is going to keep the $250-$500 cost structure for as long as they can. I don't expect them to drop the price below $249, instead they'll just release say an 8-10GB mini for the same price 6-12 months from now. Here’s another point about the iPod mini - if they priced it any lower than $249, it would remove some incentive (not to mention profits) to buy the $499 iPod. If you look at Apple products with multiple price points (powerbooks, G5s, iPods) you will almost always see this:
Top of the line product costs $x
Bottom line product costs $1/2x

So the cost of the iPod mini is just keeping with Apple’s previous pricing strategy. I think Apple is going to keep the $250-$500 cost structure for as long as they can. I don’t expect them to drop the price below $249, instead they’ll just release say an 8-10GB mini for the same price 6-12 months from now.

]]> by: Grady Haynes http://wordparts.com/2004/01/08/mwsf-2004/#comment-171 Tue, 30 Nov 1999 00:00:00 +0000 http://wordparts.com/2004/01/08/mwsf-2004/#comment-171 I definitely agree that the mini is partially an upsell. At the movie theater, you could buy a 16 oz. soda for $3.49, why not buy the 64 oz. for $4.99?? Apple's not shedding any tears if you decide to buy the regular iPod. Apple has a long history of bringing out products at a higher price, especially those that involve new technology/components, and then dropping them after a few months. The most apropos example I can think of is the original iPod which they dropped from $399 to $299 when they released higher capacity models. The Cube dropped from $1799 to $1299 over its lifetime, I believe -- though that was due to poor sales. I'm sure they know that the iPod mini would appeal to a much wider group of people at $199 -- that seems to be the number that most everyone is throwing out as "I'd buy it if it were just $x". My guess is that they know that and want to get it there soon (much of the reason for iPod mini is likely long-term market share rather than immediate profit), but there's no reason to do that until the component prices drop and they've gotten the extra $50 of profit out of the early adopters. And that's where most commentators and I differ. I think there will be plenty of buyers sustaining $249 iPod mini sales for at least the few months until they drop the price to $199. Time will tell; thanks for the comments. I definitely agree that the mini is partially an upsell. At the movie theater, you could buy a 16 oz. soda for $3.49, why not buy the 64 oz. for $4.99?? Apple’s not shedding any tears if you decide to buy the regular iPod.

Apple has a long history of bringing out products at a higher price, especially those that involve new technology/components, and then dropping them after a few months. The most apropos example I can think of is the original iPod which they dropped from $399 to $299 when they released higher capacity models.

The Cube dropped from $1799 to $1299 over its lifetime, I believe — though that was due to poor sales.

I’m sure they know that the iPod mini would appeal to a much wider group of people at $199 — that seems to be the number that most everyone is throwing out as “I’d buy it if it were just $x”. My guess is that they know that and want to get it there soon (much of the reason for iPod mini is likely long-term market share rather than immediate profit), but there’s no reason to do that until the component prices drop and they’ve gotten the extra $50 of profit out of the early adopters. And that’s where most commentators and I differ. I think there will be plenty of buyers sustaining $249 iPod mini sales for at least the few months until they drop the price to $199.

Time will tell; thanks for the comments.

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