“In the coming months, Apple will begin to unfurl its strategy of making a little less profit on the average iPod, but selling a lot more of them. A Hewlett-Packard branded version of the iPod is due in a few weeks, and HP will pocket some of the profit from that version. The new iPod mini will bring Apple less profit per sale than previous iPod models, because its parts make up a larger portion of its $249 price tag,” Jon Fortt reports for The Mercury News.
“Success for Apple will mean selling so many of the music players that the slimmer profits don’t matter, and paying lower prices for the iPod’s building blocks. Apple will begin to show success or failure in the spring,” Fortt reports. “So far, Apple has struggled to make enough iPod minis to meet demand, though that is common for a new product. And as for wrangling lower prices out of its parts suppliers — Richard Doherty, director of research for Envisioneering Group, doesn’t think that will be a problem for Apple’s chief executive.”
Fortt reports, “‘There’s the laws of economics and there’s the laws of Steve Jobs negotiation,’ Doherty said. ‘He has been known to get components at cost, or sometimes below cost.'”
Full article here.