Marketing expert: iPod will face pricing challenge, ‘Apple has a long history of blowing it’

“‘It’s unusual for a product like this to cross all the gender and age lines right away, but iPod is doing both,’ says Seth Godin, author of several best-selling books on marketing such as ‘Unleashing the Ideavirus.’ ‘It’s like the whole culture was ready for this – we were ready to change the way we listen to music,'” Phil Kloer reports for The Atlanta Journal-Constitution.

“Apple launched the iPod in November 2001, with a unit that held 1,000 songs and cost $400. (You can now store 10,000 songs for that price.) It sold rather slowly at first, and really started building critical mass last year. One of the big boosts was Apple launching its iTunes online music download store for PC users (as opposed to just Mac users). Apple has acknowledged it doesn’t make any money off iTunes but uses it to sell highly profitable iPods,” Kloer reports.

“It took the rest of the consumer electronics business awhile to catch up, but recently there have been lots of MP3 players similar to the iPod hitting the market, sometimes for less money. So far nothing else has that iconic status, but if prices fall on competing models and Apple tries to keep its prices high, Godin says consumers will go for the cheaper models,” Kloer reports. “‘Apple has a long history of blowing it,’ he says. ‘They invented the personal computer and figured out the laptop,’ but now have only a small fraction of those markets. ‘The juice,’ he says, ‘is in reducing the price and making it completely ubiquitous.'”

“That day may be coming, whether it’s with the iPod as a brand or a bunch of generic 10,000-song MP3 players. Eventually, the device will probably become like cellphones and e-mail accounts, no longer the plaything of techno-pioneers,” Kloer reports.

Full article here.

43 Comments

  1. I disagree…..obviosly price is not an objective at this time. It’s about the experience…and people like to be in the “in” crowd. That is owing an iPod, it’s hip to carry one. And Apple is NOT the same Apple 10 years ago. They are much smarter now.

  2. Apple may have invented the personal computer, but IBM legitimized the business computer – and that made all the difference.

    Apple may have made pricing mistakes in the past, but it doesn’t appear to be the case with the iPod. It is priced right in there with comparable products. Their biggest challenge appears to be dealing with the whole file format issue. This remains to be seen over the coming months/years.

  3. giofoto, that’s not completely true. Yes, the iPod has been sold to the “in” crowd, and to people like myself who really value music.

    But there is still a large–no, very large part of the population that like music but won’t pay over $100 for a portable music player. This is the market that Apple and the other companies have really failed to penetrate as of yet.

    This is no different than the computer model. When computers cost at least $2000 years ago, only a small segement of the population figured it was worth buying. Now that they are so cheap, everyone can think of a killer app they can use a computer for.

    Apple needs to capture the majority of market share in order to dictate standards (hopefully open ones like AAC) and continue making profits. In short, I think the author is correct in assuming that if Apple does not address the low-cost market fairly soon, they they will lose huge market share as the low-cost market comprises the majority of the portable music device population.

  4. Damn, I didn’t know my aunt was such a techno-pioneer!… ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  5. I somewhat agree with the article that in the long run, the iPod may be irrelevant. Down the road, digital music players will be like portable cd players. You can get those now in the checkout lines at your grocery store. Apple will need to license Fairplay out to other players at some point. Thats where the money will be.

  6. Good points Macfather. It is why we were so dissapointed with the mini pricing. It may sound good that Apple has 50% of the market, but what that statistic fails to reveal is currently the “market” isnt very big – most people will not pay $250 for a portable music player. The real mass market is still out there, waiting for a device in the sub $100-150 price range.

    Apple does seem to suffer somewhat unfairly and certainly disproportionately for the mistakes of the past. It reallly needs a big head turning success to kick those memories into touch – the iPod is almost there, its just priced too high.

  7. Before any flaming begins based on the title MDN gives this, people might want to read the original article. Better than 90% of the article is about how people use their iPods … it’s a lifestyles article.

  8. john: sure, but much of the flaming I’ve seen has been deserved ;^)

    If there was anything unreasonable in my post, it was that I would expect people to RTFA….

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