Korean MP3 War: Apple cuts iPod prices in Korea only, goes after domestic companies

“Apple Computer raised the stakes in the local MP3 player market by announcing yesterday that it will lower the price of its iPod only in Korea. The discounts are only for Apple’s hard-disk drive music players and exclude the iPod Shuffle, its cheaper flash-memory music player, which began sales here yesterday,” Wohn Dong-hee reports for The Joong Ang Daily. “Local representatives even asked the media to ‘keep quiet’ about the price cuts, saying that headquarters feared opposition from other Asian countries.”

“Kim Ji-hyun, a spokesperson for Apple Korea, said that the company wants to change people’s perception of the brand as an expensive one,” Wohn Dong-hee reports. “Lower prices of iPods give Apple a competitive edge in both flash-memory and hard-disk drive digital music player markets. At 125,400 won ($122), the 512-megabyte model of the iPod Shuffle is less than Reigncom’s 256-MB model, which was only recently lowered from 187,000 won to 149,000 won. A 20-gigabyte iPod now costs 363,000 won, instead of 418,000 won. The iRiver hard-disk model has only 5 GB of memory for the same price.”

Wohn Dong-hee reports, “But such a comparison is not fair, said Reigncom spokesman Kim Dong-hwan. ‘Our [iRiver] players have other functions such as radio and voice recording. It’s like comparing a huge van to a tiny sports car,’ he said. Although domestic companies claim that they are not worried, they admit that Apple’s presence is pressing them to lower costs as well. Reigncom lowered its hard-disk drive player prices last week; Geowon is doing the same for its flash-memory players. Meanwhile, they are looking at foreign markets, saying that the domestic market for MP3 players is already on the verge of saturation.”

Full article here.

MacDailyNews Take: “It’s like comparing a huge van to a tiny sports car.” Yes, sir, it is like that exactly. Hey, how do you say “it’s all over, boys” in Korean?

Related MacDailyNews articles:
iRiver bows to Apple’s iPod shuffle, slashes MP3 flash-based player prices up to 25 percent – January 31, 2005
iRiver hires U.S. porn starlet Jenna Jameson to promote portable media players – January 18, 2005
Portable digital device maker iRiver bites into Apple (literally) via website – January 18, 2005

19 Comments

  1. No, its like comparing a small sports car with leather seats, poor performance and high maintenance,

    to

    a small sports car with well-made cloth seats, drop-dead good looks, stellar performance and exceptional reliablity. Not everyone wants leather or needs leather.

  2. Let’s not use a leadership position to crush the competition. I hope this doesn’t backfire, targeting a specific market to “drive” out the competition by lowering prices.

    magic word using, as in unfair trade practices

  3. CitizenX

    What would you say constitutes unfair trade practices?

    Apple is lowering prices. They never said they were going to sell the iPods below cost. The margin is probably high enough that they can take a few percent.

    Think about it, if the OEM contractors that build the ‘pods are in Asia, (they are) the shipping cost would be much lower per unit. The lowered shipping cost (+ taxes, import/ export duties and etc) would allow them to cut the price reletive to US prices, and still keep a high profit margin.

    Happy investors, happy end users, happy Apple. A win-win for everyone. (except Reincom)

    Magic woed = cost No joke. MDN, thats just paranormal

  4. Darknite

    One of these days the iTunes/iPod anti-competitive charges will stick in some market, why throw fuel on the fire with lowering prices in one market. The new pricing, in only one country makes in not a cost of production issue, otherwise the price cuts will go across the board in all countries.

    I made no judgement as to whether it is deserved, etc., but it has the potential to threaten Korean based businesses.

  5. iRiver is based in Korea and that’s what they deserve for mouthing off in the press.

    iRiver and Creative is Apples main problems.

    Everyone knows not to buy a Rio, since you continuously have to slam them on a table to get them to work.

  6. Please, CitizenX, “unfair trade practices” is a socialist fabrication. If Apple was selling a product for less than cost, the competition shouldn’t be whining – they should be buying those items and re-selling them in another market where Apple hasn’t cut prices – and undersell Apple with Apple’s own product.

  7. Yeow misanthrope. Obviously the fact that Apple has faced and is facing 3 or 4 unfair practices charges is lost on you. With the stakes as high as they are, some vested interest may want to protect their territory. To deny that reflects your utopian post.

    Why can’t we all just get along and sell iPods. Maybe M$ should just give up their grand dreams of locking us into Janus or maybe just give up all together and give back the shareholders money.

    Fact is in this market they have cut prices to undermine the competition. Whether they have broken the law, I leave to the numerous governmental bodies that decide these things. I only mentioned that to some it may look like they are playing “unfair”.

  8. Well, if the Korean Government feels Apple’s price cut was unfair, or can prove that they are selling them below cost, they can do what the US FTC has done when Korean memory maker Hynix started dumping RAM at way below cost. Put a 200-300% tarif on iPods imported into Korea.

    A manufacture price reduction in an area isn’t an unfair trade practice providing that they don’t sell below cost

    As for the suit in the US, the guy who is sueing Apple because iTunes Music Store is the only way he can get music for his iPod won’t hold much water. Apple’s attorneys only need to show that you can rip a CD into iTunes and the guy can get music for his iPod. Apple also has a converter program that will convert WMA files to AAC.

    The other so called legal challenges to date have been the Real CEO crying that his company is going out of business.

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