“Apple slashed the price of its hot iPod Mini digital music player Wednesday to $199 and introduced a slightly larger version for just US$50 more — moves expected to further fuel sales of the trendy gadgets… When the Mini was introduced last year at $249, the colorful device faced weeks of back orders. Apple CEO Steve Jobs says that won’t happen this time. “‘We’ve learned from our history,’ he said. The new models will be widely available this weekend, he said Wednesday. Jobs called $199 a ‘magic’ price point: ‘Getting under $200 has historically resulted in a broader market,'” NewsFactor reports.
“Tim Bajarin, an independent analyst at Creative Strategies, says Apple will sell many more iPods at the lower prices. But the bigger picture, he says, is the ‘game of chess’ Jobs is playing with competitors. ‘Every time he makes these moves with pricing, he makes it more difficult for them catch up,’ Bajarin says. Software giant Microsoft has been working with hardware manufacturers such as Creative and Rio to compete with Apple in music by offering players for songs using Microsoft copy protection. Apple’s moves make it even tougher for Microsoft, says Stephen Baker, an analyst at market research firm The NPD Group. ‘This leaves them at the mercy of their hardware partners, who are going to be forced to reduce their prices or put in additional features,'” NewsFactor reports. “Apple shares rose $2.94 Wednesday to close at $88.23.”
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