Analyst: Apple has structured their iPod pricing model in a very clever way

In response to Apple’s announcements today of a new 1GB iPod nano for US$149, the lowering of the 512MB iPod shuffle price to $69, and the number of videos sold via iTunes Store having exceeded 12 million, JupiterResearch analyst Michael Gartenberg blogs, “Good move for them as we know each price band opens up new markets for them. Even more clever is the way the pricing model is structured so if you’re looking at a 512MB shuffle, it’s tempting to be upsold to the 1GB [shuffle] model and if you’re in the market for a 1GB shuffle, just a little more gets you a [1GB] nano. Very clever. Lots of interest in video downloads as well, looks like Apple boosted their number by 50% in the last month.”

Full article here.

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Related articles:
Apple’s iPod nano, shuffle moves good news for Apple, consumers; bad news for also-rans – February 07, 2006
Apple shares rise on $149 iPod nano, $69 iPod shuffle, Showtime content news – February 07, 2006
Apple unveils new 1GB iPod nano for $149; iPod shuffle now starting at just $69 – February 07, 2006

32 Comments

  1. I say so, the competition is dropping dead really fast.

    However, my friend showed me a sat radio device with a MP3 storage capacity, he can download music from his cd collection or tape the radio for a temporary time.

    Of course the RIAA is raising hell, no money for them and the consumer gets to keep the music and of course off load it to their computer using stereo inputs.

    But much like ripping off subscription music, it takes a lot of labor, it’s just cheaper to pay the 99¢ and own it.

    The 99¢ price model was pretty smart move by Apple in more ways than one. They must have though they would be competing against subscriptions.

    However with iPod it’s still a big investment

    • Computer

    • iPod

    • Broadband Service

    • Backup DVD’s, CD’s and hard drives

    If Apple could come out with a iTunes Stereo with integrated broadband and iPod dock. The computer illiterate of the world could also get in on the act.

    Until then sat radio is their only choice.

  2. BY JOVE I THINK I GOT IT!!

    A viPod with touchpen screen and integrated iTMS!!!

    Sort of like a PDA/iPod combination!!

    Comes with a dock with modem, USB2 and/or firewire port for drive backups.

    Marcy, get Steve on the line NOW!!!

  3. MacDude,

    I would think that anyone that’s technologicaly savvy enough to want an iPod or would be willing to buy digital music from the iTunes store already has a computer….

  4. MacDude: “iTunes Stereo with integrated broadband and iPod dock.”

    Integrated broadband?? You’d still have to pay a service provider, really no different than broadband for a computer, most service providers provide a free modem.

  5. You don’t seem to understand, the majority of the public is computer illiterate.

    Circumventing the computer requirement for sampling and purchasing music not only would be cheaper, but target a larger audience of potential buyers.

    Most everyone has a phone, all they need is a Apple integrated broadband modem direct to the iTMS store only, in a dock so if it breaks, just get a new dock.

    If these people want to manage their music further than a viPod/iTMS combination can do, they can get a computer after that.

    I have so many friends that envy my iPod and want one, but are idiots when it comes to using computers.

    It’s not their fault, it’s just either too expensive or they just don’t have the time or patience to learn. Plus Windows does a good job of discouraging PC home use anyway by non-techies.

    The SONY walkman was a device anyone can use, a cd player is also such a device.

    The iPod needs to become a device anyone can use, not just us computer folks.

  6. Apple needs to strangle the competition in the crib, before the can fund their loser lawsuits. The most deadly threat to my AAPL investment is the shyster/judicial threat. In a nation with a Supreme court that crushed our property rights in the Kelo case, anything is possible.

  7. off topic, BUT……..

    This was posted on an earlier thread, but I am trying to post it on a more current one so more readers will see it.

    MacDude had mentioned TRUSTED COMPUTING (such a benign sounding name). TRUSTED COMPUTING is HARDWARE BASED, and I am VERY leary of it to say the least. I think it is an important issue that is worth checking out. Mac OR PC. Your privacy is at stake – not sure if there is anything we can do about it. If there is enough pressure to actually implement it, they will.

    Go to http://www.poweruser.tv and scroll down to the Episode 20 Podcast. Download the ‘cast fast forward to about 7:15 and have a listen (about a 15 minute segment). I don’t think you’re going to like what you hear.

    poweruser.tv is more of a Windows related Podcast, but is excellent in my opinion.

    DISCLOSURE: I have NO affiliation with poweruser.tv and am not trying to get them “hits”. There is an intelligent discussion about TRUSTED COMPUTING in the episode 20 Podcast and it is worth a listen.

    And NO I am not trying to be a fear monger. It’s information – process it as you like.

  8. MacDude.. Hate to say it but you’re wrong! 82% of all American households own a computer. It’s a fact.

    Your argument about the walkman is moot, the iPod marketshare has grown considerably faster than the Sony walkman ever did.. The Walkman success was over a span of almost 20 years, the iPod is going on year four. It’s simple enough, trust me. Mike was correct, in this day and age if someone doesn’t have a computer yet, they certainly aren’t very likely to buy a digital music player like the iPod.. No matter what you connect it to.

  9. I think MacDude is correct that Apple is looking to sell a consumer electronics product that can go directly to the iTMS, either via wifi or via cellular. I think the rumored iPod Boombox could be that product.

  10. I agree an iPod with direct access to the iTunes store would be great, I believe that this will be done via a bluetooth iPod. However, You will still need broadband access and a computer in the equation to manage and backup your library, burn/rip cds, transfer photos, contacts, calenders and anything else you wish to put on your iPod.

    My point is that the iPod is not suffering a loss of sales because non-computer users find the technology too difficult. If someone doesn’t have a computer they are not the target market for the iPod anyway.

    Question: How many Americans have broadband?

    Answer: 2 out of 5 and growing every day.. That’s right 40% of all Americans have broadband access. A staggering number when you think about it!

    http://www.businessweek.com/the_thread/techbeat/archives/2005/09/but_how_many_am.html

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