The Motley Fool: SanDisk’s new MP3 players vs. Apple iPod juggernaut

“Here we go again — another challenger to Apple’s seemingly impenetrable iPod franchise,” Tim Beyers writes for The Motley Fool. “On Monday, SanDisk unveiled a new eight-gigabyte music player for roughly $250, while lowering prices on other models. That’s a potentially serious blow to Apple, whose iPod nano carries a maximum four gigabytes of storage and sells for $249.”

MacDailyNews Take: Oh, yes, potentially serious, if Apple ceased all R&D over a year ago and plans no new products in the future.

Beyers continues, “SanDisk’s assault on the market has thus far earned it a 10% share of the music-player market, according to press reports. Cost advantages could increase its share, but I doubt many gains will come from Apple. SanDisk hasn’t eliminated the iPod maker’s core advantage: the seamless tie between the iPod and iTunes.”

Beyers writes, “iTunes is, in fact, essential. Other devices can’t access the store for downloading; its unique content provides a moat around the iPod, funded by Apple’s blossoming free cash flow. Expect Apple’s advantage to increase even further if the Mac maker finds a way to license movies for downloading, which I expect it will.”

Full article here.

With the opposing viewpoint, Jack Uldrich writes for The Motley Fool, “Yesterday, [SanDisk] unveiled a new, higher-end MP3 player, the Sansa e280, with eight gigabytes of flash memory storage — enough for roughly 2,000 songs. SanDisk also reported that it’s working on an MP3 player that will cost less than $100.”

“The Sansa e280 will be priced at $249.99, a price point meant to compete directly with Apple’s iPod nano. The lower-cost player will target new users at the lower end of the consumer market,” Uldrich writes. “I think SanDisk’s announcement poses a danger to Apple. To date, its increase in market share has not come at Apple’s expense — the company had 75% of the market share for MP3 players in 2005, and has the same amount today. But that could be about to change.”

“SanDisk’s latest efforts could erode Apple’s lead on two fronts. By offering twice as much memory at the same price, the Sansa e280 should compare quite favorably to the 4GB iPod nano. This could cause a number of customers looking to upgrade to switch to SanDisk. Secondly, the lower-end $100 version (which will probably also possess more memory than Apple’s popular, low-cost iPod Shuffle) could weaken Apple’s ability to reach new and younger customers. Often, these new consumers are most easily converted into higher-end customers as they age and mature,” Uldrich writes. “In addition to these two possibilities, the threat of a price war could also erode Apple’s margins.”

Full article here.

[Thanks to MacDailyNews Reader “Shieldzee” for the heads up.]
Being big fans of logic, let’s first wait to see what Apple debuts for the holiday season, shall we?

Related articles:
SanDisk intros 8GB flash-based digital music player – August 21, 2006
NPD: Apple retains huge lead with 75.6% share of U.S. music player market – August 17, 2006

23 Comments

  1. As I said yesterday, look for Apple to soon update the nano to 2/4/8GB models and leave the current price points the same. That would eliminate any price advantage that SanDisk may briefly have well before the holiday shopping season even gets here.

  2. More fluff. Other players have been offering more storage at the same or cheaper price point than Apple for a while. This is nothing new. Analysts and journalists just need something to say other than, “the iPod is great.”

  3. It’s clear that the makers of so-called “iPod killers” still do not get it.

    It’s just like the jibe Bill Gates made about the original bubble iMacs when sales were in a frenzy. “Oh, colors – that’s SOOO hard to do [paraphrased],” he said sarcastically.

    To all the likes of Bill Gates and PC makers, the iMacs were popular simply because Apple had slapped a coat of paint on. Oh, let’s do the same thing – slap a coat of paint on and make it all shiny! But that’s the kind of deep-level reasoning (sarcasm) you expect from people who don’t value integrated top-to-bottom design.

    So iPod wannabe-killers are essentially doing the same thing. Let’s slap on more capacity! Let’s do video! Let’s add FM! Let’s add more plastic shiny buttons! Lower the price even more! Add wireless! That will really kill the iPod!

    Yet thoughout all this, it seems that they are so blinded by own neuroses that they can’t see the simple words that have been a part of every iPod commercial to date.

    iPod + iTunes

    That pretty much says it all.

  4. The thing is that sure this may give SanDisk more sales, maybe even a couple of percent market share. So what? That’s barely a dent, even then all Apple has to do is the same. Cut prices a bit, add more space and instantly they’re back to where they were.

  5. Look for Apple to make a “Checkmate” move like reduce the 30G video iPod to $250.

    If you were a consumer which would you choose, 8G Sandisk or 30G video iPod?

    I know, it’s all about flash memory but feature hungry consumers would scarf up 30G iPods in droves since they like the larger advertised capacity and video playback too.

    So what if the Sandisk has a tuner. The beauty of iPod is, you’ve got all your music with you and NO ADVERTISING. Once you experience how amazing ad free music and entertainment truely is you’ll never want to turn on a tuner again.

  6. I like how these writers can’t see their nose in front of their face. Clearly, they know Apple is soon to launch new iPod product, yet they do not even dare to speculate about this.

    BUT

    They do speculate as to how SanDisk could really crush Apple.

    So the writer speculates on who SanDisk will erode Apple, but refuse to speculate how Apple is about to launch a new Nano?…

    Can anyone else see the spin in this?

    Apple will launch 8 GB nano’s, with an ever so slightly larger and higher resolution screen, capable of video playback – for the same prices SanDisk it toughting.

    Lastly, Apple has iTunes – DUH. Game over SanDisk, but thanks for playing and eating up Creative and Sony’s market share.

    ~Steven

  7. the bottom 20% of the market place is getting damned crowded, I smell a blood letting, goodbye……..unCreative Labs ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

  8. So long as all those other manufacturers continue to ghettoize themselves by only working on a single platform (Windows Media Player) they’re never getting a dime from me…why should I consider buying a player that won’t even work on my computer?

    MDN magic word “rate” as in “Yet another second-rate iPod competitor.”

  9. The iPod is like OMG so doomz0red articles stopped for awhile as everyone realized that it wasn’t just a fad but recently they have been all over the place. From the laughable idea that YouTubes non portable ad supported music video strategy is going to kill iTunes (it won’t even kill music video sales which can’t be more than a couple percent of total sales) to this current BS about SanDisk it shows that people don’t get it. The iPod brand is very strong and people like their players. They are unlikely to switch any time soon. A competitor having a higher capacity for a few days, weeks even a few months isn’t going to change the tide. If SanDsk can consistently stay leaps ahead of Apple in capacity it might matter eventually but Apple will catch up.

    Maybe the upswing in MS trying to make self fulfilling prophecies. Maybe if comsumers think iTunes is going to fall they will get in line to be Zunes. Doubt it but it’s a good effort.

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