“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?
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