Robert W. Baird & Co. is reporting that their “checks indicate very weak NOR flash-memory bookings for the month of December, in sharp contrast with the third quarter, and suggesting a drastic reduction in lead times,” Tristan Gerra, Dylan C. Moore and Scott Hirleman report for Barrons.
“NOR flash trends tend to correlate with other commodity products such as low-end analog and 8-bit microcontrollers. Several semiconductor companies are already implementing tight expenses control and/or hiring freezes, also per our checks,” Gerra, Moore and Hirleman report. “In NAND flash, we are getting additional feedback about weak iPod 8-gigbyte nano sales, suggesting further pricing weakness in November. Following our estimate reductions on 11 semiconductor names last Tuesday, we are today downgrading STMicroelectronics shares to Neutral from Outperform and reducing our estimates and price target on SanDisk.”
Full article (subscription required) here.
As many expected, and most probably as Apple intended (due to possible 8GB flash memory supply constraints and/or enticing people to get a video-capable iPod unit), $249 for an 8GB iPod nano vs. $249 for a 30GB iPod is a perfect recipe for cannibalization of 8GB iPod nano units by 30GB iPods.
[UPDATE: 1:04pm EST: Added “due to possible 8GB flash memory supply constraints and/or enticing people to get a video-capable iPod unit” to “Take.”]
MDN,
I don’t get your take. Why would Apple have wanted to cannibalize sales of 8GB Nanos? Wouldn’t they intend to price both the 30B iPod and 8GB Nano so that they both sell?
I’d bet on a price reduction on the 8 GB nanos after Christmas. It needs to find a more attractive price point.
I bought a 30gb instead of the 8gb black for this very reason. My intention was to buy a nano though.
“Oh my god. What can it be? We’re all doomed! Who’s flying this thing!?”
(deadpan)
“Oh right, that would be me. Back to work.”
MDN take is right.
Managing inventories (and planning proper shipments) of multiple colors of the same device is a pain.
Apple limits the color choices to the middle tier. Color, not price or capacity, tends to be (believe it or not) the motivating factor for those buying into the mini/nano product tier.
Crafting color choice to be limited to 4GB does several things. It makes the 4GB choice the “sensible” choice, both capacity and price-wise.
People don’t “get” the capacity number, be it stated in GB or number of songs. Most people can’t do the division of 12 (songs per CD average) divided by 1000 to see whether their CD collection will fit.
Buying the middle option is both reasonable in terms of capacity (it seems a “safe/sane” amount with room to grow) but they also get to avoid feeling like a cheap-ass (technical term) by only buying the lower priced one.
Those that either need the 8GB for storage (these people “get” capacity numbers, btw) or want the status of having the most expensive/coolest/best/black option will gladly pay the premium price for it.
It’s an artform at this point, and Apple has it down pat.
Jobs/Wash take is the best. Apple knows what the hell they’re doing.
Not worried at all.
Ecksley.
I don’t think anyone here is expressing worry. In fact, everyone seems to agree that this was to be expected. Still, the 8 GB player should drop in price soon after Christmas.
PS – Yeah, I am aware its really going out on a limb. Wow, technology drops in price?! You don’t say, duper.
I want the 8gb nano. 3 reasons: flash memory won’t skip when I’m running hard, 8gb is plenty of room for the music I need for running, it’s black.
Too bad funds are a little short after spending so much on new car, computer and lenses. New iPod was on the back of the priority list.
I bought a black nano because
A. They are so sexy and
B. I don’t want a 5.5G video, I want a widescreen 6g video.
So I’ll wait for that one.
-c
MW: ‘final’ (that’s all I have to say about that)
The sweetspot is the 4GB that’s why it comes in the range of colours. The 2GB is the cheap alterantive the black the expensive.
BTW those that want a cheaper nano…
It isn’t about price, it’s about price point.
Early 2005:
iPod: [ $299 | $349 | $449 ]
iPod mini: [ $199 | $249 ]
iPod shuffle: [ $99 | $149 ]
Late 2005:
iPod: [ $299 | $399 ]
iPod nano: [ $199 | $249 ]
iPod shuffle: [ $69 | $99 ]
Current:
iPod: [ $249 | $349 ]
iPod nano: [ $149 | $199 | $249 ]
iPod shuffle: [ $79 ]
Eliminate choice from the top and bottom. Raise the price of the bottom, lower the price of the top. That’s how it is trending.
Future?:
New iThingy: [ $399 ]
iPod: [ $199 | $299 ]
iPod nano: [ $99 | $149 | $199 ]
iPod shuffle: [ $79 ]
Forgive my numbers if they are off, it’s off the top of my head.
Just idle speculation, btw. Seems logical.
If you want a lot of solid state memory and the nano package, then the 8GB nano is terrific. If you don’t want to spend that much, then get a 2GB or 4GB nano. If you would prefer storage capacity and video capability over weight/size, then get a 30GB iPod.
Sales of higher end products like the 8GB nano are expected to be lower than the budget models. No news here. Move along.
Bruce, I agree. Can’t run with the 30GB. I think that only the Nano can use Nike+ also.
I, too, bought an 8GB black Nano because I didn’t want the weight or size of the 30GB. I bought it to listen to music while exercising- not watch TV shows or movies.
Even though one might think that you’re getting more w/the 30GB iPod, sometimes less is actually more (less weight, less bulk for the task at hand- listening to music). BTW, picked mine up on eBay for $220 including shipping…
My next iPod? Why, an iPhone, of course!
On the one hand, Apple might want more people to buy a video-capable iPod, on the theory that they will be more likely to buy iTS movies, which will make them more likely to buy the iTV.
On the other hand, the $249 price for the 30GB iPod may have simply been to screw with MS. And Apple didn’t have the margin to lower the nano prices by $20 or $30 (and mess up there neat price points).
Whichever it is, Apple is smart, very smart.
Not an Apple Employee,
From the look of your numbers, it’s:
-Increase storage and features.
-Improve design and functionality.
-Drop low end products that are not cost effective.
-Lower the price of the bottom and the top.
It’s technology, that’s how it’s always* trended. Logical.
*Microsoft and Dell excluded.
As for the New iThingy – iPod Mini wasn’t added to the top, iPod Shuffle wasn’t added to the top, iPod Nano wasn’t added to the top. I presume you’re thinking iPod Video, you’re right – that would probably be added to the top. But, Apple realized their mistake with the iPod Photo and have since left iPod as the top product… We’ll see.
mark: “On the other hand, the $249 price for the 30GB iPod may have simply been to screw with MS. And Apple didn’t have the margin to lower the nano prices by $20 or $30 (and mess up there neat price points).
Whichever it is, Apple is smart, very smart.”
Great point, I agree.
Is it just me, or are iPods (the Nano more than anything) becoming too thin?
I’m a big guy, and I find the Nano WAY too skinny and uncomfortable to hold in my hand. Pretty soon, they’ll have paper-thin iPods made from carbon fiber that can double as a Ginsu.
I prefer the girth (careful) of the iPod photo. Just found a brand new one, and will stick with it because I can actually hold the thing. I love iPods, but there is a point when light and thin gets a little ridiculous.
Wash is (was) the best pilot in the galaxy.
I would like everyone to remember that for the last 5 years every “channel” analyst has been absolutely, completely, and entirely wrong about iPod sales. I don’t think their perfect record will be broken this season, either.
Why would they cannibalize their own sales?
Apple would prefer that people own the video units. Why? Because then you might buy tv shows, then you might buy movies, then you might buy games.
How many times have we heard this FUD before and then Apple goes to report another record sales quarter.
It may seem shallow, but the problem is it’s only in the one colour. I would have quite happily bought an 8GB, but in the end went for a 4GB because it came in silver. I’ve spoken to others that wouldn’t have minded paying up extra cash for the capacity, but preferred the green, blue, or now red.
It’s interesting how MDN always to put some Apple problem in a fanbo..er, good light.
There is NO indication in the report quoted from, nor anywhere else I could find, that there are constrained FLASH supplies.
Perhaps the less than hoped for sales of the 8GB model are just that.
As usual, the analyst is saying stuff without actually saying anything – First, Apple/steve jobs is smarter than this guy. Clearly by grouping the colors at 4 GB, Apple knows these will be the best sellers. The 8 GB version is sold as a slight premium because some people will pay it just to be the top but it’s also to answer anyone who might only want the highest available NAND drive – Apple offers an option that’s smaller and better than any others at 8GB. But it’s also priced for those who do analysis by GB – clearly the “regular” ipod is a better buy but the option is there if you want a smaller AND flash drive player – Apple has it covered and is making money on all the sizes no matter what attributes you deem most important …
Oops, forgot one last bit – by December it’s too late to ship anything except by plane so if you have to run out of any ipods, make sure it’s the most expensive and highest margins ones …
>It’s an artform at this point, and Apple has it down pat.
Yep, don’t think that the late arrival of the 2G shuffle was a ‘mistake’ either, Apple made sure they didn’t cannibalize new Nano sales. And with the 7.0.2 itunes update installed, I don’t have to worry about the lack of a CD in the shuffle box…it’s already here and loaded on my machine, waiting for me to buy one this friday… Down pat indeed.
NOT AN APPLE EMPLOYEE
don’t walk, RUN to slap a copyright, and trademark on New iThingy
lol, the best ‘i’ name in forever!
The 8GB Nano may cost the same as the 30GB iPod; but this doesn’t alter the fact that—for many people, myself included— the smaller form factor is perfect. The difference in size and weight is actually much greater than one might expect from just comparing specs. One feels like it’s hardly there in your pocket; the other is an obvious, bulky presence. I paid $249 for my 4GB Nano and would do it again; so 8GB for the same price looks like a sweet deal to me.
Faced with a decision to buy a nano or a shuffle, and given the relatively high prices of the nanos, I opted for a new shuffle which is headed from Alaska to Canada via the U.S. There is no way an 8 gig nano will hold more than a fraction of the music in my iTunes files, so I will be faced with choosing up to 1 gig of content whenever I decide to wear my shuffle. My 30 gig iPod has filled up already, almost all with music, and it’s great for plugging into the car stereo or home stereo. But the shuffle is far less likely to incur accidental damage, and I predict that its market will be absolutely phenomenal. For those who think music is shuffled on a shuffle, they need to know that it can be played in sequence as well. As for the nanos, from my perspective, it’s either the shuffle (C$87) or the 80 gig iPod, the one for wearing and the other for the big collection of data.
Apple’s market share of 77% is about to rise as the shuffle takes over the world. Apple should raise the shuffle to 2 gigs. for people who don’t want to watch their music. Listening works for me.