Robert W. Baird & Co. sees weak Apple iPod nano 8GB sales

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.”]

31 Comments

  1. 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.

  2. 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.

  3. 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.

  4. 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.

  5. 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!

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