iPod Mini in the Media and on TV?

[Spades]

I just rewatched that section of the keynote to make sure. Indeed, Steve Jobs defines that 31% of high-end flash market as being priced from $100 to $200, not $150 to $200. He was talking about a market whose average price is $150. This put everybody on a high, expecting something at no more than $200. Then, he went and announced the $249, $100 more than the average price of the target market, and people came crashing down. There was no stated promise, but Jobs sure lead everybody to believe the price was going to be in the $100 to $200 range. Presenting it as he did and then pricing it so high was a psychological blow. The way it was presented was definitely a marketing mistake.

You're right that they're going after the $200 players. You're wrong, however, that $200 players are 31% of the market. 31% of the market is $100 to $200 players. Just the high end of the high end is logically less than 31%. I'd really like to know how much of the market they're REALLY targetting.

Originally posted by nagromme
Actually, at the mini intro Steve said they are going after the ~$200 high-end flash market ONLY. That market is already known to be 31% of all player sales. (Another 31% is $150 and down, and Apple's not going for that because you can't make a good player that cheap--they hold hardly any music.)

 

[ganryu]

Re: Some general observations:

Originally posted by nagromme
Some general observations:

1. Some people seem to be running logic backwards: they start with a conclusion--I WANT an iPod for $199 (or $39 or whatever) and rumor sites got my hopes up, so I will just DECIDE that it's possible, and then work backwards to try to create reasons why it is.

2. Anger among (some) Mac rumor-forum members is very little reflection on the buying public as a whole. Reports of long backorders are very likely true! And this is BEFORE people are seeing these things in person--which seems to impress people with the mini even more.

3. The mini's benefits are not just aesthetic (not that color choice is a small thing at all). It's also smaller/thinner (more pocketable), lighter, has nifty new simpler controls, comes with a belt clip (the 15 doesn't), comes with the USB cable (the 15 doesn't--and FW is not universal on all the PCs sitting out there), and is more durable--I can vouch for this from owning an anodized aluminum PowerBook!

4. If people are so convinced that Apple can make a profit on a 1" HD at less than $200... then why are other 1" HD players priced the same? iLife can't be used as an example proving Apple's ability to price the mini cheaper. You see, Apple doesn't need to buy a 1" HD to put inside every iLife box

I'd love a $199 mini too, but it's not possible. Maybe it will be by the time I buy--but if the main thing the 15 has over the mini is GB, then I'll be saving money AND getting a better player by choosing the mini. 4 GB is plenty for some of us.

AMEN.

Another note on point no. 2 - if the Mini is priced less, the increased demand might simply overwhelm supply. You can't just say "oh won't apple make up for profit by selling more cheap iPods?", because production capabilities of the new hard drives need ramping up, production capabilities of the actual Minis need ramping up as well. You can't just one day build a whole new factory to build new Minis, or suddenly change half of your production lines to build new Minis.

Not to mention that if you're selling at a higher volume, supply chain and product allocation becomes a MUCH bigger problem. How many do I allocate to California, and how many do I allocate to New York? If Minis are sold out in Oregon, and they're stocked up on the shelf in Florida, then Apple is losing money on the unsold inventory, while missing out on the potential sales in Oregon.

These are the very elementary questions that someone working at Apple have spent many days and weeks thinking of, and many Macrumors users that fail to think of (when they complain about the price).

 

[tbutler]

Re: Re: Some general observations:

Originally posted by Spades
Well if 2 gigs is too much to ask for, how about 1.5? There are players with that much for $199, and they're sold for cheaper than that. 1.5 gigs will hold almost all of my collection.

I think this is getting into the distinction another poster made a while back, about whether Apple would make only 'quality' products. I think that's the big reason Apple did not and will not make a low-capacity player:

1) An important part of Apple (or Jobs') vision for the iPod is having a large enough 'hunk' of music available at once, so that you're not having to constantly swap to get a 'fresh' set of music and you can keep enough 'favorites' loaded to be happy. (Even a 700 MB MP3 CD wasn't really enough to pass this test for me, as I mentioned in an earlier post.)

2) The defining part of the iPod's interface really only shines when you're dealing with lots of songs; the trackwheel, easy browsing, etc. don't mean nearly as much with 60 songs as they do with 600. So an iPod with limited capacity has that much less to distinguish it from its competitors.

So I can see both vision-based and pragmatic reasons why Apple wouldn't introduce a low-capacity iPod. (And that's why I didn't give any credence to the rumors of a flash-based iPod; flash memory is a helluva lot more expensive than disk space, and a flash-based player with a decent capacity would be so high-priced that it wouldn't be funny. Creative just released a half-gig flash-based player, the Nomad Muvo TX... $499!)

1.5 gig would be pushing it in my opinion; that's somewhere around 350-370 songs, which is a lot more than a flash player but still enough to feel severely cramped. A hand-picked list of my vocal favorites is 349 songs, without including instrumentals, soundtracks, comedy sketches...

 

[splashman]

Arrogance

Originally posted by ccuilla
But discussions of "value" are silly absent data about the buyers. For some people the current iPod Mini at its current price WILL be a good value. For some it won't. When it drops to $199 it will be an even greater value to those that thought it a good value at $249, and it will (now) be a good value for some new set of people (that didn't think it was a good value before).

Why do I feel like some basic courses in marketing, sales and economics are in order here?

Um, and which Apple marketing execs do you propose to send to the econ courses?

Apple makes mistakes, no doubt about it, and it's always possible that they've just made another one. But it's pure, unadulterated arrogance (not to mention ignorance) to maintain that the pricing decision is so simple as you state. Apple is not run by idiots. They have made a decision that they think, in the long run, will maximize profits. You're free to disagree -- I happen to disagree myself -- but at least make an attempt to show an ounce of respect.

 

[splashman]

Originally posted by Count Blah
Apparently those who say the mini is the best thing since sliced bread. They defend it like it's their first born. They make fun of people who think it's overpriced. They can't see the irony that the same arguments that Stevey used in the Keynot to buy the mini makes it look like a dog compared to the classic iPod. They think the leader bends over an poops nickels. They see the cube as a success, and blame the unwashed troglodyte masses for not buying, instead of seeing it as an overpriced headless G4.

I'm guessing these people would have been happy with a $199 mini, but they seem to REALLY love it as it is and REALLY love to make fun of others who didn't drink the kool-aid.

Is this your application to Curmudgeons Anonymous?

 

[Spades]

Re: Re: Re: Some general observations:

The relationship between size and quality is subjective. I agree 1.5 gigs is pushing it, but I would still think it's acceptable. To give you an idea of where I'm coming from, my collection is currently 324 songs and 1.67 gigs. I'm definitely expanding that thanks to iTMS.

Now, how big would it have to be to still be high quality? I think a full waking day should do. If you're not going to store your entire collection on the device, then having a full day of music gives you a chance to change the playlist nightly. Creating a random playlist limited to 1500 MB in size gives me 20.3 hours of music. I don't sleep a full eight hours, but 20.3 still covers me just fine. As for the iPod interface being unnecesary, I think not. True, it doesn't shine as much with such a small collection, but that doesn't mean I don't need it.

I would still prefer 2 gigs, but 1.5 gigs appears to be feasible now. Only Apple knows the reason they aren't releasing a lower cost iPod.

Originally posted by tbutler
I think this is getting into the distinction another poster made a while back, about whether Apple would make only 'quality' products. I think that's the big reason Apple did not and will not make a low-capacity player:

 

[ccuilla]

Re: Arrogance

Originally posted by splashman
Um, and which Apple marketing execs do you propose to send to the econ courses?

None. I am not presuming that Apple is the one in error here. Many people are, but failing to backup their assumptions with any HARD data ("I want the price to be lower." is the only reasoning they provide.)

My assumptions are that Apple has done (and is doing) market research on this product.

Seems a pretty safe assumption.

My assumption that the naysayers on these (and other) boards are NOT representative of the customer base Apple is targeting is probably also a safe one.

Apple makes mistakes, no doubt about it, and it's always possible that they've just made another one.

Of course they do. I didn't suggest any differently. However, many here are saying (flat out) that they HAVE made a mistake, but have failed to provide anything but (weak) anecdotal evidence and whining that they just want the thing cheaper.

But it's pure, unadulterated arrogance (not to mention ignorance) to maintain that the pricing decision is so simple as you state.

First of all, its probably not much more complicated than this. Secondly, it is the naysayers here that are being simplistic in their pricing theories. "Just sell it for $199, because me and my friends want it for $199 (or less)." Apple probably cannot (and still be profitable), that, and they have probably measured the market (correctly, I suspect) and found that this will work well for an introductory price.

Apple is not run by idiots. They have made a decision that they think, in the long run, will maximize profits. You're free to disagree -- I happen to disagree myself -- but at least make an attempt to show an ounce of respect.

Perhaps this is where the confusion (on your part) is. Perhaps you meant to reply to another post.

I DON'T think Apple is run by idiots. Quite the contrary. I also AGREE that Apple has made a pricing choice that they believe will bring them the greatest long term profits.

 

[splashman]

Mini pricing

Originally posted by phantompigger
I can't argue with that. People who choose the iPod mini at its current price point will certainly be making the decision based upon aesthetics.

If that's true, the Rio Nitrus buyers must really be idiots, because they won't even be getting aesthetics for $249.

Personally, I'm not in love with the mini. I love my 3g 15gig, and if I were in the market now, I'd buy it again. But you have to see there's more appeal than just the aesthetics. The physical size alone is a huge draw, as it opens up markets dominated by the flash players. Even those who had a big budget bought ugly flash players because they were smaller/lighter. And then there's the "cool" factor . . .

The consensus seems to be that Apple could have hit a home run at $199.

Again, these forums are populated with geeks like you and me -- not representative of Apple's target market. So this "consensus" (seems to be plenty of people who disagree with you) is meaningless. If you're claiming a consensus in the general population, I'd ask what you know that Apple doesn't.

And for those of you who claim that the iPod isn't targeted at the faithful, I'd like to point out that in a recent Newsweek, Jobs claims that one of the "...biggest customers for the iPod mini is going to be current owners buying a second iPod."

I haven't heard anyone claim that. I and others have pointed out that Mac geeks like you and me are only a subset of "the faithful". The rest actually have a life.

One final thought: Do you think that the introduction of 15GB might have been ill-timed? Do you think that we'd all be more accepting of the $249 price point if the $299 continued to carry a 10GB HD?

Heh heh. So, in other words, if Apple had maintained a worse $-per-gig ratio on their entry-level iPod, you'd be happier? Or you'd be happier if they raised the 15gig price to $399, so you wouldn't FEEL ripped off by the mini?

Based on what undoubtedly are very complicated factors, Apple set a minimum price point for the mini (i.e., "We don't want to sell cheap"). Everything else flows from that, including the pricing and capacity of the entry-level iPod.

I was one of those who claimed Apple would never release a mini at only $50 less than the iPod -- "No differentiation", I said. But the more I think about it, the more it seems an inspired decision. Talk about a tough choice -- a smaller, lighter mini, or a higher-capacity, iconic iPod. The very fact that it's a tough choice means Apple has nailed it.

 

[splashman]

Re: Re: Arrogance

Originally posted by ccuilla
Perhaps this is where the confusion (on your part) is. Perhaps you meant to reply to another post.

I DON'T think Apple is run by idiots. Quite the contrary. I also AGREE that Apple has made a pricing choice that they believe will bring them the greatest long term profits.

Hmmm. I apologize. I was certainly responding to your post, but I must have misinterpreted your point. It seemed that you were saying that Apple could have (and should have) opened up a wider market by pricing the mini at $199. Thus my response.

Sorry 'bout that . . .

 

[Nicky G]

BBS irony

I think it's funny that people will bicker here to no end, wasting hours of their lives -- but then will utterly fail to respond to a post like mine, where I laid out very matter-of-factly WHY I ordered an iPod mini. I have seen a few other folks lay out the exact same reasoning as to why they've ordered minis.

FUTURE iPOD MINI OWNERS DEMAND TO HAVE THEIR EXISTENCE ACKNOWLEDGED!!!

Considering there will be more of us than standard iPod owners soon, ya'll had better start to recognize!!!

 

[D*I*S_Frontman]

C'mon folks

I think some well-considered self-restraint is in order here:

First of all, anyone posting here whose naysaying comments appeared on the original "they're-too-pricey-and-sure-to-flop" iPod thread should recuse themselves from any comment on the Mini.

Anyone who balks at the Mini's $249 pricetag should be REQUIRED to read that thread before ranting on and on about it.

Anyone who is let down for Minis not being sub $200 like the rumors lead them to believe should stop blaming Apple and fix the blame on the truly guilty parties--rumor sites and their own gullibility.

Anyone who thinks they understand Apple's entire situation well enough to condemn them for mispricing the Mini should be able to answer the following questions:

1) How many Minis are currently in the supply chain, awaiting shipment?
2) What are the per day and per month production figures?
3) What were the R&D and production setup costs that must be recouped?
4) Who are the third party partners in distribution, and what are the committed preorders to date?
5) What is the actual cost per unit now, and what are they anticipated to be in 3-6 months?


If you can't answer any of these, you can't possibly judge Apple for their decisions. Just because you can't afford one doesn't mean they priced it wrong. Heck, I can't afford one and I'm not complaining.

 

[mvc]

Back to the future...

Everyone bickering here should be forced to use a sony walkman and lug around all the cassettes needed for 1.5 or 4 or 15 or even 40gb of music.

You'd need a truck and a forklift to scroll though your playlist.

Be grateful, any kinda iPod at any kinda price is a great thing by comparison.

 

[Count Blah]

Re: C'mon folks

Originally posted by D*I*S_Frontman


...

Anyone who thinks they understand Apple's entire situation well enough to condemn them for mispricing the Mini should be able to answer the following questions:

1) How many Minis are currently in the supply chain, awaiting shipment?
2) What are the per day and per month production figures?
3) What were the R&D and production setup costs that must be recouped?
4) Who are the third party partners in distribution, and what are the committed preorders to date?
5) What is the actual cost per unit now, and what are they anticipated to be in 3-6 months?


If you can't answer any of these, you can't possibly judge Apple for their decisions. Just because you can't afford one doesn't mean they priced it wrong. Heck, I can't afford one and I'm not complaining.

I call foul on this one. You are telling us we are not allowed to "Monday Morning QB" this one without having insider information? Give me a break. If you want, I'm sure we can find examples of Apple's rather large margin on products compared to the rest of the computer industry. I'm sure everyone will say that this is a given. So, we are simply saying - "How about making less per unit and DESTROY all competition" How about a 2Gig iPod mini for $199?

Personally, I just purchased a discontinued a NIB 10Gig iPod for a smidge less than the iPod mini, so I am happy as a pig in S$%#.

 

[tbutler]

Re: Re: Re: Re: Some general observations:

Originally posted by Spades
Now, how big would it have to be to still be high quality? I think a full waking day should do. If you're not going to store your entire collection on the device, then having a full day of music gives you a chance to change the playlist nightly.

Depends on how you use it, I suppose. I tried going that way, both with MP3 CD's and the original 5 gig iPod, and it just didn't work for me. Part of the time I like listening to random playlists. Part of the time I want a specific song, or a specific album, because something I'm doing brings it to mind - and not having that song/album in the subset of music I've got loaded is intensely frustrating. That's why, when I upgraded the 5 gig, I spent more than I should have and went whole-hog to get the highest capacity model they had at the time.

I'm also not very good at this 'nightly synchronize' thing. I don't think I sync my Palm more than once every couple of weeks, on average; and even though I've got a couple of Smart Playlists based on playcount, I don't sync the iPod to update the playcount in iTunes more than every 3-4 weeks unless I have more music to add.

 

[ccuilla]

Re: Re: Re: Arrogance

Originally posted by splashman
Hmmm. I apologize. I was certainly responding to your post, but I must have misinterpreted your point. It seemed that you were saying that Apple could have (and should have) opened up a wider market by pricing the mini at $199. Thus my response.

Sorry 'bout that . . .

Not a problem. I think Apple eventually WILL. But they are going about this this right way...in my ever-so-humble-opinion.

 

[ChrisH3677]

many here keep saying Apple "shoulda" when you don't even know if they "coulda"

 

[ganryu]

Re: Re: C'mon folks

Originally posted by Count Blah
I call foul on this one. You are telling us we are not allowed to "Monday Morning QB" this one without having insider information? Give me a break.

Of course you're ALLOWED to. It's just that no one really would take you seriously, same way no one takes the Monday Morning quarterbacks seriously (or rambling homeless alcoholics on subways).

Originally posted by Count Blah If you want, I'm sure we can find examples of Apple's rather large margin on products compared to the rest of the computer industry. I'm sure everyone will say that this is a given. So, we are simply saying - "How about making less per unit and DESTROY all competition" How about a 2Gig iPod mini for $199?

How about a high school economics class for you? Supply and demand boy, supply and demand. What's the use of a $199 Mini if they can't meet demand? Less profit! This isn't rocket science.

Count Blah, you really should read your previous posts, because you keep repeating the same points that we've torn apart again and again.

 

[splashman]

Opinions vs. Judgments

Originally posted by Count Blah
I call foul on this one. You are telling us we are not allowed to "Monday Morning QB" this one without having insider information? Give me a break.

One more time, for everyone's benefit:

Express your opinions, no matter how far-fetched or unsupported. Opinions sound like this: "I think Apple should have . . ." "Seems to me, Apple would make more money if . . ." "Instead of product X, I really wanted product Y". Since nobody on these forums has any factual information to go on, all opinions are valid. However, not all opinions are equally well supported, and all opinions are open to challenge from people who believe their opinions are better supported. Example: an opinion like "I think Apple is going to drop the price of the mini to $49 in 2 months" is going to be respected less (and challenged more) than "I think Apple is going to drop the price of the mini to $199 in 2 months".

Judgments sound like this: "Apple is STUPID for doing . . ." "Only IDIOTS would want product X" "It's OBVIOUS Apple screwed up", etc. etc. When you judge Apple ("they are absolutely wrong, and/or I am absolutely right"), you're revealing your immaturity and inability to accept that Apple just might be privy to information that you're not.

To sum up: Keep the judgments to yourself. Keep the opinions flowing.

If you want, I'm sure we can find examples of Apple's rather large margin on products compared to the rest of the computer industry. I'm sure everyone will say that this is a given. So, we are simply saying - "How about making less per unit and DESTROY all competition" How about a 2Gig iPod mini for $199?

There you go -- you expressed an opinion without trashing Apple. Groovy.

Wouldn't you love to have been a fly on the wall while the Apple execs were debating the pricing? Just thinking about it gives me goose bumps. I'd love to hear all the nitty-gritty details. I'll bet some folks in those meetings got pretty hot.

Anyway, it will be interesting to see what Apple does in the next few months. I'd love to see them do exactly what you suggest -- a $199 price point, whether it's 2GB or 4GB. Given Apple's track record, though, my best guess is that they will milk the profits as long as they can. Then, when the competition starts nipping at their heels, they'll reconsider the pricing. Seems a bit short-sighted to me -- like you, I think Apple's got a once-in-a-lifetime opportunity to grab marketshare with relatively little effort. Does this mean Apple thinks they can get the same marketshare at $249? Or does it mean that marketshare isn't their highest priority right now? If not, what is? Dang it all, I want to know!

Personally, I just purchased a discontinued a NIB 10Gig iPod for a smidge less than the iPod mini, so I am happy as a pig in S$%#.

Sweet!

 

[Count Blah]

Re: Re: Re: C'mon folks

Originally posted by ganryu
Of course you're ALLOWED to. It's just that no one really would take you seriously, same way no one takes the Monday Morning quarterbacks seriously (or rambling homeless alcoholics on subways).

And we are only supposed to take your point of view seriously?

Originally posted by ganryu

How about a high school economics class for you? Supply and demand boy, supply and demand. What's the use of a $199 Mini if they can't meet demand? Less profit! This isn't rocket science.

You are correct. If they can't build them, they can't maximize their profits. Just don't put a dress on a pig and expect me to take it to the dance.

How many iPods have been sold to this point? I believe Steve said that they have 1/3 of the ENTIRE market. So I'm guessing that they actually had to make enough iPods for 1/3 of the market. So Steve's "claim" of going after the $100-$200(middle third of the piechart) flash market was really a lie then. Because, and see if you can follow me, if you plan to take over a market, you have to actually make the product to do it. Call me silly, but I seem to remember that part from Econ 101.

You supply an overpriced item, and there won't be much demand. I understand it perfectly.

 

[splashman]

Can't meet demand at $199?

Originally posted by ganryu
How about a high school economics class for you? Supply and demand boy, supply and demand. What's the use of a $199 Mini if they can't meet demand? Less profit! This isn't rocket science.

Let's be a bit careful here. You're assuming that Apple couldn't meet demand at $199, and that this limitation is what dictated the pricing. Honest question: Is that assumption based on anything besides pure speculation?

 

[doogle]

boring...will someone start another thread that interest me. (yeah yeah i should go elsewhere but the other threads are worse)

 

[sushi]

Re: Re: Some general observations:

Originally posted by rjstanford
I realize that all of this is true, but I am curious - how often is the size/weight of the current iPod a big deal?

I can think of many folks who would prefer the mini iPod over the iPod.

Japanese and European folks come to mind, and anybody else who regularly rides a train to work.

Anybody who wants to carry their music device in their shirt pocket. The iPod is too heavy. The mini iPod is much better since it is lighter and smaller.

Anyone who wants to carry/use it when wearing a suit.

Those who like to travel lightly. An ounce here, and ounce there, it all ads up.

I could go on, but I think I have made my point.

BTW, my bet is on these things selling like hotcakes in Japan. Already you can see many folks who are really interested in April (when they are available here) coming around. The small size. The colors. The weight. The cheap cost. Windows compatability. Lot's of positive interest out there.

Sushi

 

[whooleytoo]

People likely to buy the iPod Mini:

1) People on a budget (it's still the cheapest iPod).
b) People who want/need miniaturization.
iii) People who like the styling, and having colour options.
-) People who's music collection is likely to remain less than 4GB.

People not likely to buy an iPod Mini:

a) People on a tighter budget (250 is still a lot of money).
ii) People with a lot of music, and want to take it with them.
-) People who prefer the iPod Senior's styling.
4) People who value highly GBs per dollar/euro.
101) People called Mr. Fester...

Different strokes for different folks, the mini will interest some people and do nothing for others. Fighting about it is a bit like big endian / little endian arguments!

 

[sushi]

Re: Re: Re: Some general observations:

Originally posted by sanford
It's just not that much smaller or lighter. I pored over the specs pretty well. And that's compared to my 30GB, not the thinner and lighter 15s and 20s.

Uh, better look over them again!

iPod mini compared to iPod 15/20:

Volume --> ~41% Smaller

Weight --> ~36% Lighter

iPod mini compared to iPod 30:

Volume --> ~50% Smaller

Weight --> ~42% Lighter

So while you may think that that it isn't much, it is.

...and that folks, is why these mini iPods are going to sell like hotcakes. I already have a 10GB (G1 version) and will be getting at least 2-3 mini iPods. Now just to figure out the color we want.

Sushi

 

[ganryu]

Re: Re: Re: Re: C'mon folks

Originally posted by Count Blah
And we are only supposed to take your point of view seriously?

Since I don't ignore replies like you do, people will take me more seriously than just someone trolling with the same points over and over again, especially when the horse is pretty dead from the beating.

Originally posted by Count Blah
You are correct. If they can't build them, they can't maximize their profits. Just don't put a dress on a pig and expect me to take it to the dance.

They probably ARE maximizing their profits from the amount they can sell.

Originally posted by Count Blah
How many iPods have been sold to this point? I believe Steve said that they have 1/3 of the ENTIRE market. So I'm guessing that they actually had to make enough iPods for 1/3 of the market. So Steve's "claim" of going after the $100-$200(middle third of the piechart) flash market was really a lie then.

They did make enough iPods for 1/3 of the market. But this is a different model, so production lines have to be changed, QA testing has to be more rigorous, etc etc..

Originally posted by Count Blah
Because, and see if you can follow me, if you plan to take over a market, you have to actually make the product to do it. Call me silly, but I seem to remember that part from Econ 101.

Going after a market has nothing to do with flooding the market with 700K ipod minis in 3 months. are you following me?

Originally posted by Count Blah
You supply an overpriced item, and there won't be much demand. I understand it perfectly.

Except for your tendency to treat your opinion of "iPod is overpriced" as a fact, yes, an overpriced item will have less demand.