A Thought.
My perceptions..
1. iPod is a high-branded product. It cost Apple to come where they are now, and its highly important that Jobs keeps this.
2. iPod's brand image and value is worth more than the revenue it currently creates. Maintainance.
3. iPod's basis is on music, not on other random stuff.
4. However Jobs, being a human, wants more money.
5. To do this, he needs market share.
6. iPod's current market share with regards to HD MP3, 90%, and Total, 70%.
7. To grab on to the rest of the 30%, he needs to enter the Flash market with the iPod.
8. To achieve this, Apple has to very careful. To mess with iPod's brand image would be literally doing a heart operation on Cupertino itself. Very very volatile.
9. First, as far as pricing goes, the iPod micro, must be kept on the high end of the scale. Jobs cannot afford to lose brand value. If he drops the iPod micro to $99, he's being very risky. He doesn't need the "poor-people" to buy iPods. He needs the middle to upper people to buy iPods. This retains brand value. Very very very imporant. A 59" Porsche 550A Spyder in a mint condition nowadays is only highly priced (ridiculously priced) because of its brand value and exclusivity. Sames goes for the rest. Take the Rolls for example. If they suddenly came to take on more market share, they would have to release a low-end Rolls. (low-end in Rolls-Royce terms would be around a 3 series BMW). That means pricing the low-end Rolls around the 5-series BMW range. Why? Because if every Tom Dick and Harry had a Rolls, it would't be a Rolls-Royce anymore. Brand value. Again, its very important for a company like Apple to retain this. It all comes down to desire. If one sees someone else with an iPod, and if they know how much it costs, and if they want one, they will aspire to have one. Something is only desirable when its difficult to acquire.
10. Apple's brand value went up this year. They owe it to Jobs and iPod. If they mess with iPod's brand image, its value will plummet, and consequently Apple.
11. So, keeping that in mind, they need to keep the price level up. Remember, if everyone was walking around with an iPod, and if it was cheap, if it became the point where "Agh, I can get if I wanted to, it costs nothing" then iPod brand value is no longer valuble. It has to be "Ooh, I want one, but its just so expensive...I'll save up" This creates brand value. Currently, the way Apple has made iPod something a product that someone would still buy even though it's expensive, is highly highly difficult for any company to do. Jobs would not want to lose that.
12. This means we eliminate affordable $99-$125 range. We end up in Apple's world of "cheap", which is $149. They will never have a $200 Flash player, they cannot retain enough market share to compensate for the high price. They need more high-school kids with their saved pocket money, entering the mini stores and giving away money. Not a lot of people will give two benjamins for a puny MP3 player. Another reason? Its getting too close to the iPod mini, that means, if they give an iPod mini upgrade, the price has to come down slightly, which jeopardises the iPod micro's price. Being on the safe side.
13. The New iPod micro. 250 Songs on your finger. For only $149.
14. With regards to space, its going to 1GB. They're not going to push it to a 512, nor a 2GB. The current available 1GB flash is around $99. Perfect. 1 is a very neutral number. 512? Its a little complex. 2GB? Too expensive for Jobs to keep a low price. Another reason for 512 not being a candidate is because that would also touching on iPod's brand image. People regard iPod as a MP3 player with lots of songs. They mess with that, they mess with iPod. The more the better.
15. That means, all in all, if they do bring, and thats a big IF, a iPod micro, its going to be a 1GB that costs $149. Still too pricey? Well thats Apple marketing and branding.
16. They buy their Flash for around $50, then add their costs to add in Tech, then you're left with $50 or $40. Thats still a lot left.
17. So say, you have $40~$50 * 1,000,000 units sold during Christmas, with MASS advertising around the Northern Hemisphere, push that to 2,000,000. You've got around $100,000,000 pure profit. Now thats marketing at its best. The end of 2004 is going to give Apple a very very Merry Christmas. Not to mention the $999 iBooks.
18. This at the end of day, made Apple successful on two major fronts. Taking control of the Flash MP3 market, which makes them 90% dominant in the MP3 market, which is what Jobs precisely wants. He wants iPod to be synonymous pronoun with the term MPEG-1 Layer 3 Audio Music Player. Also talking care of the 10-17 yearold market, where kids with their own pocket money, and those younger ones who will start believing in Santa Clause even more.
17. With the iPod, iPod mini, and now the iPod micro, The iPod will ensure Apple's complete and utter power in the MP3 player market.
18. iPodomination. 😉
