It's gonna be bigger, not smaller...
Just from reading this thread, you've all accidentally described something that sounds more probable.
If apple releases a cheaper iPod, it may have a smaller capacity, but it will defintiely be larger. In consumer electronics, smaller = more expensive, larger = cheaper. There isn't one example where the converse is true. Think camcorders or digital cameras. You always pay a premium for size.
If apple releases a "budget" iPod, it would have to be -less sexy- than the deluxe model. Less sexy = bigger.
How can we get it cheaper? When size is less of a factor, the answer becomes obvious: the new ipod would be .7" bigger because it would use a 2.5" notebook hard drive. The price differences even on single units is tremendous.
On pricewatch, a 2.2gb IBM microdrive (a 1" Hard Drive, probably what toshiba is making) goes for $192. You're paying a huge premium for the smaller size.
A toshiba 6.0 GB 2.5" drive goes for $68.
Now:
When the original iPod came out with 5 gb @ $399, you could buy that same 5.0 gb 1.8" drive in a firewire enclosure but without the mp3 playing guts for $299. So, we could say apple is adding on $100 for the mp3 guts and screen.
Nowadays you can get an external firewire/usb enclosure for 2.5" hard drives for around $20.
So, that's maybe $89 for a 2.5" drive and controller - street prices!
So, being generous to apple's margins, let's give them the $100 for their mp3 playing guts (and probably, some nice profit margin) and we're still at only $189 for an mp3 playing, white-and-aluminum clad, slightly (only .7") larger budget ipod.
Now, that's _street prices_, and that allows for as much profit margin as the original iPod!
What happens when you factor in volume costs? This is certainly intended to be a high volume product - probably more so than the current ipod. Apple has already extended, with the 3g ipods, their profit margins on the non-drive guts of the machine - essentially selling for $299 what they originally sold for $399. So they are making the mp3-playing guts better and for less money.
Anyway, for final prediction -we have to account for things like marketability and availability of parts - if apple does market a larger, clumsier, cheaper iPod, the line-up would be something like:
$199 10gb HuskyPod
-looks just like 3g ipod, only bigger (think 14" ibook). No backlight on the buttons, no dock, no case, no remote.
$299 15gb 3g iPod
- replaces 10gb, otherwise no change
$399 30gb 3.5g iPod
- maybe color screen ala GBA, or other extras. no video yet.
$499 60gb 3.5g ipod
- maybe color screen, etc.
And that's your level-headed, non-pie-in-the-sky forecast for a way into a cheaper ipod.
