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News
Analysts: Apple Focuses on iPod Margins, But Market Share Could Suffer
Sunday, September 17th, 2006 at 3:00 PM - by Brad Cook
Apple's refreshed iPod nano and iPod shuffle have been well-received, but Gartner analysts Joseph Unsworth and Jon Erensen said in a report issued Monday that they believe "the company is looking for better profit margins, not gaining market share," according to an IDG News Service article.
Looking at the cost of the materials going into the new MP3 players, they believe that the iPod shuffle should be priced US$49, since $30 of materials are going into it, rather than $79. Likewise, the 8GB iPod nano's $130 materials cost should have translated into a price point lower than $249. In particular, NAND flash costs 60% less than it did last year, and Apple has locked in a large chunk of the market.
The analysts commented: "Apple is in a secure position atop the portable media player market and has decided to strategically focus on its margin this time." Its market share is 75.6% according to the most current numbers available, but competitors, especially Microsoft's new Zune player, could chip away at that given "a lack of revolutionary new functions" in the latest iPods, according to the Gartner report.
Gartner's 12-page report, which looks at the entire semiconductor industry, sells for US$45.
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