Mon Sep 18, 2006 4:09 pm

I've just concluded an extensive market anal-ysis on the pricing of Joseph Unsworth's and Jon Erensen's report, and I have concluded that they are emphasizing margins and not market share in the pricing of their product. To wit, my calculations place the cost of their 12 sheets of paper at approximately $0.04. Based on the cost of materials, a fair asking price for their report would be something less than $0.04, since this put the value of their report at something less than that of the paper upon which it is written.

Mon Sep 18, 2006 5:39 pm

Apple sycophants aside, Gartner does bring up some interesting points.

For example, Apple really could price out the Nano to be a category-killer AND STILL make a good profit. For example, with current NAND flash memory prices being so cheap, their scenario of a $99 1-gig 2G Nano is very feasible for Apple. And it would SMOKE everything in its path at or near that price range. Ditto if the 2G Shuffle went for $49-59, or the larger 2G Nanos went for prices that emphasized healthy margins, as opposed to the obese ones Apple is playing for.

Anyone remember how Apple lost the desktop wars back in the day? It was a lot of factors, but one of them was overpriced hardware. Have they learned all that much since then? We'll see, but right now it looks like they're sliding back into some very bad, very old habits.

Mon Sep 18, 2006 7:46 pm

Given the huge drop in flash mem prices, obviously the new Nanos should be priced at $99/$149/$199 for 2/4/8 gigs. Apple is getting cocky and price-gouging again. And there's no one to make them pay for it, except Microsoft, maybe, and even then only at the high-end.

That's the only reason why the hard-drive iPods were priced aggressively... the possible threat of the Zune. On the rest of the line, Apple teed off... on the consumer. :p

Tue Sep 19, 2006 2:52 pm

	Mav wrote:
	Huh. So what am I missing every time Oppenheimer says that iPod margins are right around the 20% mark for just about every single earnings call? When will those teardown analysts learn that a product's cost, much like, say, a Mac, is more than the sum of its parts.

Sure, there's advertising and shipping costs that aren't taken into account in those parts analyses. But, c'mon... the iPod is a multiBILLION dollar a year product. Advertising and shipping as a percentage of revenue isn't that high. Apple IS making a killing here, let's face it.

Tue Sep 19, 2006 8:14 pm

Small White Car wrote:

Anonymous wrote: For example, Apple really could price out the Nano to be a category-killer AND STILL make a good profit. How do you know it's not going to kill anyway? They couldn't make the iPod Mini fast enough to keep them in stock. If the Nano ends up being the same way this Christmas (which is certainly possible) then your suggestion of lowering prices means Apple makes less money and gets NOTHING in return for that. If they're selling them as fast as they can make them then they can't exactly sell more than that, can they? Giving up money for no reason isn't really good busines sense.

But they would get something for it. They'd pretty much wipe out all meaningful competition, with the exception of Microsoft. At some point, Creative, SanDisk, Sony etc., if allowed to hang out long enough, wise up and learn to copy the iPod, and their marketshare goes up. Why not kick the legs out from under them before they get any traction? What about not letting get started? Brutal reasoning I realize, but that's the marketplace.

I agree that Apple is in a position to 'milk it' for now, with the possible exception of the high end, due to the 'threat' (overhyped IMO) of Zune. But if those prices don't drop right after Christmas, Apple will be inviting potential trouble.

Wed Sep 20, 2006 12:51 pm

	geoduck wrote:
	Anonymous wrote: They'd pretty much wipe out all meaningful competition, with the exception of Microsoft. MS is going to do that anyway with Zune.

At the high end, yes. But the Zune retails for $299. That's far from the whole market.