Apple Rolls Out Cheaper iPod
Apple Computer Inc. on Tuesday introduced a smaller, entry-level version of its popular iPod digital music player, but quickly ran into criticism that the price of the new device is too high.
The iPod Mini is the size of a business card, has a memory of 4 gigabytes, or about 1,000 songs, and will sell for $249 when it hits the U.S. market in February, Apple founder and Chief Executive Steve Jobs said in his annual keynote address to the Macworld convention.
That’s $50 more than a Rio player sold by Digital Networks North America Inc., which includes 1.5 GB of memory. Paying more for the iPod Mini “is the best $50 you’ll spend,” Jobs told the crowd at San Francisco’s Moscone Center.
But some analysts said the smaller iPod is overpriced -- particularly because Jobs also announced that Apple would boost another iPod model’s memory from 10 to 15 GB, but keep the price at $299.
“With only $50 difference with the bigger one, why wouldn’t I buy the bigger one?” said Bob O’Donnell, director of personal technology with the market research firm IDC. “You get four times the amount of music. The iPod Mini should have been more like $170.”
Other makers of MP3 players probably will introduce devices priced lower than $200 with high-capacity hard drives at the Consumer Electronics Show this week in Las Vegas, O’Donnell said.
Rival computer makers Dell Inc. and Gateway Inc. sell MP3 players with 20 GB for $299 -- $100 less than the comparable iPod -- and also feature voice-recording capability. IPod owners need to buy a $49 microphone to do voice recording. The Gateway device also has a built-in FM radio.
Apple is hoping its successful online music store will fuel iPod sales.
Apple sold 730,000 iPods in the fourth quarter of last year, giving it 31% of the worldwide portable music market in terms of units and 55% of the market in terms of revenue, Jobs said.
Computer users have downloaded more than 30 million songs from the Apple iTunes Music Store since it launched in April. The service dominates legal music downloading with 70% of the market, Jobs said.
“It feels great to get above that 5%, doesn’t it?” he quipped, referring to Apple’s share of the U.S. PC market, which market researchers put at about 4%.
