Apple Trims Prices on Some of Its IPods
Apple Computer Inc. cut prices on its iPod digital music players, added color screens to some models and began supporting downloadable radio programs to defend its lead against competing players and music services.
Apple is selling two versions of its white iPod -- a 20-gigabyte version now with a color screen for $299 and a 60-gigabyte color model that was cut to $399 from $449. The Cupertino, Calif., company also dropped the price of the 1-gigabyte iPod shuffle to $129 from $149.
Chief Executive Steve Jobs is working to maintain the iPod’s lead in the U.S. digital music player market and increase shipments as prices drop amid competition from Creative Technology and Dell Inc. The average iPod selling price fell 42% to $191 last quarter, and Apple said it expected lower-cost models such as the iPod shuffle to weigh on margins.
“They’re lowering prices to grab market share, and they should be able to maintain the same profit margins at these lower prices because memory costs have been declining,” said Piper Jaffray & Co. analyst Gene Munster, who predicted Apple’s iPod shipments would top 35 million by the end of the year.
As of March 31, Apple had sold more than 15 million iPods. Jobs introduced the player in October 2001.
The digital music player market totaled $4.6 billion in 2004 and may grow to $6.9 billion this year, researcher ISuppli Corp. said.
Apple also cut the price of a special edition iPod that was customized with the band U2. The player, now with a color display, sells for $329 instead of $349.
The company also released a new version of iTunes, the music software that runs on the iPod and links customers to Apple’s iTunes Internet music store. The updated software lets iPod users find and download Podcasts, or online radio programs. The iTunes store has links to more than 3,000 Podcasts, said Eddy Cue, Apple’s vice president of applications.
Companies offering Podcast programs include Walt Disney Co. and its ABC News unit and National Public Radio.
Apple has sold more than 430 million songs, at 99 cents each, through iTunes since opening the store in April 2003.
The online music market is expected to top $1 billion in sales this year, according to researcher In-Stat.
In May, Yahoo Inc. started a subscription music service to compete with Apple.
Yahoo Music Unlimited lets subscribers access more than 1 million songs that can be transferred to digital music players as long as they subscribe to the service. The service costs $6.99 a month otherwise. Subscribers can also buy songs permanently for 79 cents each. Nonsubscribers must pay 99 cents a song.
Shares of Apple rose 21 cents Tuesday to $37.31.
