Price tags Get Smaller at Apple

1
Price tags Get Smaller at Apple

• By DAVID POGUE
• Published January 13, 2005

http//www.nytimes.com/2005/01/13/technology/circu
its/13stat.html
2
Real Fun

• FOR geeks and gadget freaks, you might expect the
  holiday season to be the most thrilling time of
  the year. After all, that's when iPods appear in
  stockings, digital cameras appear under the tree
  and flat-panel TV sets appear on the wall.
• Truth is, though, the real fun doesn't begin
  until January. That's when two trade shows out
  West serve as launching pads for new electronic
  goodies that eventually blow eastward into the
  eager paws of early adopters.

3
Steve Jobs

• On Tuesday, Apple's chief executive, Steve Jobs,
  took the stage he always takes, wore the same
  black turtleneck he always wears - and made two
  announcements of a sort he's never made before.
• One of them concerned the iPod, the
  classy-looking music player that's found a place
  in 10 million pockets, armbands and belt clips
  since 2001. The iPod and its colorful sibling,
  the iPod Mini, have pretty much sewed up the
  market for high-capacity music players (those
  containing a hard drive).

4
"Nyah, nyah, you can't catch us!"

• But at 250 and up, iPods haven't made a dent in
  the sales of small, low-capacity players, priced
  at 100 to 150, which store music on a stick of
  memory instead of a hard drive. Those so-called
  flash players hog 29 percent of the music-player
  market, practically waving their little plastic
  buttons in Apple's face and singing, "Nyah, nyah,
  you can't catch us!"
• It's not nice to taunt Mother iPod. So Apple did
  just what it usually does it reinvented the
  category.

5
iPOD Shuffle

• The result is the new iPod Shuffle. At first
  glance, it works like a typical flash-memory
  player. Its U.S.B. 2.0 connector plugs into a
  Macintosh or Windows PC, it contains no moving
  parts and it costs 100. (That's for 512
  megabytes of memory, enough for about 120 songs,
  about seven hours of music. A 150 model offers
  twice that capacity.)
• The Apple spin, however, involves the iPodization
  of the flash player. And that begins with its
  looks this tiny, sleek player resembles a couple
  of sticks of Juicy Fruit entombed in shiny white
  plastic. It weighs less than an ounce. It comes
  with a white lanyard to complement the famous
  white iPod earbuds. And it can also work as a
  tiny hard drive for transporting computer files.

6
The Economics

• Apple had competition at the low end!
• So they competed
• Results
• the product got better!
• the price fell!