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 Post subject: IT News: Apple Unveils New 1-GB Nano and Drops Shuffle Price
PostPosted: Tue Feb 07, 2006 7:51 pm 
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Newsfactor Magazine Online
by Elizabeth Millard


"With lower pricing, someone might buy a Shuffle for the car, and another one for the gym, and one for the office," said Forrester analyst Ted Schadler. "That strategy makes the iPod an accessory rather than the center of the digital music experience. That benefits Apple because it can sell more."


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Apple Computer has developed a smaller-capacity version of its iPod Nano and has cut the price of its least expensive player, the iPod Shuffle. The newly unveiled 1-GB Nano will sell for $149 and come with the same features as the two larger versions, which have 2 GB and 4 GB of memory.

"Now everyone can afford an iPod Nano," said Greg Joswiak, Apple's vice president of worldwide iPod product marketing, in a statement. He added that the iPod is the world's most popular digital music player, with over 40 million sold so far.

The Nano is distinctive in the company's device lineup for its ultrathin design, which Apple boasts is thinner than a pencil. Like other iPods, the Nano sports a click-wheel.

Apple also noted that it would be dropping the price of the diminutive iPod Shuffle, with the 512-MB and 1-GB models priced at $69 and $99, respectively.

Price Fix

Especially intriguing in Apple's announcements is the lowered pricing of the Shuffle players. In the past, the company has not been known to do much price tweaking and tends to shy away from discounting.

But there are several reasons why Apple might have introduced the new pricing levels, noted Forrester analyst Ted Schadler.

"The winner takes all in this market, and that means whoever gets the best pricing on memory can offer the best prices on their devices," he said. "Apple has been playing this game brilliantly."

In lowering the Shuffle's price, Apple likely will lose money on the first few thousand devices sold, Schadler predicted, but will be able to negotiate more volume discounts on the basis of the sales uptick.

"Because they'll be able to lock up the volume discounts, they can undercut everyone's prices over the long haul," Schadler noted. "It puts price ahead of profit."

Saturation Point

Another reason that Apple might be changing its pricing strategy for the Shuffle, as well as introducing the more affordable Nano option, is to broaden the reach of both devices.

Schadler noted that, although iPods have not yet reached a saturation point, not everyone wants one, making it necessary for Apple to sell multiple devices to the same consumer.

"With lower pricing, someone might buy a Shuffle for the car, and another one for the gym, and one for the office," he said. "That strategy makes the iPod an accessory rather than the center of the digital music experience. That benefits Apple because it can sell more."

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PostPosted: Wed Feb 08, 2006 8:59 pm 
A bunch of my friends have the 2 and 4GB versions :)


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