When PCs with USB 2.0 are launched in the fall, the iPod will lose
its biggest perceived advantage - the transfer speed of FireWire. By
then the iPod needs to be the standard or, despite many other
advantages, it risks becoming one of many. Apple can only make it
the standard if iPods are available at different price
points.
A few other MP3 players have an advantage in capacity, but since it
takes hours to fill them via USB, many don't find this extra capacity
useful.
Although Apple has never confirmed that Toshiba is the hard disk
supplier for iPod, there was no other supplier of 1.8" hard drives at
the time of launch. For some time Toshiba has had details of 10 GB and
20 GB versions of the 1.8" drive on its site. Since the 10 GB hard disk
weighs slightly less, and the 20 GB version only 7 grammes more than
the 5 GB drive, increasing capacity won't affect portability. A
glance at the other specs shows the drives to be identical in the
important areas.
Therefore Apple can launch an iPod range, providing it can
buy the new drives and the 5 GB ones at a low enough price. As
125,000 iPods were sold last quarter (after the November launch) and
sales were held back by the lack of manufacturing capacity, iPod sales
should now be well over 200,000. These volumes will have driven down
the prices Apple pays for all the iPod components.
If Apple can buy the new 20 GB drive for about the same price it
paid for the initial shipment of 5 GB drives, this could be the
drive for the new top of the range model at $399. This would minimise
the market for the other high capacity MP3 players, as the Rio Riot
costs $399 and the Archos Jukebox Studio 20 is $349.
Reducing the price of the 5 GB model to $299 would bring the
iPod within the range of many more buyers. It would probably boost
sales of the 20 GB model as well as many, are tempted by the drop in
price of the old model, would decide to pay out the extra $100 for four
times the capacity. For now two models could adequately cover the
market. This would let Apple introduce a 10 GB model if and when
component prices let it drop the price of the current model to
$249.
The faster Apple can drive down iPod prices through reduced
component costs, the larger a share it will have of the MP3 and backup
hard drive markets. With current sales, it is the largest volume
producer. It needs to maintain that position and make it unattractive
for a rival to enter the market and undercut the iPod with a product
that is seen as "good enough," as Palm undercut the Newton.
People are willing to pay a premium for ease of use and good design,
but, as Apple has found with the Mac market, once that premium exceeds
10% many prefer to buy cheaper alternatives. When Apple no longer has a
huge advantage in transfer speed, iPod pricing needs to be much closer
to rival products with the same capacity.
Apple also needs to push the iPod into new markets.
Unfortunately the "write-behind data lost" IEEE 1394 (FireWire)
problem on PCs has to be solved before Mediafour, with its Xplay
and MacDrive programs, can help to make Windows a volume market. In the
meantime, and to expand the Mac market, Apple should offer a voucher
program so non-Mac iPod users can bring CDs and download them at a
local Apple outlet (see Converting
Windows users with the iPod ).
iPod needs to be a good backup to other FireWire devices like
camcorders and digital cameras (see iPod: More than an MP3 player). A 20 GB iPod
would hold four hours of digital video and provide an easy download and
later upload into iMovie and Final Cut Pro would add to the reasons for
using the products together.
Similarly, with the latest digital cameras offering 5-6 million
pixels, professional users will have to buy a lot of memory or fast
convenient storage. A simple link from iPod to iPhoto would also help
the amateurs with high end cameras.
Extending iPod in these ways will mean it can be marketed through
camera stores and take it to users that Apple wouldn't otherwise reach.
This will also put iPod in the hands of a new set of reviewers and let
it ride on a new wave of publicity.
The more ways people can use the iPod, the larger the market will
be, and the more iPod can be the portable part of every Digital Hub.
How soon will we see the ad series "What do you have on your iPod?"
