September 5, 2007 1:10 PM PDT
iPod gets touchy, with price cut
Last modified: September 5, 2007 4:39 PM PDT
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September 5, 2007
Apple announced on Wednesday a complete overhaul of its line of iPod portable music players and a significant cut in the price of its recently released iPhone.
The iPod Touch, essentially a phoneless, camera-less version of the iPhone, has the same 3.5-inch screen, multitouch interface and home screen as the smart phone. The iPod Touch has the ability to connect to the Internet with 802.11b/g Wi-Fi. The Touch comes with Apple's Safari Web browser and has built-in Google and Yahoo search.
The new iPod comes in two configurations, an 8GB version that costs $299 and a 16GB model that costs $399. The battery in each can handle 22 hours of audio playback or 5 hours of video, according to CEO Steve Jobs. Both versions are expected to be available this month.
The device runs the same version of Apple's OS X found in the iPhone, said Greg Joswiak, vice president of iPod products for Apple. Also, as with the iPhone, developers will have to settle for building Web applications to run in Safari on the iPod Touch, as Apple doesn't plan to open the new device up to application developers just yet.
The iPod Touch may pull some customers away from purchasing the iPhone--in that it's cheaper and doesn't require a two-year contract with AT&T--at the cost of being unable to make voice calls, of course. But Apple isn't that worried. "It's better than having to go to a competitor," Joswiak said.
Apple is also revising some of its previous iPods, including the regular iPod, the Nano and the Shuffle. Apple will offer a 160GB version of the regular iPod (now known as the iPod Classic), which is enough storage for 40,000 songs, according to Jobs. It is thinner than the regular iPod and has better battery life, enough to handle 40 hours of audio. That model will go for $349, and an 80GB version will now be $249, a price drop of $100. Those iPods will be available this weekend.
Apple is making only minor changes to its iPod Shuffle line, which will come in new colors and is available now for the same price as the previous line. A new Product Red Shuffle will benefit a program fighting AIDS, tuberculosis and malaria.
The iPod Nano will now have video capability, though its screen is only 2 inches wide. It comes loaded with new games and Apple's Cover Flow software, which lets users scroll through album covers when searching for music. The Nano will come in two configurations, a 4GB version priced at $149, and an 8GB version that will cost $199. The Nanos will come in the same new colors as the Shuffle and are expected to be available in stores this weekend, according to Jobs.
The Nano overhaul is in line with previous rumors of a shorter, squatter iPod. The new Nano, from a volume perspective, is identical to the old one, but it's shorter and wider. That's to accommodate the 2-inch screen, which has a 320x240 pixel resolution.
Initial reaction to the new Nano, which has been the most popular version among previous iPods, was mixed. Readers posting on CNET News.com griped about the new colors and expressed skepticism about watching videos on the 2-inch screen.
One poster on AppleInsider's forums opined, "I like it, but it kind of reminds me of a cracker. I feel like adding some cheese and taking a nibble."
However, it's not likely that many people will buy the iPod Nano with movies or TV shows in mind, when they now have two other options with larger screens and larger capacity.
Jobs also announced news that may irk some early adopters of the iPhone: the price on the 8GB model has dropped to $399--a savings of $200--only two months after the product became available in stores.
Introducing the iPod Touch
At S.F. Apple event, CEO Steve Jobs introduces an iPod with almost all the same features of an iPhone, but without the phone.
Price cuts to attract iPod shoppers?
Apple CEO introduces an overhaul of the iPod lineup (and pricing) for the holiday season. The iPhone gets a big price chop too.
Roger Kay, president of Endpoint Technologies, said the rapid price cut is probably the result of slower-than-anticipated demand.
"It is a very interesting sign. My first suspicion is that they aren't getting the volume," he said.
But AT&T, the iPhone's exclusive wireless service provider, dismissed concerns about iPhone sales.
"We are very pleased with how customers have responded to the iPhone," said Mark Siegel, a spokesman for AT&T. "And the new pricing by Apple will do nothing but make the device more popular. So we view this news very positively."
And Jobs reiterated Apple's statements that it plans to have sold 1 million iPhones by the end of the current quarter in September. Before the price cut announcement, Piper Jaffray also echoed its previous estimates that Apple would hit that mark. Still, the financial analyst community hasn't had the best track record predicting iPhone sales so far.
On the software side of things, Apple announced a new version of its iTunes media player, which is scheduled to be released Wednesday night. A new feature in the updated iTunes allows users to create ringtones from any segment of a song they've downloaded through the iTunes Store. That service costs 99 cents per ringtone, and does not include the price of the song. The ringtones will be compatible only with the iPhone.
Apple also announced the iTunes Wi-Fi Music Store, which allows consumers to buy songs wirelessly. Users can preview, download and listen to songs right away on their iPod Touch or iPhone (after a software update expected later this month). Upon syncing the device with a computer, those songs will be transferred into the user's iTunes library.
Apple fans have been clamoring for this capability ever since the iPhone was introduced, but the company wanted to make sure to get it right the first time before plunging in, said Eddy Cue, vice president of iTunes at Apple. "We didn't want to have a crippled store," he said, meaning a store that didn't have the same inventory as the regular iTunes Store or that didn't provide the same shopping experience.
The wireless store is just confined to music at the moment, however; people won't be able to purchase TV shows or movies through the Wi-Fi store, Cue confirmed. He declined to specify when that might become available.
Along with the Wi-Fi Music Store, Jobs announced a partnership with Starbucks. People with an iPod Touch or iPhone who walk into a Starbucks coffee shop will see a button pop up on their screen. They will then have the option to buy the last 10 songs that have been playing in the store, as well as music from featured artists at Starbucks.
Apple's stock did not react well to Wednesday's news, tumbling 5.13 percent, or $7.40, to close at $136.76. The stock has been extremely volatile this year, and it tends to follow a "buy on the rumor, sell on the news," progression.
But the movement could also be related to concerns that Apple's margins could be in for a hit with the steep discount applied to the iPhone. The company guided more conservatively on earnings per share for the current quarter when it announced third-quarter earnings in July, perhaps well aware that steep price cuts were in the offing for the iPhone. That is, unless it needed to stimulate demand more than previously thought.
CNET News.com's Michael Kanellos and Marguerite Reardon contributed to this report.
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year sometime, yet the ipod part was what i was wanting
I'm sure AT&T will offer cash-back on iPhones already purchased...right?
I assume that when they get around to adding some more "enterprise friendly" features (activesync anyone?), that it'll be a new higher priced model.
[http://Sorry...Great Ipod News, but the price drop in the iPhone sort of trumped it for me|http://Sorry...Great Ipod News, but the price drop in the iPhone sort of trumped it for me]
insulting to those of us who bought them when it first came out. I
just bought an IMac and now i'm thinking about returning it and
have a bad taste in my mouth with Apple. Bad Apple! You just lost
a recent convert. So sad.
The immediate price cuts on the existing iPhone models do smart though. Early adopters got screwed there. :/
Anyways, I won't be waiting in any lines, but I will likely buy one of the 4gb iTouch models. I don't have any need for music on it or video either, but the rest is good.
I think it's fitting justice to all of those Apple fanbois who paid their Steve Jobs tithe. Like lemmings off a cliff... Enjoy the satisfaction of being the first with a phone that doesn't do anything more than any other phone (in fact in a lot of ways less) aside from having a pretty face. (oh and you might want to check your voice mail now since you have no indicator on the phone that you have anything waiting... I'm sure there are a ton of third parties out there that will remedy this shortfall with a web app in Safari! Ha!)
Goooooooo Steve!
soon is an insult. I'm canceling my contract and returning the imac
I just bought and yes, I'm done with apple.
What??!!
THE NEW IPOD ISN'T AVAILABLE IN WHITE!!!!!
*collapses*
Will any consumers buy an iPhone and an iPod?
Without the price cut, I think this would have done in the iPhone.
Kinda' strange.
Everyone knows Apple has the ability TODAY to include an 80GB or 160GB micro hard disk drive in the iPod Touch. Increased storage capacity that is critically required for storing the type of multi-media information (videos, photos, and, of course, thousands of audio files) for which the gorgeous 3.5? video screen on the iPod Touch seems so perfectly suited. But, instead, Apple chose to offer two models of the iPod Touch with only a paltry 8GB or 16GB of flash memory instead. Big mistake. Many current iPod owners have 10 GB or even 20 GB of music files today. Why would anyone purchase a new iPod Touch with the ability to store and display videos and photos in addition to playing audio files when it has LESS memory than their current 2-3 year-old iPod? Doesn?t make sense.
I understand WHY Apple chose this strategy. Apple obviously didn?t want to cannibalize sales of its new iPhone, which is nearly identical in appearance and features to the iPod Touch with the addition of cell phone functionality. They wanted the iPhone to be the step-up purchase decision over an iPod Touch ? for an additional $100 you get an iPod Touch PLUS a cell phone and wireless internet capabilities. The iPhone only comes with 4 GB or 8 GB of flash memory for good reason. Cell phones get dropped, tossed on tables, and abused daily. ?You can?t put a hard drive in a cell phone!? Apple engineers no doubt exclaimed! So, they went with much more rugged, reliable and smaller capacity NAND flash memory for the iPhone. In addition to the step-up marketing strategy angle, using flash memory instead of micro hard disks also increased the battery life of both the iPhone and the iPod Touch. For the iPhone, battery life (talk time) is critical. But I could easily live with 16, 12 or even 10 hours audio playback time on an iPod Touch with an 80 GB or 160 GB micro hard disk instead of 22 hours for an iPod Touch with 8 or 16 GB of flash memory.
Finally, Apple drops the price of the iPhone by $200 just two months after it?s first offered for sale! Great for enticing new customers, but anyone who just bought an iPhone has got to be royally upset. I?m guessing AT&T customers will try taking advantage of their 30-day exchange policies and exchanging their ?expensive? iPhone for ?new? $200-cheaper iPhone. And what does this do for the profit model for iPhone sales? Seems like sales would have to at least double or triple just to maintain the same income flow into Apple corporate coffers. Fixed fabrication costs could not have dropped by $200 in just a couple months. Oh - and why not offer a 16GB iPhone? Or 3G capability?
Apple will, without a doubt, offer much higher-capacity iPod Touch devices within a year ? possibly sooner ? at about the same price as today?s models. And everyone knows it. I think many people will wait for that inevitable second-generation iPod Touch with much greater storage capacity. I know I will.
logically included. It's the only glaring thing missing from this
absolutely fabulous device.
Good Job Apple! I don't care what all the whiners say, you guys
are kicking serious butt! The new products are great and I am so
thankful I bought aapl at $22.50.
http://money.cnn.com/quote/quote.html?
symb=AAPL&time=3yr
Does this look like a company that is in trouble?
I love reading all of the experts telling us all what Apple is doing
wrong and how their products don't stack up.
They own 75% of the MP3 market and the highest customer
satisfaction rating among MP3 players in the market.
Their computers AND software really kick butt and have been
gaining market share in a big way. Apple has the highest
customer satisfaction rating in computers.
The iPhone has had the fastest selling debut ever for a cell
phone and even though it is their fist generation, the iPhone has
the highest customer satisfaction rating among cell phones.
The experts will agree that Apple can do nothing right and
almost everybody here is whining and complaining about Apple,
but the proof is in the pudding and I will continue to laugh all
the way to the bank and be happy that Apple stock has more
than paid for all the Apple products I have purchased over the
years and then some.
Go Apple and all praise his worshipness and Apple savior Steve
Jobs!
- iPod Pricing is always king
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by Andreas Graham
September 6, 2007 7:49 AM PDT
- I think that the drop in the price of the iPhone is absolutely logical. First, the iPod is a critical part of the Apple business model. The top of the line iPod has pretty consistently been sub $400. So if the new 8gig iPod touch is $300 then it is going to be a pretty tall order to ask people to pay an extra $300 for phone and email, on top of a service agreement. It seems that the iPod is driving the pricing of the iPhone not overall sales.
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See all 66 Comments >>On a separate note, I do feel that there is no real compelling reason to upgrade for us 5g iPod users. the iPod classic is really just a cosmetic improvement and the touch, though beautiful, has too little capacity. I am going to stay with mine until we see a 60gig touch (or go the iPhone route once it gets 3G capability).