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Apple Makes a Safe but Profitable Choice with New iPods

by Van Baker  |  September 9, 2009  |  Comments Off on Apple Makes a Safe but Profitable Choice with New iPods

The new Nano will sell for the same price as the current model at $149 for the 8 GB model and $179 for the 16 GB model. The company also announced three models of the iPod touch with the 8 GB model starting at $199 and two additional models at $299 and $399 with 32 GB and 64 GB respectively. The feature set remains the same for the iPod touch despite rampant speculation by the trade press that the product line would be enhanced with the addition of a still and video camera similar to the iPhone. The decision by Apple to keep the feature set of the iPod touch the same is the safe element of the Apple announcement.
If Apple had added a microphone and camera to the iPod touch the company would have introduced a VOIP equivalent of the iPhone without any service revenue to go with it. This would have been an aggressive but risky choice for Apple. In the end it was one that the company chose not to make.
The Nano has been the best selling iPod ever with over 100 million sold. The focus on the Nano will resonate with consumers that are likely to be watching their wallets this coming holiday season. It is expected that the company will generate very strong revenues with the new iPod Nano in the upcoming holiday season as video continually gets bigger with 1 billion videos being uploaded to YouTube every day. However, the less than aggressive behavior from Apple gives us pause as the company has historically been very aggressive in cannibalizing its own products in order to stay ahead of the competition. This new safe behavior may come back to haunt Apple in the long run.

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Van L. Baker
Research VP
20 years at Gartner
29 years IT industry

Van Baker is a vice president and research director for Gartner's Retail and Manufacturing Industry Advisory Services. He covers consumer behavior as it relates to electronic commerce and emerging Web 2.0 technologies in the retail industry. Read Full Bio

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