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Did Apple pull a Redmond with new nano?
iSuppli's latest teardown analysis of the latest nano claims that Apple is turning a roughly three-fold profit over the cost of the hardware for each device, not counting manufacturing, packaging, or R&D costs.
We're not sure if this will lead to any substantial rise in profits, as Apple seems to spending all the money it saved on running the nano's torturous new television ad non-stop.
On one hand, Apple is a corporate entity, and stockholders don't want feel-good stories in place of returns on investments. If Apple knows that they can sell the same amount of product while pulling in a higher margin, they have every right to.
However, Apple has always maintained that their high prices are due to higher-quality products with better components. Earlier this year Steve Jobs said that Apple sells its products for the lowest price it possibly can, but eschews the low-end because it doesn't want to make products that it is not proud of. Shouldn't that pride also extend to not charging customers excessively while cutting production costs?
There's also an uneasy feeling of monopolization in this. The iPod nano has become the most popular music player on the market, by a long shot. During last year's holiday buying rush, each of the nano's different colors were amongst the top-ten sellers. Even amongst iPods, the nano has become dominant.
During its antitrust heyday, Microsoft was accused of using its dominant position to offer lower-quality products at an inflated price. If Apple is, in fact, heading down that road, the constant innovation in the iPod line could take a back seat to regurgitated products that simply sell due to their market position.
Let's hope the iPod Nano won't become the next Windows ME.
Feist rocks
Posted by Sean | September 22, 2007 5:28 PM