alex chiang: web 6.0

I’ve been thinking about the $249 price point for the miniPod a bit. As a consumer, I’m pretty disappointed, because hey — everyone wants cheap stuff, right? On the other hand, the more that I think about it from the business standpoint, the more I like it.

Lots of people (like me) see the $249 price and think “That is dumb. For an extra $50, you can get so much more. If it were only $149, I’d buy it in a second.” So the people who think that (like me) are people who wouldn’t have bought an iPod at $300 anyway. Never would have considered it. But we may have bought a flash memory player for $200 that could hold 256 MB of music.

Now we have to think to ourselves “Do I spend the extra $50 for the miniPod and get 4 GB of space + the iPod interface?” For a mere $50 more, you can get a minipod vs a flash player and get “lots more”. But the thing is, once you’ve converted to *that* mindset, you look at the $300 iPod and see that you can get 15 (!) GB of space for “only” $50 more.

So now you’re actually considering a piece of hardware that you absolutely wouldn’t have bought before the minipod. I don’t know all the ins and outs of the psychology of marketing, but I bet that getting a “no-way” to change his/her mind to a “maybe” is one of the hardest parts of marketing.

So maybe you only spend the extra $50 over the flash player and get the miniPod, but maybe you’ll spend an extra $50 over the minipod and get the real iPod. Either way, Apple wins without cannabalizing the (presumably) more profitable $300 iPod model.

Of course, this analysis ignores the intangibles that minipod offers, like different colors and smaller form factor. But from a pure pricing perspective (and looking at it as someone trying to
make a PROFIT), the $250 price doesn’t seem so dumb after all.

Also, I’m ignoring the other players that offer lots of GB for $200 — $250. My belief is that the mass market is not as “value-focused” as the geek market. The mass market is willing to pay for “cool” or whatever you want to call it, whereas the geeks can only think of things in terms of GB / $.

In other news, I’m off to Aspen to celebrate Dr. Martin Luther the King day.