Apple debuts new, low-priced iPod
Published: January 11, 2005, 11:39 AM PST
By John Borland and Richard Shim
Staff Writer, CNET News.com
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update As widely expected, Apple Computer on Tuesday introduced new versions of its popular music player dubbed the "iPod shuffle," priced at just $99 or $149, and respectively holding about 120 and 240 songs.
Based on flash memory, rather than the more expensive computer-like hard drives that have been the centerpiece of all other iPods, the new player is aimed at a low-end segment of the market that has been untapped largely for Apple to date. The player has two versions, respectively holding 512MB and 1 gigabyte of memory.
Unlike most similar devices, the shuffle has no display screen to show songs or playlists, consisting only of a slender white rectangle with the trademark iPod navigation wheel on one side. The company is instead highlighting the random-play aspect of the device, although this is a common feature on virtually all MP3 players.
"iPod shuffle is smaller and lighter than a pack of gum and costs less than $100," Apple CEO Steve Jobs said in a statement. "With most flash-memory music players users must use tiny displays and complicated controls to find their music. With iPod shuffle you just relax and it serves up new combinations of your music every time you listen."
Although widely expected following a series of leaks, Apple's move into the flash market does mark a departure from the company's previous high-end strategy. Jobs has previously dismissed small-capacity, relatively inexpensive MP3 players as products given as gifts and rarely used.
The flash market overall has been larger in terms of units sold than the hard-drive market, and remains very strong overseas. The largest share of the U.S. retail market over the past year belongs to iRiver, followed by Rio and RCA. Other players include Nike/Phillips, Samsung and Creative Technologies.
Other companies have been making their own new approaches to the low end and middle of the music player market as well. At last week's Consumer Electronics Show, Rio introduced a new 2.5-gigabyte player called the ce2100, priced at $199.
The holiday season proved a successful one for some of these Apple rivals. Creative Technology said Tuesday that it had sold more than 2 million MP3 players in the quarter ending December, prompting the company to raise its yearly revenue guidance substantially.
However, Apple remains the dominant player in the hard drive-based MP3 player market, accounting for more than 80 percent of sales in the year between October 2003 and October 2004, according to the NPD Group. The company said Tuesday that it had sold more than 4.5 million iPods in the fiscal quarter ending Dec. 25.
The company's share prices have soared from $40 to nearly $70 in the last three months, largely on expectations of continued iPod sales growth and associated positive effects on the rest of the company's business. The Prudential Equity Group said it expects Apple to ship 15 million iPod units and 22.5 million units in fiscal 2005 and 2006.
Tuesday's introduction of the flash iPod may also give Apple's iTunes store a boost. Previously, none of the flash players on the market could directly play songs purchased from Apple's digital music store, although customers could burn the songs to a CD and then re-rip them to MP3 format.
By offering a lower-priced player, Apple could attract a new segment of the market to its music store that previously only had access to rival download services such as Napster, Virgin Digital or MSN Music.
