Remember when Apple’s infatuation with the iPhone drove me to think the Mac was being neglected? Now it’s the iPod that’s being neglected. Jon Fortt comes up with Three Reasons Why the iPod Still Matters on CNBC:
When iPod sales underperformed with 9.05 million units sales in last quarter’s earnings report, it scarcely warranted a mention: the big news was that iPhone sales outperformed with 14.1 million units.
Should anyone care about the iPod?
Here’s the key thing to consider, though: low-end iPods are the biggest reason why Apple now has more than 100 million credit cards on file – and it continues to be the Trojan Horse that hooks the youngest consumers into Apple’s ecosystem…
Ah, it’s all about the ecosystem. Right. It’s like $49 candy for children to get them hooked.
There’s got to be more to the iPod than $49 trinkets – and there is. Traditionally, the most popular version has been the mid-range nano at $149, which has a small color screen, video playback, and was the first full-fledged iPod to incorporate flash memory. That has changed, however – now the $229 iPod touch is challenging the nano’s popularity.
So, the iPod nano hooks young users into Apple’s touch ecosystem. So, does iPod touch capture their middle school credit card numbers and get them hooked on games and apps? What else?
Financial leverage. Think about it: Apple is the world’s top single buyer of flash memory. How did that happen? iPod.
Aha, so Apple gets flash memory at favorable prices, which gives higher margins, reduces supply for competing products. If only Apple could do that for expensive touch screen technology.
The new iPod touches also use the high-resolution Retina Display that Apple brought to the iPhone this summer, which should help Apple lower its cost enough to (perhaps) bring the technology to the iPad 2.
This is a good example of how Apple maintains quality and lower prices with higher margins, and brings in new customers to the growing ecosystem. Sweet, no?