OK, so Apple held its much-awaited “And the Beat Goes On” event today (as usual Ryan Block has the best live-blogging of Apple’s prized dog-and-pony show) during which Steve Jobs unveiled some major changes to Apple’s iconic iPod and iTunes line, all designed to juice sales come this holiday season.
Among the less than earth-shaking but still smart product upgrades:
—iPhone owners will be able to make ringtones out of any one of 500,000 selected songs downloaded from iTunes for $.99.
—iPod nano has been reconfigured in a new product called The Fatty, which features a 2-inch high-resolution screen capable of showing video. The new nano also features the cool “cover flow” display of album covers and comes equipped with three video games. The 4 GB version will cost $149 and the 8 GB version will cost $199.
—The original iPod, now called the iPod “classic,” has been overhauled. It’s a lot thinner, starts at 80 GB capacity and goes up to…160 GB! The $80 GB model will sell for $250, the 160 GB model will sell for $350. (All the new products, except the new iPod, are shipping this weekend, btw.)
The earth-shaking news is that the iPod will now feature a touchscreen, Wi-Fi access, a browser and is the same, larger size as the iPhone (the screen is 3.5 inches although the iPod is now a very slim 8 mm, encased in metal). The new iPod also features YouTube videos made available via Wi-Fi connectivity. It is, in essence, an iPhone without the phone part.
The new iPod comes in two configurations: 8GB and 16 GB, priced, respectively, at $299 and $399. The devices will ship in a few weeks.
Another significant new product announcement, although one unlikely to surprise existing iPhone owners, is the creation of an iTunes Wi-Fi Music Store, which will enable iPod-touch model and iPhone users to download music to their devices instead of transferring the songs via computer-connected docking stations.
This development had been widely anticipated given that iTunes software already provides a feature for transferring songs from the iPhone to the computer. To give a marketing boost to the new Wi-Fi iTunes store, Apple and Starbucks have joined hands to give iPod and iPhone owners free access to the store at Starbucks’ outlets.
What wasn’t anticipated is the last bit of news Steve Jobs unveiled at the event: a price cut of the iPhone to $399. The highly praised and market-shifting device launched at $599 for an 8GB model and $499 for a 4 GB model (which now, apparently, will be discontinued because presumably everyone wanted the higher capacity model.)
Possibly because the iPhone threatened to overshadow Apple’s still-hot iPod product line, and given that the iPod now functions like an iPhone without the AT&T voice service, Apple’s price cut on the iPhone makes sense. Moreover, it seems likely that iPhone sales will now pick up as a consequence even as iPod sales get revitalized.
But, for reasons that have yet to emerge, Wall Street has taken a preliminary dim view of the price cut, sending Apple shares immediately down by at least 4%. One possible reason for investor concern is simply that the iPhone price cut is a surprise and Wall Street hates surprises.
Another possible reason for the lukewarm investor reception of Apple’s announcements (which are usually embraced with gusto) is that Wall Street thinks that iPhone sales, which are on track to reach one million this month, aren’t as robust as predicted, evidenced by the price cut. So much of Apple’s stock run-up over the past six months is due to healthy expectations for the iPhone and it’s ability to drive up Apple profits.
Cynthia Brumfield at 2:26 PM|Comments(0)
Blogs We Read
