[quote]Originally posted by satchmo:
You miss the point. They would probably sell a ton more at $299 and make more money than selling fewer at $499.
And it ain't bitchin, it's debatin'
If they sell it for less than it costs them, they'll bleed money, and the more it sells the more they'll bleed. I don't know for a cold fact that the 5GB iPod costs Apple more than $300 a pop, but it wouldn't surprise me.
The pricing tells me that, contrary to all the people who've always said the price was a deal-breaker, the iPod is still a strong seller, and the 10GB version is at a premium because sales of the 5GB version aren't flagging.
Apple is consciously pursuing a strategy of increasing market share at the expense of their profit margins. Fred Anderson came right out and said so, and if the "5 down, 95 to go" retail campaign isn't proof enough, the razor-thin margins on the new iMac should be. They've never made that much money on the iPod, as far as I can tell, and if they're not lowering the price it's probably because they can't lower it enough to significantly impact the number of units sold, and keep it profitable.
It'll probably continue selling well for as long as it has no serious competition, and so I imagine its price point will hold pretty well. There are players with bigger hard drives and more features, but they're still nowhere near as usable.