With the New iPods, Profit is the Word

Analysts at Gartner say Apple has focused the release of the new iPods for profit and not market share, like canceling the 1gig iPod, which they say could have been a big seller. But since Apple has over 75% of the market, they feel they can price it a little higher and not cut the prices like they did previously. What this will do, is, it will give Microsoft and the Zune Player an opportunity to slide in for some extra market share. Combine this with Microsoft promoting itself as the next generation MP3 Player and the iPod as the Pong of digital music, and Microsoft may be able to do something, especially if some young enterprising hacker cracks the DRM and the 3 day or 3 play limitation.

The top sign Apple is going for the green is its lack of aggressive pricing, according to Gartner analysts Joseph Unsworth and Jon Erensen in a Monday report. The second-generation iPod shuffle, for example, could have been priced closer to $49 to stimulate demand from users, since the cost of materials going into it amounts to only $30, the analysts said. Instead, the shuffle is priced at $79.

The company could have also priced the new 8GB nano product lower than $249, since its materials only cost $130, Gartner said, the same with its 4GB, which at $199 is far higher than the $90 worth of materials inside, and the 2GB version, which is $149 and is made from materials costing only $70.

The two Gartner researchers even lamented Apple’s decision to discontinue the 1GB nano, which they say could have been a nice mass-market item for around $99.

“Apple is in a secure position atop the portable media player market and has decided to strategically focus on its margin this time,” the analysts said.

I don’t know about most people, but if I know someone is beefing up the price on me, it tends to push me somewhere else.