Has Apple lost it?

Apple announced the iPhone 5 today and updates to the iPod line. Most of
the announcements were lackluster at best, but the event laid the
groundwork for the rumored iPad mini event in October, which could be
even more disastrous than the iPhone 5 event today.

The iPhone 5 is a nice upgrade, thinner and lighter, but at the same
time, it doesn’t have any feature that makes it a must upgrade for me
and my iPhone 4. This is probably more of a testimonial on how good a
phone the 4 is than what the 5 brings to the table. There are features
in the next version of iOS that I won’t be able to use, such as
turn-by-turn navigation, and, I’m assuming, Facetime over cellular, but
since there are apps I can use to replace these missing features I’m not
that worried about upgrading.

What’s more disturbing about todays event was the iPod line refresh.
Apple now sells the iPod shuffle, iPod nano, and iPod touch (the Classic
is still available, but it hasn’t seen an update in 3 years). The iPod
shuffle makes sense as an entry level music player, and at \$49, makes
it pretty affordable. After the shuffle comes the nano, which doesn’t
make sense at all. At least the 6th generation nano had a cool look and
could be used as a watch, this 7th generation looks like an iPod touch,
works like an iPod touch, but isn’t an iPod touch. Why would Apple waste
engineering sources on the nano? They priced it at \$149, only \$50 less
than the entry level iPod touch that includes the same amount of
storage. I just can’t think of a use case where the nano makes a better
purchase than the iPod touch.

Then there’s the iPod touch. At the \$199 price point, they’re now
selling the 4th generation iPod touch with 16Gb instead of just 8GB. No
other changes in the now two year old device. If you want the new iPod
touch which has several of the goodies of the iPhone 5, be prepared to
shell out \$299. You do get 32Gb at this price but is it worth a third
more than the iPod touch 4th generation.

It’s the pricing of the iPod touch which is the most worrisome. Making a
guess about the iPad mini launch next month, I bet that Apple will drop
the iPad 2 and put the iPad mini in at the \$399 price. This would hand
the Christmas shopping season to Amazon, Google, and possibly Barnes and
Noble. The software for iOS is heads and shoulders above what is
available for Android, but when a parent can pick up two Kindle Fire HDs
for the price of one iPad mini, what choice do you think they’re going
to make? I really doubt they’d price the iPad mini at the same price as
the new iPod touch, but let’s say they do. It would still be a third
higher than the Kindle Fire HD, although closer in price to the Nexus 7

Apple has solid devices, well built, but their pricing expectations are
all over the place. To me, it makes sense to:

  • keep the shuffle at \$49
  • place the old nano form factor (but with bluetooth) with 8GB at \$99
  • iPod touch 4th gen (8GB) (add bluetooth 4.0 and IPS screen) at \$149
  • iPod touch 5th gen (16GB) at \$199
  • iPad mini (16GB) at \$299
  • iPad 2 (16GB) at \$399
  • iPad 3 (16GB) at \$499

I see more and more kids getting Kindle Fires, which is now at \$159.
Apple has dominated the tablet space (and the mobile phone space in
profits), but if they don’t price their products more aggressively, they
will lose that dominance. Right now, a \$299 iPad mini would be a tough
sell in my school district when I get get a Nexus 7 (which has better
integration with Google Drive) for \$199. Forget about a \$399 iPad

p.s. Signs that Steve Jobs is gone: he would never have added that hand
strap to the iPod touch.