Apple Shrinks Price on Dinkiest iPod

Apple's (Nasdaq: AAPL) iconic iPod lineup just got a lower price of entry.

Apple slashed the price of its tiny iPod shuffle by more than a third, dropping the 1 GB model to US$49. Plus, Apple is introducing a new 2 GB model of the iPod shuffle for $69, which will hit retail cases later this month.

"At just $49, the iPod shuffle is the most affordable iPod ever," noted Greg Joswiak, Apple's vice president of worldwide iPod product marketing .

The Wearable iPod

The iPod shuffle is just half a cubic inch in volume, weighs just over half an ounce, and features an aluminum design with a built-in clip that makes it easy to attach to clothing. It comes in five colors -- silver, blue, green, purple and a (Product) Red special edition. The overall design was introduced in late 2006 as a follow-up to the first version, which was shaped more like a stick of gum and came with a lanyard.

All shuffles use flash memory for storage and none have included a screen of any kind. A single playlist is created by the user on a Mac or PC, and the most noteworthy feature is the ability to randomly "shuffle" the list.

"The shuffle is priced to appeal to anyone who wants a portable media player but doesn't also have a lot of money to spend," Susan Kevorkian, IDC's program manager of IDC's audio consumer markets analysis, told MacNewsWorld.

While the iPod shuffle is at the very lowest end of Apple's iPod line-up in both price and functionality, ironically, it can become even more appealing to consumers who've shelled out hundreds of dollars for the more feature-rich iPod touch and iPhone.

"It also appeals as a secondary or tertiary device -- for the gym, to have as a backup," she added.

As for the new low price, Kevorkian said Apple is facing competition from generic "white box" manufacturers worldwide that tend to run under the radar with low-priced, high-volume offerings.

Cheaper Flash

Still, the price reduction likely has little to do with competition and more to do with the supply chain.

"We've consistently seen pricing on flash-based players decline, and that's directly related to the falling prices of flash, which have become less expensive to where today you can get a gigabyte of flash in a player for $50," Kevorkian explained.

"We think the iPod brand -- where even the white headphones are so distinctive -- has the brand cachet to compete around the world," she said.

The iPod shuffle requires a Mac with a USB 2.0 port, Mac OS X 10.4.8 or later and iTunes 7.4; or a Windows PC with a USB 2.0 port, Windows Vista or Windows XP Home or Professional (Service Pack 2) or later and iTunes 7.4 or later.