The case for a $149 iPod Touch

The global recession has been hitting the technology market particularly hard these past few months.  Christmas sales across most electronics retailers (besides Amazon) were significantly down and Circuit City is even out of business.  PC sales are down in just about every sector except the bargain-basement Netbook category.

Apple, on the other hand, is faring pretty well.  They had record revenues and profits for their holiday quarter and most market watchers think they'll do pretty well for the current quarter.  Even so, there is that low-priced computing device market that is wide open right now for those who can innovate in that space.

Many Apple customers (myself included) really wish Apple would build a Netbook.  I want an Apple Netbook not necessarily for the cheapness, but more for the smallness (though the cheapness wouldn't hurt) and of course to be able to run OSX natively.  Apple has said, again and again, that they can't make a Netbook that would compete in price with the ASUS, Acer and HP's of the world and they'd be proud to produce.  They simply can't get their margins, design and production costs down to the levels that the PC makers can.  Or they choose not to. 

But, when questioned on this, Apple execs always end up pointing to the iPod Touch and iPhone platforms as Apple's answer to the Netbook.  And they really have a great point.  The Touch platform has most of the same capabilities as a Netbook but is cheaper and smaller.

Maybe it is time to step it up in this area.  The 8GB iPod Touch is already a great deal for $200.  But really, the purchase is just the beginning of the customer's relationship with Apple.  Then, there is the iTunes and App store.  While they'd need to sell around $150-$300 of music and apps to break even on a $50-100 price drop, the price point might open Apple up to a whole new level of customer.

Apple operates the AppleTV sales with this model - in the US at least.  They sell the device at around cost and expect to make money through iTunes sales over the next two years.  Why should the iPod Touch be any different in terms of pricing?

A drop in price would spike Apple's share of the handheld gaming market.  Apple doesn't currently need much help getting developers on board, but any on the fence of PSP or Gameboy would develop for Apple first if they sold a $150 'console'.

It wouldn't just be games, all apps would have a bigger audience. Even music and movies would see more sales.  Add a free (come on Apple! $50?) TV connector would open the iPod Touch up as a full screen video player.

But I think this price point would also open the iPod to new types of customers as well.  Value conscious enterprise could even conceivably join in.  Apple already has enterprise deployment kits for iPhone.  iPod wouldn't be much different.  For workers on the go (on company campuses), the iPod makes a great communications device.  Email, Web Browsing, Instant Messaging and even Exchange support are all within a Wifi connection.

With VoIP from Fring or Truphone, they can even function as phones.

With Citrix or VNC, they have a full computer at their fingertips. 

Imagine everyone at a hospital outfitted with an Exchange enabled iPod Touch.  You could stop buying expensive, virus-riddled PCs and outfit everyone from doctors and nurses to administrators to facilities workers with a little wallet sized communications device that can do everything a laptop can do.  Business wouldn't need to buy laptops and phones for employees that didn't need them.

Or what about manufacturing plants or schools and universities?  Airports? Even prison workers could use iPods as communications devices - though you could probably make a pretty dangerous shiv out of a lost iPod touch..

The point is that the iPod Touch hasn't yet even come close to its potential.  It should, but in this market, a price reduction would help it get there much faster. Apple really has a chance to deal the knockout blow to the industry.