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AUGUST 19, 2004
By Alex Salkever My Huge Mistake about the Mini I thought a smaller, not-much-cheaper iPod would be a bust. I sure was wrong. Still, just how big it will be remains to be seen Dear Steve, You probably remember an exchange we had back in January, 2004. You had just introduced the new iPod mini at Macworld. I wrote a column opining that the mini was too pricey -- only $50 less than the iPod -- and destined to flop in much the same manner as the ill-fated G4 Cube (see BW Online, 01/07/2004, "A maxiPrice for Apple's miniPod"). You then wrote me an e-mail asking that if my assumption of a mini flop proved incorrect would I publish an apology. "Of course!" I replied. Well, the mini is not a flop. In fact, it's a hit. I can't deny it. So, here's my apology, Steve. The mini is no Cube. I was wrong, and you were right. SUBWAY-SAFE. My first inkling was when e-mails arrived from people planning to buy the mini. And these weren't over-the-top e-mails from the raging fanboys who froth at the mouth when anything negative is written about Apple (AAPL ). Rather, these were thoughtful notes from people telling me very good reasons why the mini was worth it. For starters, they said, the smaller footprint would be a huge draw. One jogger and iPod owner said he would love to lose the extra weight on his arm or waistband and that the business-card-size mini was far less noticeable than the regular iPod, which is the size of a deck of cards. An urban hipster wrote to say that her pants' pockets floweth over between cell phone, change, keys, and wallet. She said the mini would be a huge improvement because it she would be able to whip it out on the "F" train without inadvertently emptying everything else into her neighbor's lap. A key source on Wall Street added further anecdotal evidence of my folly. In lower Manhattan, he intoned, the iPod has become the favorite gadget for the investment-banking set. These people -- his friends and colleagues -- were drooling at the prospect of a mini and were undeterred by the $249 price. Indeed, for Masters of the Universe -- whether in Manhattan, Palo Alto, Los Angeles, or San Francisco, such a sum is a dinner tab. My Depression-era sensibilities were perhaps out of sync with a large portion of the consuming classes. A LID ON SHIPMENTS? I watched as the waiting period for the mini grew from several weeks to more than a month and onward. The wait now is two to three months, with few signs of getting shorter any time soon. True, the wait is due in no small part to the limited supplies of Hitachi (HIT ) hard drives used to power the mini. But if the iPod mini weren't so popular, there'd be no shortage. Early adopters have already placed their orders, and now it's everyone else's turn. To be honest, I'm still hesitant to call the mini a mass-market phenomenon, however. Apple won't disclose the number of units shipped. A significant percentage of mini sales are going to Apple's retail and online stores, neither of which provides tracking data to tech analysts. But Hitachi is shipping only 200,000 drives per quarter, putting the upper limit on minis at around that number -- assuming Apple is buying up every disk drive that it can. So Apple won't even be selling 1 million minis this year. What's more, it will have trouble eclipsing the 1 million-per-year mark until Hitachi or other drive producers can significantly improve yields and up production counts. And until Apple records a boffo holiday season for the mini, it can't officially be called a runaway success. A BETTER DEAL. Do I still think the price needs to come down? Absolutely. The Sony Walkman didn't truly take off until it dropped below $200, and video-game consoles often sell poorly or slowly until they fall below that threshold. Heck, if you drop the price to below $200, I'd buy a mini myself. So would lots of other iPod fans. Any chance a cheaper mini is on the way? That's the rumor, but your flacks won't comment. So, Steve, I've come around to your way of thinking on the mini. Yes, it's a better deal than high-end players with flash memory cards rather than hard drives that cost about the same but store far less music. And yes, there's enough differentiation between the mini and the rest of the iPod lineup to both entice existing iPod owners to buy and bring in a new group who might have skipped the bigger Pods but love the pint-size power of the mini. I was wrong, and I apologize here and now in front of millions of online readers, as promised. And please, get well soon.  Salkever is Technology editor for BusinessWeek Online Edited by Patricia O'Connell
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