Apple Caps Explosive Year With iPod Mini.

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Author: Newman, MelindaKipnis, Jill

Dateline: LOS ANGELES

Apple is starting 2004 with a bid to push iPod sales even higher, with the introduction of its least-expensive iPod yet.

The iPod Mini bow, announced by Apple CEO Steven Jobs Jan. 6 at the Macworld Expo in San Francisco, follows a year of explosive sales for iPods and MP3 players in general.

Apple rang up fourth-quarter sales of 730,000 units, according to the company. The year's sales tally was 1.45 million units, compared with 467,000 iPods in 2002.

The new iPod Mini lists for $249 and features four gigabytes of storage, the equivalent of 1,000 songs. It weighs 3.6 ounces and comes in five colors. It will be available in U.S. stores from mid-February and outside the U.S. in April, and it works with both Mac and Windows.

By contrast, the Dell DJ 15 model retails for $249, has a 15 gigabyte memory, stores 3,700 songs and weighs 7.6 ounces. The player was launched in the fourth quarter; no sales figures are available.

Although it had been expected that Apple would debut an even cheaper iPodā€"perhaps one in the $99 rangeā€"Apple's VP of hardware Greg Joswiak says the company never considered a flash memory-based player. "Doing a $99, 30-song flash player would be of absolute zero interest to us and our customers."

However, he adds that the creation of the iPod Mini positions Apple to compete with less-expensive flash players.

"Even though it's a hard-drive player, we're positioning iPod Mini against flash players," he says.

The small size, bright colors and lower price point "will also appeal to a more youthful segment," Joswiak says.

Previously, Apple's cheapest iPod had sold for $299. That model will now increase from 10 gigabytes to 15 gigabytes of storage. The highest-priced iPod remains $499, with 40 gigabytes of storage.

Overall, MP3 player sales experienced growth in 2003 as average price points dropped for flash and hard-drive devices.

The Arlington, Va.-based Consumer Electronics Assn. (CEA) reports that shipments of MP3 players totaled 3.8 million units in 2003, which is a 121% increase over 2002. It predicts shipments of more than 5.1 million units in 2004.

Additionally, the CEA says that MP3 players generated $556 million in revenue in 2003, which is a 171% increase over 2002. This year, it projects that revenue will increase 27% to $706 million.

"The biggest thing you see going from 2001 to now is that the average unit price of players has dropped from $138 to $117," CEA senior manager Stephen Gates says. "The players are now doing a lot more, and you can store entire libraries. Three or four years ago they mainly appealed to young people, but that is changing."

PHOTO (COLOR): THE Ipod MINI: SMALLER SIZE, PRICE

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By Melinda Newman and Jill Kipnis