iPod Shuffle: Initiating a Price War?


Apple's $99 iPod Shuffle entry into the low-end flash-based MP3 player market has sent shock waves through the industry, the Korea Herald reports.

In response, Korean manufacturers are introducing aggressive price cuts on their flash players. South Korea's biggest MP3 player manufacturer, ReignCom, has cut prices by up to 25% in Korea, a move which will also extent to the company's overseas markets from February.

Firms like ReignCom see Apple and Sony as their major rivals and argue that their price cuts are "competitive". However, ReignCom will not be reducing prices on its hard drive-based players, which line up against Apple's iPod and iPod Mini.

Price slashing has been made possible by lower flash memory prices, and flash chipsets are likely to continue to experience price drops this year. Larger flash modules, such as 512MB and 1GB capacities, will fall furthest in price, and companies are looking to take advantage of economies of scale. Apple offers a 512MB and 1GB iPod Shuffle, separated in price by $50.00.

In South Korea, the 1GB Shuffle will cost only 60% of the equivalent ReignCom model, even after the price cuts. In fact, the 1GB Shuffle costs considerably less than the Korean company's 512MB model.

However, the Shuffle is not expected to be a huge seller in South Korea, where features are all-important. The Shuffle lacks a display and a radio tuner, for example.

Take a few minutes to have a read of this fairly thorough article.