iPod: Luxury or Commodity?

27May07

Tanned Tourist with iPod

The Technology Liberation front recently posted an article discussing the economics of iPod Repairs. The article goes into a discussion of the logistics of Apple providing or not providing free support for old iPods, but what I find more interesting is the demand for iPod repair itself. I think it comes from a struggle in consumers’ consciousness trying to determine whether the iPod should be a luxury item or a commodity item.

To being with, Apple goes to incredible lengths to protect its brand and keep its demi-luxury status intact. A new iPod according to Apple’s website will run for at least $250, still what many would consider to be a significant premium. Additionally, if one chooses to buy one in a store instead, they’ll find that the stores are set up much more like luxury item stores than commodity item stores. Each Apple product on display is given more room than the product could possibly take up, implying that there is enough value to fill up the shelf, regardless of product size.

However, many factors in consumers’ minds are wrestling with Apple’s designer presentation. For one, the average lifespan of an iPod is only about two years, a time that many people consider a bit short to be spending $250 for. Couple that with Apple’s desire to make the white earphones ubiquitous and it leaves consumers with an uneasy tension.

Don’t get me wrong, I think the strategy has worked very well for Apple in terms of profit margins. However, I just find it interesting that to do so, they’re overcoming the public’s resistance to pay $250 on a relatively regular basis.

(photo courtesy of Cheese & Onions via flickr)

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