Mac, iPod average prices decline during Apple's Q1

Macs were 8 percent cheaper while iPods were 18 percent cheaper, suggesting that either Apple was discounting its products or buyers chose less expensive options.

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
Tom Krazit
2 min read
Apple's average selling price for a Mac was down about 8 percent during last quarter. CNET

Much was made of the fact that Apple didn't introduce lower-cost Macs ahead of expectations of a brutal economy, but Mac prices did in fact decrease last quarter.

The average selling price of a Mac declined 8 percent during Apple's first fiscal quarter, from $1,532 a year ago to $1,408, according to Apple's 10-Q filing with the Securities and Exchange Commission. It also declined 4 percent from the average price of $1,469 recorded during Apple's 2008 fiscal year.

iPod average prices declined even further. Apple's ASP for the iPod during the holiday quarter fell 18 percent to $148, compared to $181 a year ago. During fiscal 2008, the average selling price of an iPod was $161.

At the same time, unit shipments were up in both categories. Mac shipments rose 9 percent compared to last year, while iPod shipments rose 3 percent.

What does that suggest? Either Apple was more aggressive with discounting during the quarter, or people opted for lower-priced Macs and iPods when doing their shopping last quarter.

Apple did cut the price of the entry-level MacBook to $999 during the quarter, and the MacBook redesign might have enticed some buyers to purchase that machine over the MacBook Pro. Apple touted the improved graphics and display on the new Macbook as bringing many of the MacBook Pro features to a notebook that cost $700 less.

And on the iPod side, Apple's iPod Touch prices decreased in September, which might account for some of the decline. It's not hard to imagine, however, that holiday shoppers confronted with fixed budgets liked the idea of buying a new iPod for the kids, but opted for the Shuffle or 8GB Nano rather than a more expensive model.

Margins at Apple's retail stores declined in general last quarter. The company's retail store managers were reminded last quarter that they could match discounts at Apple partners such as Best Buy, and it also seems there was a fair amount of bundling: buy a Mac, get an iPod. Some analysts thought Apple would cut prices more significantly on Black Friday than in years past, but the company stuck with its usual plan.

Apple smashed its earnings targets for the quarter even with the lower prices, suggesting that prices could fall even further without taking a great deal away from Apple's bottom line. It can thank the iPhone for that.