By Richard Menta 3/07/04
Back in December of 2001 I reviewed a product that I felt had amazing potential to change the digital music market. At a time when 64 MB flash memory players were the norm and 5GB hard drive based jukebox players were large and heavy as hell, this device promised at that moment to solve the capacity to size problem facing MP3 manufacturers.
Microdrive technology in Apple Mini.
The device was the 1GB IBM Microdrive, the latest evolution in the Microdrive technology that was already a few years old at that writing. The 1 GB Microdrive promised to bring a high capacity player in a small, light package that at the right price would immediately take over much of the MP3 player market.
Price is the key word here. At the time the 1GB drive alone sold for $360. What stands out on that review is this admonishment I made to IBM on a product I was thoroughly impressed with:
Companies like IBM traditionally employ a strategy of premium pricing when selling their most compelling innovations. At the time of this writing, the retail price for the 1GB drive is about $360, more than most MP3 players including the 6GB versions of the Nomad Jukebox and Archos Jukebox.
Let's play a game. What if after Jan 1st IBM dropped the Original Equipment Manufacturer (OEM) cost of the 1GB Microdrive to a point that would allow MP3 manufacturers to sell a basic 1GB portable for $250?
The answer is Microdrive players would take over a sizable percentage of the market. A large adoption by manufacturers would also propel the CF slot format over the others, ending for some the decision of which flash media to commit to. That's a lot of market influence, one that remains dormant if IBM is conservative with its price cuts….The 1GB Microdrive can dominate the market now, that's how good it is. If 1GB drives aren't a dominant niche in the MP3 market next Christmas, IBM can only blame itself for a lost opportunity.
Jump ahead to last year when on Jan 12 2003 I came out with MP3 Newswire's annual winners and losers list. The IBM Microdrive made the losers list:
...This tiny and remarkable drive should have taken over an MP3 portable market littered with 32MB and 64MB players, but Big Blue - a strong believer in premium pricing - arrogantly kept the street price high on their Microdrives despite the fact the technology was already several years old. Then came the Apple iPod and the Microdrive became a footnote. Oh well, they still have the pro-digital camera market...until someone puts the Toshiba drive found in the iPod inside one of them.
As far as I was concerned it was over. As I predicted another product came by to narrow the Microdrive's competitive advantage and IBM missed an opportunity - to Apple of all people.
A few months later IBM sold the technology to Hitachi.
And Hitachi has brought the technology back - with the help of Apple no less - with a 4GB drive that returns some of the size/capacity advantage lost by IBM.
We have all seen the news of the success of the new Apple iPod mini. The unit sold out its first hundred thousand players in just a few weeks and is poised to overtake the full sized iPod in total sales. The player uses the 4GB Microdrive as its storage medium.
The price of the iPod mini?
The $250.00 price-point I suggested for the 1GB Microdrive back in 2001..
To be honest, when the iPod Mini was first released I was one of those who questioned the $250 price-point. I felt $199 was more appropriate to the 2004 market for two reasons. The first is that the iPod Maxi (no that doesn't sound right) for only $50 more was already reasonably small and light with significantly more capacity. Second, there are other (larger) jukebox units selling for less than $250. True, there are tiny 512MB flash-based portables selling for that amount, but they are not big sellers.
Apple proved my logic wrong and is Steve Jobs happy about that as there is another $50 (or 25%) in added revenue per unit for Apple's coffers.
But the biggest winner is the Microdrive, a device I called a footnote a year ago. Give Hitachi credit for making viable to the marketplace. Give them credit for convincing Apple this was the drive for them.
Give them credit for doing what IBM couldn't, giving mass commercial life to a piece of impressive technology.
The iPod Mini can be purchased on Amazon
Other MP3 stories:
iPod Mini Released