Why iPods Are So Expensive: Secret “Apple Tax”

Posted by Alex in Gadget on July 10, 2008 at 2:20 pm


Wonder why the iPod is so expensive as compared to other MP3 players? Well, sure - it looks and works great - but is quality necessarily the main driving force behind its high prices?

Perhaps not. Here’s an article in Popular Mechanics about the secret "Apple Tax":

Last year, when Apple introduced the original iPhone and the latest generation of iPods, another new product came out of Cupertino, Calif., but this one received little fanfare. It was a proprietary authentication chip. The chip works like a silicon key that unlocks streaming video functionality on iPhones and iPods and generally authorizes the devices to work with approved accessories. The advent of the “auth chip” made it impossible for any third-party company to produce iPod-compatible gadgets without dealing first with Apple—the only company selling the chip. Previous-generation iPods could output video over a generic $2 iPod video cable, but new phones and iPods require officially licensed Apple cables—and these can cost up to $50.

The chip has become a headache for many accessory manufacturers, who complain that they sometimes have to compromise on quality to pay for the chip and other Apple licensing fees, while still maintaining price points consumers can afford. “If we didn’t have to pay Apple for the dock and auth chip, we could have made a much better speaker for the same price,” said an official at a major electronics maker, who, like several sources for this story, requested anonymity because of fears that speaking with the press could jeopardize his company’s relationship with Apple.

Link - Thanks Andrea Faville!


Previous post
this post? Please Email this               
Next post

FROM THE NEATORAMA ONLINE STORE - Your purchase helps support the blog!

COMMENT

20 comments to "Why iPods Are So Expensive: Secret “Apple Tax”"

  1. DanO
    July 10th, 2008 at 3:07 pm

    Yeah, Ipod accessories are ripoffs. The main reason they come out with new models is so you have to buy a new case, charging cord and speakers. Microsoft is no better but Apple really shafts its customers.

  2. bean
    July 10th, 2008 at 3:17 pm

    Me and my cassette Walkman are laughing our asses off at all the Apple fanboy yuppies.

  3. caitlin13
    July 10th, 2008 at 3:40 pm

    Apple has a very loyal customer and fan base DanO. I’d hardly say we’re being “shafted”. If you don’t like it, don’t buy it. Join bean and his dinosaur age technology and laugh.

  4. Miranda Vink
    July 10th, 2008 at 3:50 pm

    Apple has a very loyal customerbase because of vendor lock in. If you’ve bought a collection of songs on iTunes, you can only play ‘em on an iPod or iTouch. That makes it hard to switch to another brand.

  5. DOJ
    July 10th, 2008 at 4:11 pm

    A dinosaur with a Walkman? that sounds like 3/4ths a Seth Galifianakis joke

  6. Tim Giachetti
    July 10th, 2008 at 4:46 pm

    I put custom firmware on my PSP. Except for lack of touch screen, it does everything the I-got-boned. Even calls from wifi hotspots.

    Why spend all that dosh when $175 and some software changes and get the same things done but with better screen size and speed? Even IRC chatting and adhock networking.

    Up yours Jobs.

  7. NuSound
    July 10th, 2008 at 4:48 pm

    But what does that have to do with the price of iPods? Either I missed something, or that’s is a seriously misleading title.
    __

    Miranda, without getting fanboyish, Apple’s loyal ‘customerbase’ has ZER0 to do with being locked in to iTunes purchases, and it’s just silly to suggest otherwise. The customer base existed long before ITMS or iPods. Customers (of any brand) are loyal because the believe in the company and it’s products. You can’t strong-arm that kind of thing.

    If you aren’t a “loyal customer of X” you can’t really tell “loyal customers of X” why they are loyal. I’m a long-time Apple customer. It has nothing to do with vendor lock-in for me, and you don’t get to tell me otherwise.

  8. AH
    July 10th, 2008 at 5:40 pm

    This doesn’t make iPods more expensive at all. Rather, it makes some accessories for iPods more expensive.

    Moreover, the story actually states, “In fact, licensing fees, such as the one for the ubiquitous “Made for iPod” sticker, account for the bulk of the so-called ‘Apple tax.’”

    So,

    1) This piece has nothing to do with the price of iPods or iPhones.

    2) The required chip — and it is only requires for particular kinds of accessories — is a minority of the “Apple Tax.”

    3) The rest of the “Apple Tax” is an entirely voluntary marketing program, wherein accessory manufacturers can put the symbol and label of Apple’s “Made for iPod” program.

    This is, by far, the most misleading labeling/framing of a Neatorama piece that I’ve ever seen.

  9. EP
    July 10th, 2008 at 10:12 pm

    Miranda, there are some programs to avoid this and copy the music to the pc. Most apple users know them.

  10. S-r-ex
    July 11th, 2008 at 5:30 am

    The reason why Apple is expensive, is because their logo is an apple which someone took a bite off, the company is called Apple, (our holy leader?) Steve Jobs presents their products, even touches them and holds them up, they have a minimalistic design, and not to forget all the hype around their products. “The Macbook Air, is SO thin, we had to make the DVD player external!”

  11. Sofar
    July 11th, 2008 at 5:55 am

    I do not approve of big companies making money.

  12. Homer Jay Simpson
    July 11th, 2008 at 9:02 am

    ah let the sheeple tire themselves out.

  13. Absent
    July 11th, 2008 at 9:42 am

    I once bought a crystal that was psychically charged by Uri Gellar. I’ve seen him to it, he holds the crystal in his hands and enforced the psychic energy into it. Steve Jobs does a similar thing with every iThing that comes odd the productions line, he personally infuses them with cool. I believe in this as much as I believe in my Uri Gellar crystal.

  14. Sasha
    July 11th, 2008 at 10:03 am

    @caitlin13: Some people like being shafted. They’re called Bottoms.

  15. Eric B.
    July 11th, 2008 at 10:32 am

    Wait, doesn’t this just tell us why the accesories are expensive, not the actual iPod?

  16. Thomas
    July 11th, 2008 at 11:27 am

    You see, they can’t make enough money selling the ipod and ripping off consumers, so they make more by ripping off manufacturers. They did something similar with Firewire, but not nearly on this scale.

  17. Xinavera
    July 11th, 2008 at 1:21 pm

    Don’t like iPods? Buy a Zune and be one of the tens of dozens of satisfied Zune users.

  18. nevrdull
    July 11th, 2008 at 1:54 pm

    oh my,the fanboys are out in full force again..
    appple does have a problem with its proprietary standards (as does MS, i know..) but then again, if apple wants to be perceived as the benevolent giant, which its supporters tell us that they are, it had better change its attitude.
    and oh yeah, steve is an asshat.

  19. Carl
    July 12th, 2008 at 12:51 pm

    Really? Apple tax? Gimme a break:

    ^ DEMAND = ^ PRICE

    simple.

  20. kirbie
    July 15th, 2008 at 2:19 pm

    I bought a 2nd G iPod nano and just over a year after I bought it I got the white screen of death. Now I have to reset it every time I want to use it and the ipod support site is a joke - there’s no way to contact them.
    I wish I’d got a creative Vision or some other such device.
    I also hate the fact that Apple’s products are so restrictive - it’s so difficult to alter with the software on them or alter them in any way.
    I’ll never fall for style over substance again.


PLEASE LEAVE A COMMENT

Neatorama Comment Policy
You don't have to register or login to comment, but it's easier if you do so. Comments aren't censored, but those that are abusive or off-topic may be edited or deleted.


Stay updated on the comments with Comment RSS