The iPod: Razor or Blade?

PBS technology columnist Robert X. Cringley has some thoughts on whether the iPod is a razor or blade, in the sense of selling single razors at a loss while selling profitable blades over and over.

According to Cringely, the margins on the iPod Mini are 30% for retail sales and 60% for Minis bought at full price from the Apple site. On the other hand, the profit on a iTunes song is around $0.20. Even though Apple sells millions of songs though iTunes, Cringely still thinks that the iPod is the blade.

While the iPod is most definitely a "blade", we don't exactly agree with him on the relationship between the iPod and iTunes. We're still convinced that Apple very much thinks of iTunes as a blade as well because it wants its DRM system to be the eventual winner against Microsoft's WMA system. We think that this is the reason why Apple cut the iPod's price by $100 last year and is now selling the iTunes-compatible Shuffle for less than $100. [Via Slashdot]

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