Meet the Lone Bear on Apple's iPod nano

Peter Burrows

Ever since he put out a report questioning the briskness of early sales of Apple’s new iPod nano on September 13, American Technology analyst Shaw Wu says he's been feeling the wrath of Mac-loving investors. “What’s really funny is that everyone interpreted my comments as negative. All I said is that sales of the nano were were ‘good, but not great’,” says Wu. “And I’m getting lynched for it!”

So what’s he saying now?

He’s not backing down. His checks with retailers suggest that the only nano model that is leaping off shelves is the black version with four gigabytes of storage. He says customers clearly prefer the glitzy new black color to the familiar iPod white. What’s more, they’re willing to pay for more storage—and less interested in paying at all for the nano models with just two gigs of storage. That’s why, as he puts it, the two-gigabyte white model “isn’t selling that well.”

(Indeed, it seems iPod nano demand currents aren't primarily a question of black versus white, but about storage capacity. Shoppers at Apple’s website are advised of a one to two week delay in shipment of either four-gigabyte nano, while the two-gigabyte models will ship within 24 hours.)

I don’t know if Wu’s data is accurate, but I do think he’s asking the right question. Even if Apple sells an armada full of nanos, will it be enough to satisfy Wall Street’s rarified expectations? He points out that analysts expect for Apple to sell as many as 11 million iPods in the December quarter. To hit those kind of numbers, Wu figures Apple would have to sell as much as eight million Nanos in the December quarter—nearly double that of last holiday season. “That’s a lot of nanos.”

He doesn’t say the task is impossible, but he does think Apple will have to do one of two things to hit the mark. On the one hand, it could increase the nano’s storage capacity to make it more attractive to the many millions of consumers that own the now-defunct iPod mini, which came in versions with as much as six-gigabytes. Otherwise, he fears the nano will seem like a step-backward for these loyal fans. Or Apple should cut the price of the nano, now at $199 and $249, to help attract first-time iPod buyers—or to make it seem like a better value for those existing customers. “At $249 for only 4 gigs, I just don’t see [them hitting that target.]. But I’m used to being contrarian. I know I’m standing pretty much alone on this.”

That may cause many of Apple's defenders to consider Wu an enemy of the Macdom--but Wu insists otherwise. “I’m actually a hard-core Mac user,” says Wu. He says he’s used Macs "through thick and thin" since 1980, starting with the Apple II. “People probably think I don’t know anything about Apple, but I’m a big fan of the company’s products.”

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