The new hot investment vehicle: discontinued iPod minis

Blackfriars has noted that Christmas 2005 is a battle between the iPod and XBox 360 for the hot product of the season. Our current estimate is Apple will sell at least 8 million iPods for an average selling price of about $200 against about 1 million XBox 360s selling for an average price of $400 (we are part of that trend -- we've accounted for three iPod sales ourselves in our holiday shopping). But with iPod nano and Video iPod sales going gangbusters, it's a bit of a surprise that iPod mini -- the iPod that got discontinued at the iPod nano launch -- are now increasing in value.

This is a great example of people valuing scarce objects of desire more than those that are plentiful. Professor Robert Cialdini wrote about this phenomenon  with cookies more than thirteen years ago in his book, "Influence: The Psychology of Persuasion". Consumers taking a cookie from a jar with only three cookies in it found it more tasty, more desirable, and better looking than one from a jar full of cookies, even though the cookies were identical. The $1,000 XBox 360s on eBay this year are demonstrating this same "scarcity drives desirability" phenomenon. And because Apple isn't making iPod minis any more, that same scarcity has driven up iPod mini eBay prices by 32% since it was discontinued.

But lest we forget, the iPod mini product has always had huge demand, often outstripping its supply. For months after its introduction, it was impossible to find this music player in stock, even at Apple stores, and it was one of the hottest products for Christmas 2004. It just shows the staying power of great products -- and great marketing.

Technorati Tags: Apple, Business, Consumer Electronics, iPod, Marketing, Music, Influence