Storage Valuation: Apple's 2001 Pricing Strategy
Steve Jobs set the price of a 5GB hard drive at $399 to launch a device that stored 1,000 songs.
By Petra Murphy ·
Apple sold 5GB of digital storage for $399 when the company launched the original iPod on October 23, 2001. The price point established the cost of portable music storage for the next decade. The device arrived twenty-five years ago as a pocket-sized unit designed to hold a user's entire music collection.
CEO Steve Jobs introduced the hardware during a keynote where he teased a breakthrough device that was not a Mac. He positioned the product as the center of a digital lifestyle, intended to connect with cameras and DVD players. The company targeted the music market because it lacked a clear leader at the time. Jobs noted that competitors like Creative, Sonic Blue, and Sony had not yet found the right recipe for digital music.
The first model used a Toshiba 1.8-inch hard drive that was 0.2 inches thick. The resulting device measured 2.4 by 4 by 0.78 inches and weighed 6.5 ounces. Jobs described the weight as lighter than most cell phones of that era. The player supported MP3, WAV, and AIFF file formats with CD-quality sound.
Connectivity relied on a single FireWire 400 cable for power and data transfer. Jobs claimed this connection moved a full CD in five to 10 seconds. He compared that speed to the roughly five minutes required over standard USB connections at the time. The system could transfer 1,000 songs in about 10 minutes, a process that took five hours via USB. A lithium-polymer battery provided 10 hours of playback and reached 80% charge in one hour.
The interface featured a scroll wheel with a piezoelectric clicker for tactile feedback. This design allowed users to navigate playlists, artists, or specific songs with one hand. The first track played during the demonstration was Sarah McLachlan's Building a Mystery. The launch coincided with the release of iTunes 2, which added MP3 CD burning and automatic syncing features.
Apple discontinued the iPod line in May 2022 after the seventh-generation iPod Touch. The product line remained active from 2001 until that date, spanning more than two decades. The last model was released in May 2019.
