2GB iPod nano now outselling 4GB model

iLounge covers a recent research note by American Technology Research analyst Shaw Wu, who believes "Apple is benefiting from better than expected sales of 2GB iPod nanos during the holiday shopping season." Wu thinks the key is the lower capacity nano's $199 price point. Wu wrote:

We believe a surge in demand for 2GB iPod nanos at $199 may surprise most iPod followers. This is because in the first several weeks of iPod nano, 4GB models, particularly black colored ones, were outselling the 2GBs and white 4GB nanos by a wide margin. Since then we believe Apple’s bet on a $199 price point has paid off (like it did with the $199 4GB iPod mini) as it built more of these models (and with better margins versus the $249 4GB nanos) as it appears that holiday shoppers (particularly first-time iPod buyers) are more concerned with the price point as opposed to the storage capacity. Demand for the $249 4GB nanos remains strong but appears to be outpaced by its lower-priced, and lower capacity version.

Pricing (and style of course) is critical, especially when the mass market is not as enamored with featuritis and the most capacity money can buy as us gadget geeks. Cost, convenience and looks goes a long way, and Apple is taking it to the bank...