When Steve Jobs unveiled the iPod mini at Macworld Expo earlier this month, initial reaction was mixed. Rumours had lead to expectations of new, low cost iPods, but the iPod mini was priced at just $50 dollars less than the 15GB iPod.

And with pricing in the UK currently set at £199, although that is "subject to change" according to Apple's Greg Joswiak, does the iPod mini risk pricing itself out of the market?

Not everybody thinks so. Alan Graham points out in his O'Reilly Developer Weblog: "Everyone looks at the $249 price as a foolish price point when for $50 more, you can get a 15GB iPod. And while that sounds like a reasonable argument, what people don't take into consideration is that the mini is an upsale from high-end compact flash models, and some competing HDD players."

Ars Technica's Eric Bangeman takes a closer look at the market and finds that the iPod mini "is a fantastic deal when the same coin gets you a mere 512MB of flash-based music storage".

He states that those who make price comparisons between the 15GB iPod offering, and the iPod mini are "missing the point of the business card sized player".

He explains: "It is not meant to be an alternative to the iPod, but to the high-end flash-based and other small hard drive-based players."

"That pricing does not look as bad when compared with its intended target market. A high-end flash player is going to set you back anywhere from $149-299, depending on which model and features you want. Of particular interest is the pricing on the 512MB players. The least-expensive one, the MPIO FY-200, is priced identically to the iPod mini. The iRiver and Creative players will set you back even more.

"So instead of looking upward at the larger hard-drive players and bemoaning the comparatively small price difference between a 15GB iPod and a 4GB iPod mini, gaze in the other direction. The 20 per cent of the market Apple is going after will be getting six times the storage for the same price or less."

Three selling points

Bangeman suggests that there are three selling points that will help Apple convince the market to buy iPod minis over similarly-priced flash alternatives.

"First off is price and performance. The iPod mini is arguably a better value than the high-end flash-based MP3 players. With smaller and smaller hard drives becoming available, the price/performance ratio is only going to get better.

"Secondly, the iPod is cool. Apple is cool. Is the iPod mini cool? I like the styling of the iPod and the iPod mini, and the look and ease-of-use of the iPod has been a selling point since the original product launch. The Apple brand is cool right now, and that perceived hipness is a major selling point for Apple. If Apple is on the mark with its multihued digital music players, the cachet of cool will go a ways towards expanding its market share.

"Last, but certainly not least, are iTunes and the iTunes Music Store. Being the first company to solve the music download puzzle has paid off for Apple, as it now commands 70 per cent of the legal-download market. If you want to be able to play your iTMS purchases on an MP3 player, the iPod or iPod mini is your only alternative at this point (HP-branded iPod notwithstanding). Apple is counting on iTMS to help make the digital music player purchasing decision an easy one."

There are a few negatives highlighted by Bangeman: battery life; not being shock-proof (as is the case with any hard-drive based player); and the fact that it does not support the WMA format.

According to This Is London, Apple could be facing competition from The ministry of Sound. Its five new players due for release soon "are extremely similar in both specification and design to the iPod", and come preloaded with music.

Scott Steinberg, the Ministry of Sound's head of audio products, told This Is London: "The iPod is only aimed at the high end of the market."