Rumors are floating around that Apple will introduce a new 60 gig iPod with color photo capabilities for the holidays. Some speculate that the cost will be around $500. Currently, the iPod ranges in price from $249-$350 depending on the size of memory.
Competitors are trying to catch up to Apple by introducing similar products, some even offer other features such as fm tuners. Noticeably, many of the competitors' prices for similar devices with the same memory or even more, are cheaper than the iPod. Yet, looking at sales, more than 4 million have been sold since its introduction. In the past quarter iPod sales accounted for 12.4 percent of Apple's overall revenue. It doesn't look like things will be slowing down, even if the rumor of the new iPod is just a rumor.
It would appear that the demand for the iPod is inelastic when it comes to cross-price elasticity. It would be interesting to survey if and why consumers prefer the iPod to other similar products. Maybe it is the brand-name that people trust or maybe it is the quality. A regression test could indicate if there is or isn't a relationship between the quantity of iPods sold and the price of competing products.