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I would say that if the the size of the memory chip itself determined how much you could fit into a specific sized device then I could maybe see there being some benefit as you could then offer a smaller device.

Likewise back in the days when HDDs were $1 a MB it might also be more sensible so that you can achieve a more desirable price point.

But when the MiniSD cards are dirt cheap and we can stick 2GB or more in a basic cell phone I don't see the market accepting such a small memory limit for most devices.

For 256MB, even 512MB there is just no major benefit anymore, the cost of the memory for Apple might make $1 difference in the prices of components, infact it wouldn't be impossible for the cost to actually be higher, I was looking for new HDDs and although I didn't really need anything big what was the point of spending the same $$ or more for a 40GB SATA drive as I would for a 250GB drive or more.
 
I really don't understand this, you want to spend 1/4th the price of the new 4GB on a shuffle that has 1/20th the capacity? and you don't want to spend 1/2 the price for a refurbished older model with 1/2 the capacity when that's actually more economical since you can use any pair of headphones with it rather than the new ones that require headphones with controls on them. You do realize you could do other things with the extra space on the shuffle that you can't with the iPhone right? Like use it as a jump drive.
 
OK, OK. Old Lady here to jump in with her 2 cents.

I remember when 45's were the norm and wow, when we had enough money as kids to buy the entire album, wow that was a lot of music. And then double-albums came out (Jesus Christ Superstar and the Beatles White Album were my first doubles) - wow, it took all evening to listen to every song. And we even had to flip the records over and put one back in the sleeve while we pulled the other one out, blew on it, then smooshed it onto the spindle . . . OK, you get my point.

You can only listen to one music piece at a time, right? Why not have just a few CDs to listen to at a time? I often get obsessed with one CD and that's my main music companion for a month or so, to the exclusion of nearly everything else. Do I listen to every piece on my 2G Nano aevery day? Uh, no.

So Old Lady cheers on those who want only they can reasonably use and enjoy. Go for it.
 
I know this is likely blasphemy, but if you do a search on eBay for mp3 players below 1gb, it's rife with listings of gadgets. Only they aren't Apple products. Pause for effect.

I know you'd like an Apple product, but they won't release anything like this, and most of these are capable of functioning as a simple USB device.. meaning drag and drop, eject and go. No iTunes involvement.
 
This is such a stupid idea. Why would you go so low in capacity? Why not get a 1GB for $20? Because that's how much a 1gb DAP would probably cost. What's up with desperately wanting such a low capacity for a higher price when you can have a higher capacity for lower?
 
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