Yeah, apple surely could've negotiated price discounts and I'm not sure what the bill of materials cost of the Toshiba hard drives were, but the larger IBM Micr

Yeah, apple surely could've negotiated price discounts and I'm not sure what the bill of materials cost of the Toshiba hard drives were, but the larger IBM Microdrives were released in late 2000 and were $499 for the 1GB version (https://www.zdnet.com/article/ibm-1-gb-microdrive/ https://www.zdnet.com/article/ibm-1-gb-microdrive/). Even if that's a 100% markup, you're talking about $250 for 1GB. Hard to build a consumer device with a MSRP of $399 if one of the components is over 60% of that cost. Competing firms estimated the total BOM for the original iPod at more like $200. They were also surely looking at the potential trajectory of storage improvements too -- by the time the 4gb microdrives had been released in 2004, Apple was already shipping 40gb iPods and selling them for $499.