Introduction

At the beginning of every great business success there’s a human capital story, and that’s certainly the
case with the iPod. In just over four years, the iPod/iTunes product and business strategy has helped
Apple double its market cap, establish over 80% market share in two very profitable industries, and
drive almost $3 billion per year in revenue. But the story of the iPod is not just a story about
innovation. It’s also a testament to one company’s ability above all others to hire a true visionary. It’s
a story that every executive hoping to take their company to the next level should read.

It all began with a smile when Steve Jobs resumed the post of CEO in Dec, 1996. After he rejoined the
Apple group, he re-revolutionized the entire company. Apple introduced the iMac and iBook product
lines for the more basic computer buyers and the PowerBook and G series computers for the advanced
purchasers in May 1998. Apple continues to forge ahead in design with the introduction of the iPod
digital music player and the iTunes Web site for the sale and download of music.

On April 09, 2007, US based Apple Inc. ple) sold its one-hundred millionth iPod. With this, iPod
emerged as the best selling product of all time in the digital music player industry. iPod was a highly
successful product.

For the financial year ending September 2006, Apple reported revenues of US$ 19.32 billion and a net
income of US $2 billion. The revenues from iPod for the same period were US$ 7.7 billion i.e. about
40% of the company's total revenues.

After the launch of iPod, Apple's stock price increased more than 700 percent between October 2001
and August 2007. iPod was first introduced as a music player. iPod wasn't the first MP3 player to
come into the market but it was the first one to engage the customer.

It overturned the weaknesses of earlier MP3 players such as bulky appearance, limited storage, etc.
and was able to forge ahead. The product was developed in a year and was launched on October 23,
2001.

iPod users could download songs and videos from iTunes Store, Apple's online music store that was
launched on April 29, 2003. As the market for the product increased, Apple kept adding many new
features. In March 2002, Apple added limited PDA4 like functionality, where by text files could be
displayed, while contacts and schedules could be viewed and synchronized using a computer terminal.

Apple also offered some games like Brick, Parachute and Solitaire, which came built into iPod. Some
features like downloadable games made the fifth generation iPods very user-friendly.

Apple had trademarked the name iPod on July 24, 2000, for a network of Internet kiosks that it had
planned to set up - this project did not materialize.6 It then used the name for its music player. Since
the launch of the iPod till August 2007, as many as thirteen models were designed and sold in the
markets worldwide (Refer Exhibit IV for the different generations of iPod).

Commenting on the success of iPod, Steve Jobs (Jobs), CEO of Apple, said, "We had the hardware
expertise, the industrial design expertise and the software expertise, including iTunes. One of the
biggest insights we have was that we decided not to try to manage your music library on the iPod, but
to manage it in iTunes. Other companies tried to do everything on the device itself and made it so
complicated that it was useless."

Although there were some criticisms from the iPod users like poor battery life, low durability, the
screen's vulnerability to scratches etc., iPod broke all previous records of sales in consumer electronics
category. With the success of iPod, Apple emerged as one of the largest consumer electronics
companies in the the world, after a period when it had made significant losses (1990-98).

Development of iPod
Napster & iTunes
In the year 2000, Jobs and his team were looking for ways to increase the sales of their Mac PCs. Then
they found that there was an application called Napster which was creating ripples across the music
industry and had become very popular among music lovers on the Internet.

However, the major drawback of Napster was that people were exchanging mostly pirated music over
the Internet. Jobs wanted to create a software that would enable music lovers to exchange music
legally. For this purpose, Apple hired Jeff Robbin, the programmer who had created the SoundJam MP
audio player.

Robin created iTunes by reworking the SoundJam application, making it simpler. iTunes was
introduced in January 2001.The iTunes Store began its operations after Apple signed deals with five
major record label companies - Electric and Musical Industries Limited (EMI) , Universal , Warner
Brothers , Sony Music Entertainment and Bertelsmann Music Group (BMG) (Refer Exhibit V for the
salient features of deals)

Father of iPod
The iPod's development is shrouded in secrecy and rumor. Tony Fadell sold Apple on the idea of an
MP3 player linked to an online music store, according to Ben Knauss, who worked with Fadell to
bring the iPod to life. "This is the project that's going to remold Apple and 10 years from now, it's
going to be a music business, not a computer business," Fadell predicted in early 2001.

Apple hired Fadell in early 2001 and assigned him a team of about 30 people -- "a typical industrial
design team," Knauss said, including designers, programmers and hardware engineers. He's currently
the senior director of iPod & Special Projects Group at Apple.

First ever… & ever…

On October 23, 2001 Apple Computers publicly announced their portable music digital player the
iPod, created under project codename Dulcimer. The iPod was announced several months after the
release of iTunes, a program that converted audio CDs into compressed digital audio files, and could
organizes your digital music collection.
The world’s best-selling music player has changed a lot from the time it got launched to the current
period. The day it got launched ie October 23, 2001 the whole world was amazed with this awesome
Gizmo which was in a white colour panel with 5Gb Memory Hard Disk to store upto 1000 songs along
with the Revolutionary Click Wheel. It had a 160×128 pixel monochrome LCD Display along with a
price of 399$ which seemed to be quite high and a gadget which only The Rich could affort because it
offered just music and spending this amount in 2001 was quite a news.

Apple iPod 2001

By the year 2002, the iPod started getting very much famous among the youth and
the sales started increasing and Apple launched few features like back text engrave
option costing 50$ and a price of 499$ for a new 20Gb Model with touch wheel, flap
for Firewire Port and software upgrades. These updates did look good but the iPod
looked more like a Dummy one along with a price hike was a No-No. Also Apple
launched the iTunes for Windows along with Mac and made the iPod available for
Sync to transfer music.

Apple iPod 2002

Next in the year 2003, Apple increased the Hard Disk on their 2 available models
to 20Gb & 40Gb models along with a decrease in the overall size of the iPod.
The controls around the Click Wheel were adjusted and this time there were
few buttons added next to it for the control of music.

Apple iPod 2003

Now since Apple had already upgraded the Memory of these music players, it was time
for some extra enhancements which included super think iPods and a new product called
the iPod Mini. This was a lighter product with 4Gb of memory and a small size available
in five colors. In the same year the Fourth Generation iPod’s were announced with iPod
Photo which allowed users to store and display photos in full colour, making the music
player a full featured smart music player and the memory being increased to 40Gb & 60Gb models.

2005 is the year Apple launched the iPod Shuffle, a attempt to cater the
low budget buyers who are looking for a high quality low priced music
player for themselves and also for gifting others. The iPod Shuffle was
available in 512Mb & 1Gb models. Along with this there were updates
to the iPod Mini in terms of memory space and few product
discontinuations. The very same year the iPod Photo got merged into
the normal iPod’s making the screen bigger and the space expanded
upto 320Gb which is seriously large memory. Since Apple didnt stop here, the very same year it again
launched the iPod Nano followed by the end of iPod Mini because most of the features were same but
this supported a new Glossy finish for more stylish looks. The final launch in the same year was of the
5th Generation iPods which allowed users to Play Videos on their players along with Photos at
30Frames/Second Speed which means awesome quality for this small player in H.264 format. The
iTunes Software was upgraded and the iPod’s were available in 30Gb & 60Gb Models.
Apple iPod Shuffle 2005 Apple iPod 2005

2006 was the year of Apple iPod Shuffle, where it was reduced to half of its size and it was just a
simple player with controllers and no display screen. This was a excellent player
for Joggers, Sportsmen, Bikers etc since it had a clip on the behind and you
could use it anywhere. There was no built-in USB plug but an external dock was
provided on which you had to set the ipod to charge it up. Along with this the
iPod Nano 2nd Generation was launched on the same day with aluminium finish
and scratch proof surface for more life and multiple colors.

Apple iPod Shuffle 2007

The Beginning of 2007 saw iPod Shuffle available in four more colours ie
orange, pink, blue and green following which at the mid-year the colours were
dimmed a bit and the iPod Nano got a bigger 2″ display with QVGA[320x240px]
resolution allowing the users to play music, view videos. The most important of
this year was the launch of iPod Touch which was a total Touch screen based
player with no buttons on the front screen. The users could also browse the
Internet, check Emails, Use Google Maps and also install Applications which
would be available through the iTunes. It was like the Apple iPhone minus the Phone.

2008 didnt see any big updates in this Music Player except memory addition in the iPod Shuffle upto
2Gb and the iPod Nano Chromatic getting new interface
along with games, accelerometer, Auto-Rotated User
Interface, Shake to Shuffle Songs etc. Along with this a
series of colours were available in this year and few iPod
models were discontinued. iPod touch was redesigned in
terms of shape with the sides becoming more thinner and the
player getting hidden bluetooth feature which was available
only when it was upgraded to OS3.0 version.
The 3rd Generation iPod Shuffle was launched in
2009 which was more small in size but bigger in
length with no controls on the players because the
earphones cable was going to handle that. It came
with a feature called ‘VoiceOver’ which would tell
you the name of the track which is being placed and
this is quite useful because there is no display to read
the track names. Available in just 2 colors Black &
silver it had a 4Gb memory capacity. Another big

update was in the iPod Nano series where in it got a Video Camera inbuilt
within it to record videos at 30Frames/Second with a bigger display of 2.2″.
Also featured a built-in FM Radio and live pause feature in radio so that you
dont miss any thing if you stop in the middle of any play. There have been
huge price drops and also changes in the speed of processor of the iPod
Touch to make sure its 50%+ more faster helping the users play games or
run multiple applications easily.

Apple iPod Sales Report

What’s the iPod’s secret? As in the case of iMac computers, the iPod is not only attractive for its
notable technology, but also because of its appearance. With a perfect design, the device has
connected more with its users’ emotions and feelings than with their IT and digital music knowledge.
The iMac discovered that, while “early adopters" and IT “geeks" notice features before aesthetics,
there was also another important potential consumer group for whom the object’s beauty and its
extremely easy use (turn it on and its ready to use) represented the key to opening their interest in
technology.

The iPod is now an icon of innovation. It is setting a trend, and for many of its users it is a status
symbol.
Ipod became ICON because…

•clean • The capacity to store thousands of songs.

•good-looking • Many celebrities liked it
•reliable • Cool and sleek design
•freedom • Click wheel concept (Menu selection)
•cool • Good interface software -itune
•status • Simple to use
•it makes you happy • Product came from Apple, known for cool
•user-friendly gadgets.
•neat • got rid of CD player, all music in one place.
•an image thing • Ability to keep Music, Photos, Movies and
• iPod became first to use compress Games at one place.
technology • Massive advertising done for this product.
• iPod was first commercial brand to market • WHITE EARBUDS
portable MP3 successfully.

People’s Association with iPod ( Ads )

SWOT Analysis

STRENGTHS WEAKNESS

 Innovative Design Heritage  Marketshare

 High Quality Software /Powerful  Compatibility with Windows
Hardware Platform.
 Fashion-conscious Product Appeal  Cost
 Ease-of-Use  Limited sales and distribution
 High Reliability channels in several parts of the
 Loyal user base Globe

THREAT OPPORTUNITY
 Increased multimedia demand by
 Rival Companies / products consumers
 Open-source Systems/platforms  New/Expanded Distribution
 Copy cats/knock-offs channels
 Emerging multi-media usages
trends
 MS Windows ubiquity