Beauty & Brains

The Competitive Strategy Behind

Apples iPod

Title
Fast Cycle Expectations
Text

What is a fast cycle industry

Concept of creative convergence

Title
Apple Cycle Reality
Text

Apple's way of dealing with competition

Apples maximizing revenue strategy
Why every company should renew its initial
idea

Overcoming competition meant apple had to

influence the force of time

Title
Text

FIT

Competitive strategy= relationship

with fit
Intutive understanding

Title

CORE COMPETENCIES
Text

2001: Launched
Competitor:
Diamond Rio (Music digital
Player
Rio- Highest market share

First mover advantage + Name

recognition (RIAA lawsuits)

Title RIO VERSUS iPOD

Parameters

Rio

iPOD

64 MB
16 songs
80 mins

5,000 MB
1,250 songs
6,250 mins

Battery life

1x AA (not
included)

10 hour
rechargeable
lithium ion
3 hours recharge
time

Display

Single line B & W

LCD

160 X 128 B & W

LCD

Connectivity

Parallel port
adapter

Proprietary highspeed firewire

Transfer rate

100 KB per sec.

50,000 KB per sec

(50 MB/sec.)

RAM

16 MB

32 MB

Introduction date

March 1999

October 2001

Price

$ 125

$ 399

Storage capacity
Text
Songs
Minutes

Title
INSTITUTIONAL KNOWLEDGE
Text

Eliminate product barriers: 256 MB (1999)

Flash memory storage technology vs hard disks

Industrys thinnest hard drive (3 years):
Partnership with Toshiba

Title
IPOD VALUE CHAIN
Text

Hard disk

Holds 50+ songs

Software

Oraganises tracks &

selects songs

Operating system

Runs software

Processor
LCD Screen

Runs operating system

Allows I/O readout

Battery

Power screen, Hard disk,

Processor

Firewire

Fast connection to sync

music on PC

Title
ORCHESTRATION
Remaining integrated

Text

Cross-disciplinary capabilities

CUSTOMER NEEDS
Aesthetics + Functionality + Usability=
Market Needs
Anticipate new ideas + Brand Loyalists=
Customers
Early Adopters + Early Majority

Title
Pricing
Text

iPod loosens the constraints by giving the

public a chance to get into an Apple at
a lower price point, low learning curve
and no fear of incompatibility.

Introduction of Mini-Mac

Title
Apples advertising strategy

Text

iPod has become a credible extension of

Apples brand fit.
Apple had to take proactive
measures to slowing down the speed of

convergence.

Title
CONVERGENCE
Text

Produce its own hardware, software and

operating system.
NETWORK EFFECTS
Ipod+iTunes music player relationship
Consumer need
Build an ITunes user base.
Reduction in switching cost.

Title
ITunes music store played a major role in

Text

iPod success

Protection against lawsuits

Napster-music sharing software
Court battle between Rio and RAA

iPod security

Title
Text

Title

ACC music standard

Text

iTunes
music
store

Digital
music
files

Proprietary
ACC Format

Title
Text

ACC Format

IPod being the only hardware player that

can play ACC files.
Created customer loyalty
Quick time
Pixar

NETWORK CYCLE

Title
Text

Switching Cost

Switching charges for users for using

competitors hardware.
Users will not invest time and money for
the same product at same price.
Hence ,customer loyalty.

Title
Third party accessories
Text

Creating and augmenting fit new, niche

and unaugmented market.
Integration of iPod into their car stereos.

Building Creditability .

Renewal
GOAL:
Realign Ipod With New Market
Conditions

INNOVATION TITLE
Quarterly upgrades that too via Internet
broadcasted public presentation
Upgrades to iPod Network-iTunes &
Music store were via internet.

Title
DYNAMIC PRICING
TextStable but premium pricing

NO DISCOUNTS

SAME PRICE EVERYWHERE

Title
WHAT LIES AHEAD..
iLife
Text software strategy

iPod to is being positioned as entertainment

server
Integration with TV, computers & cars.

Title
WHAT LIES AHEAD..
TextiLife software strategy

iPod to is being positioned as

entertainment server
Integration with tv,computers & cars.