Brains and Guts in Cupertino
A while ago I posted some commentary about Apple's retail strategy and how they treat those partners. Some folks took offense at that, so I thought I'd pause to say something nice about the gang from Cupertino's strategy so I could be fair and balanced.
Remember that the iPod started out as a typical move - it was based on 1394 (an Apple technology that few PCs had) and only worked with iTunes on the mac. Someone at Apple thought a really good mp3 player might be a good differentiating "feature" of the Mac. The iPod was an iMac peripheral.
Someone at Apple was prescient and gutsy with the iPod early on. Remeber that after the first year of sales, they had only moved a few hundred thousand iPods. But someone at Apple realized the potential to move beyond the geeky niche into a completely new mainstream market. The company then did several very risky things:
- Turned around $50M of their $200M per year marketing spend over to the upstart business and brand.
- Brought iTunes to Windows - very un-Apple thing to do that removed an important differentator for the Macintosh and iLife.
- Pulled 1394 in favor of the more ubiquitous USB 2.0 (and switched to a proprietary connector, creating a future supplemental revenue flow).
It's hard to argue at this point that Apple "got lucky" - the were smart. Had they not made these moves, the iPod would have languished in it's Mac-Niche. With these moves, they unshackled the product which then promptly took off, surely beyond their expectations.
I don't know who deserves the credit - Steve Jobs, Tony Faddell, or someone else - but it's a pretty impressive business strategy story.
8 Comments:
Just wondering, how do you feel about the rumored upcoming ipod? I am a worred Zuner right now.. :|
-ZuneBoards.com
In theory, to boost sales they "had" to port the iPod to Windows concidering the massive userbase.
And, i'm sure you have enough questions on your hand, but about the Zune to Zune sharing....
If a song isn't even copyrighted, perhaps from your own band or something, will the person you send it to be only able to listen to it for only 3 days/3 plays? And then, even if you flag it, you can't buy or download it because it's not on the web but is a personal file?
IMHO, it's not who started this business strategy for Apple that's important, it's who is consistently keeping them on top of the market. They'are always one step ahead of the competition, brining the apple fanboys and casual consumers something new.
Think about podcasts and how they will continue to be a step ahead in this space for the forseeable future. To this day, Microsoft offers no support of this medium, and ZUNE surprisingly won't support podcast subscriptions.
Then think about sleekness and form factor. They're products are consistently slimmer and smaller than their nearest competitors. I seriously WANT a Zune, but I can honestlyh admit it's very "brick-like" when compared to Ipods with even bigger hard drives.
Lets take a look at games and movies. How on earth Apple could be a step ahead of Microsoft in brining portable games to the market is beyond me. I know countless people who have downloaded these ipod games. They won't be able to play these games that they've just bought on anything other than an Ipod. One more thing to keep them on that platform.
Microsoft will have the time of their lives convincing users that they need wi-fi and community features. Meanwhile, what the consumers want, which is some kind of interactivity between their 360s and a portable device, is several years out of reach according to J. Apple is like no other company, in that they seem to know what the consumer wants before they (the consumers) even know it. They then bring features and products to the market expediently, wasting no time and making sure they're always one-step ahead. I don't have one single Apple product, but their swiftness if rivaled by none.
I'll stop short of writing a thesis and just say this: Whoever started the Ipod business was smart. Whoever consistently innovates and keeps it one step ahead the competition (even MS) must be a genius.
so, basicly, microsoft is reason for ipod to succes:D
exactly anonymous :)
Nobody should take this on faith, but so far Apple has been "staying ahead" of a Microsoft that wasn't really focused on this problem and didn't have "skin in the game" withour own products. The next two years will be different.
Don't take me on faith, but wait and see...
It's funny that you say in two years. I've actually pegged 2008 on my mental calender as the time frame when Microsoft will be competing in this space. The product rollout now is like the XBOX 1 launch all over again. I'm assuming the cool features and product integrations will take time (about 2 years). By 2008, I'm sure Microsoft hopes the music space will resemble the game space, in that they will have the mindshare of consumers, if not the profits.
On a side note, a lot of cool things are happening in 2008. SED television should be rolling out, which I predict will redefine the flat screen market. Microsoft will hopefully be looking at a worthy successor to Vista Media Center (i.e. media center 2008). The media center that launches with Vista in early 07 has virtually no significant upgrades. So, this will be big. And, I also expect the whole Directv/Microsoft partnership to kick in at this time. Lots of "ifs," "ands," and "buts." But, looking into my crystal ball, 08 seems like a good year indeed.
Yeah, right. 2008, whatever.
Dave, is it too late to exit the Zune product division?
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