Success narratives ever find their manner to centre-stage. But what makes a journey even more interesting is when a company that finds itself in some degree of trouble turns the tide and leap starts its engines to mount to the top of the success ladder. Apple’s is one such narrative. Whilst the jobs that affect it lie in the background, the phenomenal success of its iPod has people fascinated. Marketing gurus swear by the growing of this advanced merchandise that provided the perfect solution to a coevals that was technologically familiar and defied competition to command every imaginable spot of the market that it entered – the digital music infinite, and made it its ain. How and why is what we attempt to detect.
The history of the iPod dates back to the January of 2001. Apple had merely introduced ‘iTunes’ – a programme that enabled Mac users to fire music off audio CD’s and covert them into music files on their computing machine systems as digital sound files. This provided users with the flexibleness of making libraries for their music files, clubbing favorite vocals in order and in clip to come, download them to portable devices.
This natural extension saw the debut of the iPod in the month of October 2001. Unlike other portable devices in the same scope, the iPod was the first of its sort to hive away music files on a difficult disc similar to a computing machine. Other devices used brassy cards and detachable storage devices that could non keep as many byt...
es of informations as the iPod did. In fact, the first few iPods had a 5GB storage infinite, which equated to the storage of about a 1000 vocals. The inquiry to be asked at this phase was if the package for composing music to the computing machine was developed maintaining the iPod in head? However, beginnings within the company maintain that the iPod was merely conceptualised 6 months before its release day of the month. Whatever the truth might be, the two scenarios complemented each other attractively giving consumers the best of both universes and a logical extension to the procedure of listening to music.
In November 2001, the first iPods were shipped to waiting purchasers and by the terminal of the twelvemonth, 125,000 iPods had been sold for a monetary value of $ 399. Within a twelvemonth, other computing machine companies every bit good as big retail merchants were selling iPods as value-adds. Dell, Best Buy and Target were some of the more outstanding names at this phase and had dedicated sites and gross revenues squads forcing for iPod gross revenues.
By June 2003, Apple had managed to sell 1 million iPods, which could download music from both Macs every bit good as Personal computers. Interestingly, by the terminal of 2003, one of its largest resellers Dell ; had decided non to sell any more iPods and alternatively establish its ain version of the iPod called the DJ ( Digital Jukebox ) . In order to download vocals from the Internet, Dell partnered with a company called MusicMatch that offered that service.
By mid 2004, 6 month
after it hit the 1 million grade, Apple crossed the 2 million grade in iPod gross revenues but the peripheral market was merely acquiring warmed up to the portable devices section. In add-on to the DJ by Dell, HP announced that it was repackaging the 4G iPod and selling it as a Personal computer friendly device. Motorola launched its following coevals phones that would be iTunes compatible. In one of the more recent statistics of the iPod moving ridge collated in October 2004, there were some interesting findings. Apple held 82 per cent of the digital market across all music participants and 92 per cent of all hard-disk based music participants.
The nearest rival to the iPod was the device launched by Creative. They had a 3.7 per cent market portion. In add-on, 2 million iPods are being sold every 3 months. The music industry excessively has gained vastly through these gross revenues. The entire figure of downloads have been clocked at a 150 million which equates to 4 million per hebdomad. The latest iPod has a mechanism that enables the storage of digital exposure every bit good as music. Today, Apple figures have registered a sum of 6 million iPod gross revenues. That’s a absorbing growing way, which would do any selling professional envious of retroflexing that sort of success.
On careful consideration though, it took really long for iPod to truly drive its gross revenues figures to the sort that it was able to accomplish in the old ages 2003 and 2004. Until so, the figures were good, but non something to compose place about. The turning point for Apple came with the debut of the 3rd coevals iPods. This is evident since it took about 2 old ages for iPod to register its first million in gross revenues and shortly after the launch of the 3G iPod in Tokyo less than 6 months subsequently ; Apple was able to register its 2nd million in iPod gross revenues.
Interestingly, the gross revenues figures recorded over the 3-year period were antipathetic to any signifier of competition from companies such as Creative, Dell, iRiver etc. They sold cheaper merchandises but non for a minute, did they encroach upon the market portion that was and is still monopolised by iPod. Apple has besides utilised an aggressive selling scheme to lasso in different age groups by utilizing the draw of famous persons and song picks. For case, in late October 2004, Apple unveiled what was called the U2 iPod. Apple conducted a publicity exercising in sync with the release of U2’s vocal – Vertigo.
The new iPod was designed with a black shell, a ruddy wheel and a back screen that had the engravings of U2 with the set signatures. It is small things such as these that have made the iPod such a function theoretical account for marketing strategians. The alone blend of holding a great merchandise and inculcating the right degree of consciousness and visibleness to sell it to the multitudes. In the chart below, the growing way of the iPod from its origin, to the terminal of 2004 shows how gross revenues surged
in 2003 after the release of the 3G iPods as mentioned earlier.
Not to advert, as the iPod gross revenues soared, so did the figure of downloads for music. Initially, the package iTunes needed to be bought in order to compose vocals from audio CD’s to the computing machine, following which they could be downloaded to the iPod. In 2003, Apple introduced an on-line music shop that enabled iPod users to download music straight from the Internet. This worked in 2 ways – it provided users with an addition in pick of music that they would wish to hold downloaded every bit good as simplified the procurance of iTunes. No more did a user have to purchase a package, put in it onto the computing machine and so utilize it to fire music off a Cadmium and eventually onto the difficult disc of the iPod. Simplifying this procedure for 1000000s of users had its positives as can be seen from the graph above.
The first large leap in gross revenues was in October 2003 when the PC version of the music shop went unrecorded. This enabled far more users to be able to download vocals onto their computing machines and diluted the monopoly of Mac users. 2 months subsequently, in December 2003, following a batch of media ballyhoo and attending being given to the iPod and a corresponding addition in Christmas gross revenues, more and more people began downloading vocals from iTunes. And in between July 2004 and October 2004, Apple registered a growing of song gross revenues from a 100 million to a 150 million.
It must be noted that in many cases within the paper, the usage of iPod and Apple is synonymous. After much deliberation, the research worker decided that it was of import to near the paper from the position of the parent company Apple. Any impact that the environment would hold on Apple would be brooding in the iPod scheme. At the same clip, in fortunes that would impact the company both positively and negatively, would subsequent consequence the iPod and vice-versa.
Purposes and Aims
The purpose of this paper is to understand the growing of the iPod through the old ages. It all began in the twelvemonth 2001 and it has been a short journey to success. But how long will this be able to go on, what is the hereafter for the merchandise, how will it fend off competition and how will it impact Apple in the longer tally. We all know that it has been a path-breaking journey for Apple as it picks itself up from the stagnations of worsening computing machine gross revenues with its advanced innovation that saw it spring back into the spotlight. It is besides the enterprise of this paper to foreground how of import an impact the iPod has had on Apple entirely and why cant other company’s model the same success narrative.
The Success of the iPod
Harmonizing to Haddad, Charles ( 2002 ) , the iPod is one of the most radical merchandises to hit the computing machine and electronics market topographic point. He believes that the lone manner frontward for
Apple is to diversify its merchandise scope and move from being a niche computing machine maker to supplying engineering that understands the spread between engineering and amusement. He quotes how the market portion for Apple in 2002 had remained at 3 per cent for a figure of old ages. In order to travel it from at that place, it was imperative that they looked beyond the computing machine industry since it was making a impregnation point in most developed markets and the degree of competition from across the Earth was doing it highly hard for big computing machine makers to last.
Digital handheld music participants were a turning market in 2002. There were few participants in the market topographic point and industry experts such as IDC had stated that demand would turn by 74 per cent over the following 3 old ages. In retrospect, they weren’t right – but merely because the demand has recorded ternary figure growing since 2002.
In add-on, the awaited gross revenues for 2002 were pegged at 12 million units of all sorts of portable digital music devices. Haddad brings up an of import point about how the degree of competition within the digital handheld music merchandises industry was still at a minimalistic phase in comparing to other industries where companies such as Microsoft and Intel who had taken over the Personal computer market. He believed that the following coevals of purchasers were more interested in a merchandise that was different, satisfied their demands and at the same clip, was ‘cool’ and suave to hold. Particularly in the instance of handheld devices where consumers would haul it around with them, this demand for voguish and sophisticated appliances was of the extreme importance.
At the clip of composing his article, Haddad had researched the iPod when music files were downloadable merely from a Mac. The iPod gross revenues were still consistent and looking positive during that phase but Apple had non introduced downloading files onto PC’s at that phase. Once that happened, iPod gross revenues grew dramatically. The iPod was ne'er intended to raise the flailing computing machine concern of the parent company but over clip, Haddad statements would keep good, as the iPod would turn to go one of the most successful merchandises of all time launched by a computing machine company.
Teething jobs with Strategy?
With the grade of success that the iPod has seen over the old ages, there have been few cases that authors have been able to happen a Chinaman in the armor of this enormously successful merchandise. One such author is Salkever, Alex ( 2004 ) . In the first of his articles –‘Apple’s slow boat to China’, he discusses how the Chinese economic system is one of the most moneymaking investing determinations for concerns the universe over and how Apple has failed to take advantage of this immense chance.
He begins by utilizing the positions of advisers who have worked within the Chinese market topographic point for decennaries now and seen it evolve over the old ages. He quotes Merrill Weingrod who works with a selling consultancy – China Strategies. When Salkever asks Weingrod how moneymaking
the Chinese market is for a merchandise such as the iPod, he answers stating that the market potency for men’s electric shavers is $ 300 million yearly. Weingrod believed that the Chinese have the purchasing power to pass $ 200 to $ 250 on luxury shavers today which are non a necessity by any standing.
This was merely an indicant of their mentalities and how much they were willing to pass and for what. He reiterates this by saying that the Chinese population measures 300 million in footings of the figure of cell phone endorsers across the state. They pay an mean o $ 200 for their French telephones and connectivity. In add-on, the mean Chinese employee earns far less than his / her American opposite number and yet, he / she is willing to pay a larger proportion of their salary towards purchasing luxury goods. This equates to the purchasing potency and avidity amongst the population and above all – a prospective consumer.
One who is invariably on the sentinel for the extract of luxury goods into the market so that he / she can travel in front and buy it, provided there is a demand of class. In add-on, the Chinese economic system is the fastest turning economic system in the universe with its GDP growing rate pegged at 9 per cent yearly. It has one of the largest middle-class societies in the universe with a disposable income that is turning every bit fast as their growing rate. With every factor in the book of marketing indicating towards the Chinese market, Salkever is dismayed at Apple’s scheme to remain out of this market and non set about an aggressive selling scheme that would tap its he possible.
The lone existent stairss that Apple has taken towards come ining this economic system is to guarantee that iTunes Music package is downloaded onto every Personal computer manufactured by China’s second largest computing machine maker – Founder Technology. It is an ironical determination sing the consumer who would buy the machine would hold small entree to the iPod on which he could hold downloaded his / her music. Besides this determination with the Chinese industry, Apple hasn’t taken any more stairss towards doing any investing determinations in this part. There was one case when they about toyed with the thought of opening an iTunes Music Store but so retracted any stairss made in that way.
The figures that Salkever quotation marks are amazing to the reader. Harmonizing to him, atleast.3 per centum of the population of China has a disposable income that equates to that of an person in the US who would gain about $ 25000 to $ 30000 yearly. That figure translates to about 60 million people today and will turn to 3 to 4 times that figure over the following decennary. With the increasing in-between category and the ability to purchase merchandises that others around the universe can afford, really shortly the Chinese in-between category would be the full population of the United States.
So what do the Chinese see these new appliances in the market topographic point as? Harmonizing to market analysts
Bryan Ma, a company that tracks the purchasing of cellular telephones in Asia, but based in Singapore, the figure of cellular telephones that are replaced are amazing. The Chinese people like to replace their cellular telephones 6 to 12 months earlier than consumers in North America and Western Europe. Appliances are seen as a position symbol of kinds. Owning the latest theoretical accounts makes persons feel like they are popular and wanted, harmonizing to the company.
Chinese consumers besides tend to travel for appliances that are sleek, debonair and voguish. Harmonizing to Salkever those are the sorts of words that would specify the iPod but they don’t find any topographic point in the market. He tries to look at the image from Apple’s position.
As a company, Apple’s scheme is to consolidate and continue its place in the markets that it is strong in. In the deal, it would non look to put in new markets such as China. In fact, Apple has a miniscule presence across the full length and comprehensiveness of Asia. If Japan is taken out of the equation, Apple draws less than 10 per cent of entire gross revenues from this part. Naturally, it is non an country of excessively much involvement for the minute. Whilst Apple takes a back place to continue in this part, competition in the signifier of Sony, Motorola and Creative have made inroads into the Chinese market.
As an illustration, Motorola entered the Chinese French telephone market early and in the first one-fourth of 2004, it was proud to declare that it has achieved a market portion of 40 per cent. It had the first mover’s advantage presenting a engineering that few others were courageous plenty to take into this state many old ages back and today it has paid off. The Chinese market is known for its incursion jobs.
The research worker agrees with the penetrations that Salkever has provided into this untapped part and understand the jobs that Apple faces in the hereafter lest it non take stairss in this way. The degree of investing required at a ulterior day of the month where the market is abuzz with competition would be significantly higher. It makes completes sense for companies to put in China at this phase and there is no ground why Apple should non be one of them.
In another article by Salkever albeit on a different issue, he adopts a similar base on the jobs that will blight Apple. In his article, ‘iPod: Leader, but Not Ruler’, he states that the gross revenues figures by Apple are either over-exaggerated or are inaccurate since there isn’t adequate grounds that the informations being collated is validated. Apparently, informations in states in Latin America, India, South Korea, Eastern Europe and Taiwan are hard to formalize and non easy to obtain. There are besides other countries across Asia, including China where information retrieval and bite is non every bit accurate as it is made out to be. So when Apple boasts of planetary gross revenues and accomplishing market portions across the universe in surplus of 50 per cent across the electronic market ( MP3 participants
) , they may really good be over the top.
To grounds his findings, Salkever looks at the assorted methods that companies use to collate market informations that can be passed onto consumers and other concern chances. On one manus, they can use the services of US market research companies such as the NPD group that entirely dedicates its attempts to the US retail economic system. On the other manus, companies such as Apple can fall back to inquiring OEM ( Original Equipment Manufacturers ) and component makers how many pieces they are taking to the market topographic point. Whatever may the instance be, harmonizing to Salkever, Apple doesn’t rather have accurate information on its planetary market portion.
He confirms that Apple is surely a planetary leader but non dominant. This could hold been a really interesting study but the lone defect with his research is that he fails to document adequate grounds either through statistics or through believable beginnings that can let him to judge with some degree of certainty that Apple’s iPods are infact confronting tough times in front.
To be just to Salkever though, he does present the topic of the turning competition of iPods outside the boundary lines of the US from Asiatic electronics companies. In the coming old ages, cheaper labor costs of the Asiatic companies will let them to make cheap theoretical accounts of the iPod and vie on monetary value sharply. In add-on, Salkever states that the Asiatic consumers who are turning to the largest consumers of amusement merchandises, prefer smaller sized iPods. This is non in sync with Apple’s scheme since they plan to present larger and heavier theoretical accounts of the iPod in the coming few months.
And even if iPod does take the cue and invests in smaller theoretical accounts in clip, it would hold lost out in comparing to other digital music makers. But Salkever does summarize his surveies by acknowledging the laterality of iPod within the digital market topographic point, yet cautiousnesss against lifting competition and a monetary value sensitive market in the close hereafter.
Kurson ( 2005 ) has an every bit interesting point of position. He believes that the iPod roar would non be able to prolong the success that it has experienced for much longer. His principle is based around stock monetary values and other statistics that he discovers about Apple which point towards a altering tide in the coming old ages. Kurson promotes the construct that Apple as a company is on the diminution one time once more and encourages people to sell their portions now since they would lose money in the coming few months lest they hang onto them. He begins by adverting the usual success narratives of the company – the last 2 old ages have seen iPod gross revenues rise more than 20 times from 219,000 units towards the terminal of 2002 to over 4 million units at the terminal of last twelvemonth.
In fact, Lehman Brothers had ab initio projected iPod gross revenues to be about 3 million units at the terminal of 2004. They had to revise their figures closer to the terminal of
the twelvemonth and pegged it once more at 4 million units for the twelvemonth 2004. Apple on the other manus clocked 4.5 million units for the twelvemonth stoping 2004, in front of anybody’s outlooks.
Another indicant of the progressive rate of success is how the figure of downloads from the iTunes rose from 50 million to 200 million. Finally, the biggest turnaround statistic prevarications in how the company about went insolvents after the dotcom epoch a decennary ago and last twelvemonth, recorded gross revenues figures in surplus of $ 3 billion with no debt on their fiscal statements.
What makes really interesting reading is how Ken Kurson describes the diminution in the demand of iPods and correspondingly, with the parent company every bit good. He states that after the Christmas haste for purchasing iPods, in all chance consumers will non be willing to pass every bit much money on it. As he puts it – “Holiday shoppers are more enthusiastic about higher monetary values, but one time the vacation season terminals, they normally don’t like to pass money on merchandises that are priced at a premium” .
In maintaining with the same, Kurson predicts that in the first few months of 2005, the rate at which consumers buy iPods would drop bit by bit at first and so, more drastically subsequently in the twelvemonth. Lehman Brothers excessively have declared that they expect a 14 per cent bead in gross revenues figures over the class of the twelvemonth.
In another instance, Kurson negotiations about how on one manus, the gross revenues of iPods have surely been increasing in concurrence with an addition in market portion, but the parent company Apple has seen a diminution in its market portion from 2 per cent to 1.9 per cent. The ‘Apple Stores’ are an over-riding success because of the iPod and its driving consumers to the shops. But although the figure of footsteps across these shops has doubled, the figure of consumers purchasing Apple PC’s has remained changeless.
Additionally, Apple’s gross figures in comparing to other computing machine companies are really mean. For a company that is on the biggest drive of its concern life, it records a growing rate of 33 per cent in comparing to HP’s 29 per cent. And what makes this expression more blue harmonizing to Kurson is that the operating borders for the old twelvemonth were declared at 3.94 per cent. This was far lower in comparing to HP’s 5.2 per cent and Dell’s 8.56 per cent.
Somehow, Kurson does shed visible radiation on certain statistics that project Apple’s public presentation in a questionable visible radiation but on closer observation, it appears that the facts have been manipulated to project a negative position to the advancement of Apple. The research worker believes this to be the instance since there are many persons who invariably try and act upon the market forces through published authorship such as this to finally seek and pull strings the public presentation of the stocks.
For every negative statement that Kurson was able to foreground, there appears to be an every bit positive account for the same. For case, a diminution in
market portion by.1 per cent is non needfully a negative impact on the company. It depends on the selling scheme of the company – is it seeking to travel out of certain markets and put in others.
Additionally, in concentrated market topographic points such as the US, any signifier of merchandise variegation would hold an impact on the market portion every bit good. So there are considerations that need to be taken before any decisions can be made. At the same clip, the research worker believed it of import to include Kurson’s work since it was one of the most recent articles on the iPod that sounded warning bells and attempts to acquire the reader to see the success narrative from a different position.
So where precisely is Apple headed towards now? Harmonizing to Murphy ( 2004 ) , a important part of Apple’s success can be attributed to the iPod and hence, any future success parametric quantities would besides be defined by the iPod. The competition amongst the computing machine industry is really intense with participants such as Microsoft for package, Dell, HP and IBM for hardware and a host of other system planimeters and competitory channel spouses. Due to a decreasing market portion as mentioned earlier of under 2 per cent, the entire concern worth of the company has fallen to half that of its gross revenues gross.
The lone visible radiation in this dark tunnel is the fact that the stock monetary value at Apple has about doubled over the past 2 old ages. But can the parent company depend on a individual merchandise offering and anticipate to piggyback sit it all the manner to the bank? Its non possible says Murphy. There will come a clip in the close hereafter when gross revenues of iPods begin to worsen, competitory forces take over with lower priced merchandises and bing markets begin to acquire saturated.
Some of these merchandises would come from companies such as HP, Dell, Sony, Creative, Gateway and Rio, each offering a merchandise that is significantly cheaper and has greater memory storage in comparing to the iPod. For case, Creative has launched a new merchandise that besides has a longer battery life and besides has white earplugs similar to those of Apple, taking a foliage out of Apple’s voguish design. At the same clip, it has been seen that consumers have complained about the deficiency of handiness of iPods in the shops. And to do affairs worse, Apple hasn’t been able to corroborate a deadline by when they would be made available.
Timess will alter bit by bit. As Murphy references – the pricing of the iPods over clip will fall significantly and Apple would necessitate to sell more and more iPods merely to keep the gross figures. For case, there is an premise based on pricing that Apple would necessitate to sell atleast 20 per cent more iPods in the coming twelvemonth to be able to prolong the same degree of growing over the twelvemonth. This should non be a job presently sing growing is predicted to lift to 70 per cent but in clip, this could surely go
an issue. If looked at otherwise, Murphy argues that falling monetary values of merchandises are all right every bit long as concern efficiencies were lifting. 4 old ages ago, when the gross revenues figures of Apple were 4 per cent higher than they are today, the operating net incomes of the company were at 9 per cent of entire gross revenues. Today, that figure has come down to 3 per cent. In add-on, the figure of employees added over the past 4 old ages has gone up by 32 per cent and the sale per employee has significantly decreased from $ 930,000 to $ 674,000.
For apple to be able to prolong its growing and keep a prima place in the market topographic point, it can non depend entirely on the iPod revolution. Its notebooks and desktop merchandises account for 64 per cent of its current gross revenues as a company. But except for the month of June that recorded a 14 per cent addition in grosss, the remainder of the twelvemonth remained much the same in footings of gross revenues.
This is worrying for Apple since it doesn’t have excessively many back up steps to fall on should they set down in problem. To undertake some of this job, Apple had introduced a series of Apple shops across the US, UK and parts of Western Europe. These shops hosted the latest debuts by the company including all theoretical accounts of the iPod and its peripherals. The rationale ballad in guaranting that consumers would walk into these shops with the alibi of looking at the iPods and at the same clip, browse about and take a expression at the scope of other Apple merchandises every bit good. Unfortunately though, this move didn’t bring in the sort of gross revenues that Apple direction had predicted.
When Apple was asked about this stagnation that was crawling into their merchandise lines, they said that 50 per cent of all purchasers at their new shops that they have introduced are new consumers and they propose to construct relationships through their merchandise quality and peripherals and increase their market portion of repetition purchasers.
Interestingly, Murphy is one of the lone authors on this topic who believes that the chief mistake of Apple’s moderate public presentation lies with its CEO Steve Jobs. Over the class of its concern history, Apple has ever ensured that its package configures merely with its hardware and no others. For case, the Mac runing system can merely be run on Mac computing machines. In comparing, the Windows Operating systems can be used on a assortment of different hardware systems doing it a more universally accepted operating system. The clip for niche solutions in non the manner frontward.
Apple must gain that the money lies in the Numberss and they can in no manner acquire to those Numberss by restricting entree to their package. It truly is a Catch-22 state of affairs for them. In much the same manner, the iPod can merely play music that has been downloaded from iTunes. What happens when the iTunes faces intense competition from other music download package companies in the
close hereafter? Are we stating that the iPod would merely hold limited entree to music and possibly, non the full scope of music that other companies would be able to offer? These are countries that the parent company has to look into and take a serious note of.
Interestingly, in July 2004, Real Networks introduced a new music download package that allowed iPod users to download from their site. This had wholly confused the Apple proficient squad, as they ne'er planned for such an contingency. Today, they are looking at whether they can take legal action against them. Whichever manner it pans out, these were the first marks of competition, which were get downing to crawl in.
iPod accoutrements – a new industry
Since 2002, the iPod has come a long manner both as a merchandise every bit good as a trade name. Apple has been able to supply consumers with a extremely developed merchandise that makes it user friendly and voguish. The first few iPods had basic functionality and storage capacity of up to 5GB. In clip, both storage every bit good as functionality of the iPod has been greatly enhanced. For case, towards the terminal of October 2004, merely prior to the Christmas season, Apple launched two new theoretical accounts – the iPod Photo and the U2 iPod.
The new U2 iPod was a smart and branded iPod that carried the U2 scratching on the back shell. It was black in coloring material with a ruddy dial. For its launch, the CEO Steve Jobs ensured that in concurrence with the media release, U2 performed its vocal ‘Vertigo’ at the event in add-on to other high profile performing artists and ostentation. On the other manus, the new iPod Photo was to integrate a storage capacity of up to 60GB. In add-on to the storage for exposure, it besides has 20GB storage for music downloads and is available in a different version with a 40GB storage capacity.
In add-on, this month besides saw the debut of the Music Store across the European Union in states such as Greece, Austria, Italy, Luxembourg, Belgium, Finland, Netherlands, Portugal and Spain. At this phase, iTunes represented 72 per cent of all music downloads whilst the iPod industry was pegged at 65 per cent of the entire portable music industry.
At the really beginning, the research worker was under the feeling that the growing of iPod has a bearing on its parent company – Apple. Whilst this is surely true, it is of import to understand that the growing of iPod has been radical to the extent that it has in fact, impacted the concern community that has been associated with it every bit good as companies that might hold similar concern involvements. With mention to this topic, Levine, Robert ( 2004 ) discusses how the iPod had triggered off a concern demand for peripherals. It has become an industry of its ain – the iPod peripheral industry. The accessary market is booming on the gross revenues growing of the iPod and companies of all forms and sizes are spearheading invention within this field, across the Earth.
As Levine describes the consumer
outlook through illustrations – the iPod has evolved into an full musical experience. Consumers want to take this small appliance everyplace they go with them – into their autos, places, at work and merely about everyplace they can. The demand for such luxuries has companies happening solutions such as plug-in arrangers into auto coffin nail igniters, radio senders that enable FM wireless entree, bag interior decorators that can hive away iPods and other such peripherals.
Companies such as Monster telegraphing systems and Belkin were among the first few to tap into the iPod accessories market. To supply some apprehension on the size of the iPod ‘ecosystem’ , Eric Tong, the Vice President for Marketing of Belkin provinces that for when iPod gross revenues hit 4 million, accessary gross revenues registered gross revenues of about 2.7 million. That amounts to about three fourths of all iPod users holding some signifier of accoutrement. Along the same lines, with accoutrements priced between $ 20 and $ 200, the math equates to the size of the iPod ecosystems as a $ 75 million market.
Levine besides dwells into why the accoutrement market is so popular with the sale of iPods. Harmonizing to him, the individual most popular ground is that the merchandise fits of course with any accoutrements that make it user-friendlier. For case, ab initio iPods were merely confined to hearers who required utilizing the portable like a Walkman.
Over clip, demands for usage across the spectrum of their day-to-day lives became a necessity and new advanced methods were discovered. When consumers wanted to transport their ‘song lists’ into their autos or into their offices or wanted to download music on the move from the Internet or listening to the wireless in concurrence with their recorded vocals – each provided the motive for companies to step in with new and advanced accoutrements. Interestingly though, the first accoutrement for the iPod was introduced by Apple itself.
During the initial phased of trial selling the iPod, the CEO of Apple, Steve Jobs and other employees of Apple were unhappy with the quality of sound from the iPod when plugged into a stereo system. This drove the employees to seek and use an sound overseas telegram from the Monster telegraphing company and they found that the sound end product was far superior. 3 yearss before the concluding launch of the merchandise, the company took a determination to sell Monster audio overseas telegrams as an accoutrement to the iPod so that users could link it to their two-channel systems. Today, Monster sells $ 14 million worth of iPod accoutrements from radio senders for users to link to the wireless to other signifiers of audio overseas telegrams for different intents.
The parent company
So how do all these additives to the iPod environment impact the success and hereafter of the parent company Apple? In a paper by Schlender ( 2005 ) , he discusses how over the old ages, Apple has moved off from its image as a modern-day computing machine maker to going a multi-diversified company in countries of computer science, package, electronics and music.
Its one of the many companies that were adversely
affected by the explosion in the point com bubble and has over clip, picked up the pieces and found new ways to reinvent itself to do it one of the more successful companies within its industry. To foreground exactly this, Steve Jobs, the CEO of Apple declared this January ( 2005 ) that the company had posted its highest turnover and net incomes of all time in its 28-year history with the gross revenues of 4.6 million iPods within the last twelvemonth entirely.
In another article by Hawkins, Tom ( 2005 ) , he reiterates the above success of the iPod and how it was instrumental in the success of turning around the luck of the parent company Apple. As he puts it, by the terminal of 2004, the iPod gross revenues had seen a 525 per cent addition in year-on-year gross revenues with the tendency go oning through 2005 with the debut of new merchandises such as the iPod shuffling and Ilife05. Overall gross revenues for Apple were pegged at ?3.49 billion for the last one-fourth of 2004 with net incomes of $ 249 million that totalled more than the remainder of the twelvemonth put together. The primary ground for this was the lead up to the Christmas season and the iPod being the most popular Christmas gift for 2004.
Burrows ( 2004 ) writes about how non merely has the iPod had a direct impact on the gross revenues of the larger parent company, but the parent company has besides used the iPod to foster its computing machine gross revenues. In an interesting move, towards the terminal of 2004, Apple introduced a absorbing machine called the iMac G5. It was particularly interesting since users of the machine found some singular similarities to the iPod.
The lone inquiry that was to be asked at this phase was if the company could double the success of the iPod with this scope of computing machines. That would surely be following to impossible but it was surely a start. It has been noticed that with the success of the iPod, there has been a fresh drift given to the selling of Apple’s PC scope. It is an thought that seems to be accomplishing some grade of success. When the CEO was asked about this scheme, he replied – “Our primary aim is to guarantee that we make the best PC’s in the universe. Our secondary aim is to do a small net income so that we guarantee that we keep doing some fantastic machines.” Albeit a small modest, his analysis sums up the cheerful attitude of the administration and its people.
Schlender goes onto to repeat that in interviews with the Apple head – Steve Jobs, he discovered that Apple wasn’t making excessively many things otherwise to fuel this moving ridge of success. Steve Jobs claims that over clip, engineering and amusement have converged throwing up different demands and demands by consumers. This convergence came to Apple’s doorsills being a engineering company and all they purportedly did was to take advantage of it through their creativeness and invention.
But all these alterations have besides had a dramatic
impact on the chief nucleus concern of Apple. For the first clip in four old ages, the company sold over a million Macs in a individual one-fourth. So, it has been smooth sailing on more than merely one frontier for the parent company. It is besides interesting how Apple has diversified its portfolio of solutions that it takes to the market topographic point. As a company, much of its success can be attributed to its flexibleness and willingness to alter and accommodate to the different demands of the clients.
Today, it can no longer be called a computing machine company in the actual sense of the word. It is a diversified concern that is accommodating to market demands and is being driven by demand. Its merchandise portfolio ranges from computing machines to package, music to online amusement and music shops, networking for its merchandise scope and amusement merchandises etc. It can about be called a retail merchant of kinds supplying a assortment or merchandise and service deliverables. In order to promote this retail growing, Apple has introduced to the market, 100 ‘Apple Stores’ that encompass the alone Apple experience showcasing the full scope of its merchandises.
Where will all this variegation eventually take Apple? To the layperson, it appears that remaining in front of the competition through technological invention and progresss is the manner frontward. Steve Jobs nevertheless disagrees during his interview with Schlender. He states that it is following to impossible for a company to remain in front of its competition strictly on guaranting that it has the most advanced engineering that it can present to the market place. It is imperative that the drive force behind a company lies in a nucleus competence that its simpler and more basic.
In maintaining with the same, Jobs says that Apple’s chief strength lies in its development of package for multivariate merchandises. In the hereafter, he sees Apple supplying package as a solution to incorporate assorted applications and ensures connectivity and homogeneousness across merchandises. He highlights by taking the illustration of iTunes. As we know, it provides the package for change overing all audio files into downloadable files onto the Personal computer or Mac and eventually the iPod. What is interesting is that 62 per cent of all music downloads on the Internet today is through the iTunes Music Store. That is a important proportion of entire downloads where all benefits get accrued straight to Apple Inc. This is why the package is the cardinal as Jobs is wont to state.
The survey was undertaken through the bite of information through both primary and secondary agencies. Due to the restraint of clip, the distribution of questionnaires were non an option, although it would hold helped in understanding the benefits and jobs that iPod users face with different theoretical accounts of the iPods. Alternatively, primary research was carried out with the aid of one to one interviews with a selected few iPod users on an informal footing to derive an penetration into what they believed purchasing an iPod did for them.
As a last resort, one to one treatments were besides conducted with users of iPods through
forums on the Internet. However, one could non set up for certain if the sample interviewed were so echt proprietors of the iPod. The information used from these treatments was carefully evaluated before they could be sued within the context of the paper.
Secondary information was chiefly gained through articles and diaries written on the growing of the iPods. Bing a comparatively new success narrative, most of the work that was found existed in diaries and documents written by pupils from across the universe. In add-on, the Internet has a figure of articles that talk about both the strengths every bit good as the failings of the iPod. The Apple web site and dedicated sites linked to the iPod were besides of great aid with statistical information on the history and growing of the iPod. For analysis demands nevertheless, they weren’t used since the research would hold been diluted in its attempts since it could hold been doing premises on colored information.
Information on the iPod and its growing were chiefly present in more recent studies and diaries since it was introduced in the United States merely 3 old ages back and launched in the UK every bit tardily as last twelvemonth. Additionally, industry trade diaries were used to collate informations and statistics on the growing of the iPod and the parent company Apple every bit good. In the research workers experience, information that was analysed on the iPod was more current than most other topics in universe concern today.
This made it more interesting as the clip elapsed between the analysis and the existent position of the iPod within the growing rhythm was about coincident and yet at the same clip, made it more hard than usual to weave together different strands of information that happened to belie or hold with each other over different clip intervals.
For case, studies and articles written in the twelvemonth 2002 and who believed that the iPod would non make every bit good as expected in the approaching old ages would belie with existent published information in 2004 demoing an highly successful merchandise. This makes it hard to patch together since the research worker needs to first present the work of the author in 2002 and so explicate the contradiction in 2004.
In add-on, it besides makes the research repetitive at times which the research worker was careful to avoid. For case, when an article in 2003 inside informations the success that the iPod would undergo in the approaching twelvemonth and an article in 2004 really high spots that same success since it appears as published information, the concluding piece of research can look insistent. To guard against this, the research worker collated all strands of information that were available, outlined them harmonizing to their date lines and relevancy, and eventually introduced them to the text being cognizant of repeats and contradictions that would originate subsequently in the text.
As mentioned earlier, questionnaires weren’t used due to clip restraints, but in the instance of future research, there are some important inquiries that should turn to some of the undermentioned issues:
- The grade of price-sensitivity of the consumer towards the
iPod – this would order how Apple would come in future markets, what their precedences would be, the degree of competition they would see from the cheaply priced merchandises manufactured in the Asiatic economic systems etc.
Finally, it is imperative that questionnaires are conceptualised in such as manner that they allow the smooth flow of informations into intelligent information. For case, many research workers fail to roll up the demographics of the interviewees. When analyzing information, if information can be placed under different headers such as age groups, gender, locations etc, more meaningful information can be obtained through the forms that emerge as a consequence.
RESULTS AND ANALYSIS
Through the class of the paper, we have seen experts in the industry provide both positive penetrations every bit good as unfavorable judgment about the iPod and its surrounding environment. There are surely concerns that Apple might be tilting excessively to a great extent on the success of the iPod to transport it through to a point where the company as a whole is more stable.
At the same clip, one of the more elusive but of import points to observe is the deficiency of investing by Apple in the developing economic systems in China, India and other Asiatic economic systems with the exclusion of Japan. What happens in that part remains to be seen but the following moving ridge of competition is in all likeliness, traveling to come from this way.
On the other manus, there are some enormously positive facets that can be taken from the success of the iPod and Apple as a company. As Burrows ( 2004 ) undertakings his findings – Apple is leveraging the trade name equity and the ‘halo effect’ of the iPod to impel gross revenues within its Mac section. This is apparent in the
direction determination to utilize the ticket line to sell iMacs as “From the shapers of the iPod” .
With over 4.5 million iPod users today and that figure steadily lifting, even if a fraction of that population is influenced into purchasing a Mac, that is a really good option to be exercised and the direction seems to hold gotten it right. In add-on, Apple has launched about a 100 intelligence shops across assorted continents that showcase the full scope of merchandises that Apple has to offer. With the increasing popularity of the iPod, the figure of footsteps within these shops will merely increase and so will the corresponding degree of prospective consumers.
In add-on, Apple needs to go on to supply technologically advanced merchandises that are both dependable and high on quality – something for which they are known for, both in footings of their package every bit good as their hardware. In maintaining with the same, they have launched the PowerBook notebook and the iBook, once more a notebook specifically being aimed at college pupils and immature professionals. This focal point of Notebooks by Apple has been initiated from market surveies that show the industry demand for Notebooks to lift 3 times every bit fast as desktops in the coming few old ages.
To exceed this, the Apple operating system is considered both by consumers every bit good as IT experts as being far superior to the Windows system by Microsoft. It is besides less susceptible to onslaughts by hackers. The following ascent of the Windows operating system is scheduled to come out merely following twelvemonth in 2006, giving Apple the chance to tap into the market for all of 2005 with its superior OS.
Apple is besides lodging to its guns when it comes to premium pricing. It believes that it has a merchandise, which is far superior to others in the market topographic point and hence monetary values it higher. This sort of scheme has come in for a batch of unfavorable judgment by industry experts and they feel that being a niche participant, the volumes would ne'er warrant the border on gross revenues. The job with the computing machine market today is that it has become a commodity-based market. And one of the chief perpetrators for this are system planimeters and companies such as Dell who are under-cutting competition by presenting monetary value wars.
There have been really few companies who have been able to maintain gait with this onslaught and most are happening it progressively expensive to keep their market portion, go forth entirely spread outing it. In this respects, Steve Jobs has made the right determination to offer quality merchandises as this differentiates the merchandise offering within the market place. It provides it an individuality – one that is based on quality and dependability.
The key to Apple’s success will be how rapidly it will be able to maintain gait with technological progresss and provide its consumers with merchandises that are in front of its competition. This besides stands good for the iPod excessively. In the months to come, the iPod will witness a rush of cheap participants with greater
memory capacity and extra characteristics as good. Apple must guarantee that it expands its scope of merchandises strategically to locations beyond where it operates in at the minute. Take for case ; iPods that are being phased out in the US can easy be introduced in both South American and Asiatic economic systems at lower costs to vie with local competition. Similar schemes will guarantee that the iPod continues along its success way.
CONCLUSIONS & A ; RECOMMENDATIONS
The iPod narrative has been one that has caused ripplings across the digital industry. We have seen during the class of the study how successful the merchandise has been with really few disclaimers that the merchandise hasn’t lived up to outlooks. It has been after all, a simple expression, an antique selling mantra – Make a merchandise or a service that provides a solution to the demands of the consumer and it will be a success.
That is exactly what Apple was able to accomplish. With every success narrative, there is a specifying point where a concern is given a window of an chance that can attest itself into big additions. That’s is exactly what Apple managed to make - It was possibly one of the lone companies that understood the turning point where engineering converged with amusement and provided a solution that the market was shouting out for.
On one manus, there were computing machines, which were feeding off the Internet for music and images, and other signifier of downloads. On the other manus, there was an full coevals of music lovers who wanted a manner to transport their music with them and non restrict themselves to a few audio CD’s. The iPod was the span that brought both these properties together and gave the consumer what is was inquiring for. Hence, it succeeded.
But what truly captures the heads of the selling professional is the deliberate preciseness with which the iPod has been introduced to the market and so, sustained its presence as a market leader for so many old ages.
The hereafter is bound to be different, as we all know. There is competition crawling in of all time closer with every passing twelvemonth and there is the possibility of more advanced engineerings that would be user-friendlier being introduced. In add-on, we have seen from the assortment of beginnings that the iPod is particulary strong in selective markets – the US, Western Europe and Japan. But there will shortly come a clip when these markets would be plagued with competition and it would go progressively expensive for Apple to retain its market portion. This becomes a instance of seting all your eggs in one basket or in this instance – three baskets ( US, Western Europe & A ; Japan ) .
It is of import that Apple look at taking the iPod to markets where there is both, an active demand every bit good as markets where they can construct demand. The future across most planetary markets is a image where they play host to a figure of Asiatic companies that are out-manoeuvring competition through price-wars. Apple can non afford to sit out this war
and expression at come ining the markets subsequently in the life rhythm. It must come in the big economic systems of India, China, Taiwan, South Korea etc with a retribution and do an imprint with its trade name equity.
But it isn’t just to get down speaking about the diminution of the iPod. One simply states the obvious as a word of cautiousness since the clip for the tide to alter is still really distant. For the clip being and in the close hereafter, the iPod is firing its way across the industry puting new records through unprecedented gross revenues eating up the market topographic point as it moves from state to state.
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