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Beauty & BrainsThe Competitive Strategy Behind

Apples iPod

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Title

Text

Fast Cycle Expectations

What is a fast cycle industry

Concept of creative convergence

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Apple Cycle Reality

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

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Title

Text FIT

Competitive strategy= relationshipwith fit

Intutive understanding

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CORE COMPETENCIES

2001: Launched

Competitor:

Diamond Rio (Music digital

Player

Rio- Highest market share

First mover advantage + Name

recognition (RIAA lawsuits)

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RIO VERSUS iPODParameters Rio iPOD

Storage capacity

Songs

Minutes

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 portadapter

Proprietary high-speed 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

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INSTITUTIONAL KNOWLEDGE

Eliminate product barriers: 256 MB (1999)

Flash memory storage technology vs hard disk

Industrys thinnest hard drive (3 years):

Partnership with Toshiba

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Title

Text Hard disk Holds 50+ songs

SoftwareOraganises tracks &

selects songs

Operating system Runs software

ProcessorRuns operating system

LCD Screen Allows I/O readout

BatteryPower screen, Hard disk,

Processor

Firewire

Fast connection to sync

music on PC

IPODVALUECHAIN

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ORCHESTRATION

Remaining integrated

Cross-disciplinary capabilities

CUSTOMER NEEDS

Aesthetics + Functionality + Usability=

Market Needs

Anticipate new ideas + Brand Loyalists=

Customers

Early Adopters + Early Majority

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Pricing

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

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Apples advertising strategy

iPod has become a credible extension of

Apples brand fit.

Apple had to take proactive

measures to slowing down the speed of

convergence.

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CONVERGENCE

Produce its own hardware, software andoperating system.

NETWORK EFFECTS

Ipod+iTunes music player relationship

Consumer need

Build an ITunes user base.

Reduction in switching cost.

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ITunes music store played a major role in

iPod success

Protection against lawsuits

Napster-music sharing software

Court battle between Rio and RAA

iPod security

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ACC music standard

Digitalmusic

files

Proprietary

ACC Format

iTunesmusic

store

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TextACC Format

IPod being the only hardware player that

can play ACC files.

Created customer loyalty

Quick time

Pixar

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NETWORK CYCLE

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Title

TextSwitching 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.

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Third party accessories

Creating and augmenting fit new, niche

and unaugmented market.

Integration of iPod into their car stereos.

Building Creditability .

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GOAL:

Realign Ipod With New Market

Conditions

INNOVATION

Quarterly upgrades that too via Internet

broadcasted public presentation

Upgrades to iPod Network-iTunes &

Music store were via internet.

Renewal

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DYNAMIC PRICING

Stable but premium pricing

NO DISCOUNTS

SAME PRICE EVERYWHERE

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WHAT LIES AHEAD..

iLife software strategy

iPod to is being positioned as entertainment

server

Integration with TV, computers & cars.

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WHAT LIES AHEAD..

iLife software strategy

iPod to is being positioned as

entertainment server

Integration with tv,computers & cars.