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
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

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
Hard disk

Holds 50+ songs

Software

Oraganises tracks &

selects songs

Operating system

Runs software

Processor

Runs operating
system

Text

LCD Screen

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
Product Design
Text

Complexity was turned into an

advantage.
iPod attracted the high-tech
innovators and recreational
early adopters.
Innovators-5GB hard drive, fast
Firewire transfer rate, solid
construction and rechargeable
batteries.
Early majority-clean, handsome
design, ease of use, seamless
integration and accessories.

Title
Product Design
Text

First mover advantage.

Slower adopters-Once loyal,
Always loyal.

Title
Text

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
Text
role in iPod success

Protection against lawsuits

Napster-music sharing software
Court battle between Rio and RAA
iPod security

Title
Text

Title
Text

ACC music standard

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
TITLE

INNOVATION
Quarterly upgrades that too
via Internet broadcasted
public presentation
Upgrades to iPod NetworkiTunes & Music store were via
internet.

Title
DYNAMIC PRICING
Text
Stable

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..
Text
iLife

software strategy

iPod to is being positioned as

entertainment server
Integration with tv,computers
& cars.