The Making of Apple's iPod

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Case Details:

Case Code : OPER064
Case Length : 19 Pages
Period : 2001-07
Organization : Apple Inc.
Pub Date : 2007
Teaching Note :Not Available
Countries : US
Industry : Digital Music Player

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Development of iPod

In the year 2000, Jobs and his team were looking for ways to increase the sales of their Mac PCs. Then they found that there was an application called Napster which was creating ripples across the music industry and had become very popular among music lovers on the Internet.

However, the major drawback of Napster was that people were exchanging mostly pirated music over the Internet. Jobs wanted to create a software that would enable music lovers to exchange music legally. For this purpose, Apple hired Jeff Robbin, the programmer who had created the SoundJam MP audio player.

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

Robin created iTunes by reworking the SoundJam application, making it simpler. iTunes was introduced in January 2001. The iTunes Store began its operations after Apple signed deals with five major record label companies - Electric and Musical Industries Limited (EMI) , Universal , Warner Brothers , Sony Music Entertainment and Bertelsmann Music Group (BMG) (Refer Exhibit V for the salient features of deals).

Later on, beginning with Moby on July 29, 2003, music by more than 600 independent label artists was added. Songs were sold for 99 cents per song and the music companies received about 72 cents per song...

The Criticism

Analysts commented that the iPod was the product of creative thinking. Its simplicity was the reason for its widespread success.

Kevin Werbach, Professor, Wharton University said, "Too often, consumer technology product makers tend to 'over-feature' their innovations. These are geeks who want to add the latest new thing and historically have a tendency to make their products too complex. They are technology experts, and their tendency is to build the product they can use, which is not the mainstream product. iPod is a big counterexample of that trend. They didn't try to put in every feature; they stripped it down and focused on a really great design and user interface, even though it by no means was the first portable digital music player."...


Exhibit I: Sales of iPod (2002 - 07)
Exhibit II A: Apple Inc - Income Statement
Exhibit II B: Apple - Balance Sheet
Exhibit III: Apple Inc. - Stock Price Chart (August 2002 - July 2007)
Exhibit IV: Generations of iPod
Exhibit V: Apple's Deal with the Music Companies
Exhibit VI: First Generation iPod
Exhibit VII: iPod Mini
Exhibit VIII: iPod Nano
Exhibit IX: iPod Shuffle
Exhibit X: Apple's Supplier Code of Conduct

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