iPOD the Knight in Shining Armour-The Success Story
Posted in Marketing & Strategy Articles, Total Reads: 2385
, Published on 07 July 2013
Apple a revolutionary company always had a sentinel to protect it from the perils of the competitors.
iMac when launched did not have a CD burner installed when compared to other competitors. iMac was used as more of a decorative piece of instrument by most of them or a matter of prestige and not much of an entertainment device. Apple anticipated trouble .It had already started impacting the sales of iMac.
Apple knew that its iMacs’ were not selling!!!
Apple had shown interest in video players and file transfer processes for incorporating in the iMac.
This is how they went about developing iTunes.
Sony with the help of its R&D team had come up with a lithium ion battery which was very small in size. Unfortunately there were no vendors requiring it .
On the other hand Toshiba had come up with a HDD, which was also small in size.
With the use of these two trump cards, Steve Jobs and team created something small yet distinct music player which was better than all the existing music players, both in terms of storage space and battery life.
when you have a player which can store around 1000 songs which can play for a month once charged. Who would go for a Sony Walkman now ?
The iPOD, was set to become a blockbuster!!
It was Steve’s ultimate dream to create this music player. Or was it ? a tactic ? a strategy ?
What most of us do not know is if it wasn’t for the iPOD, the company probably would have disappeared in the mist of competitors.
The recording companies were facing an issue of stealing of albums from sites like Napster and piracy was becoming an issue.
The recording companies came as guardian angels. Steve jobs called all of the recording companies for a meet, one of which was Warner music group (WMG).
Steve proposed a deal to these recording companies and promised to save them from piracy and stealing of songs by introducing the iPod. Jobs beautifully managed to negotiate with the music companies by giving a classical justification.
He convinced them that his new music player is so much better than the others and it will rely on a software, iTunes for transfer of songs. The songs cannot be played without this distinct software. The albums have to be converted and compressed in iTunes, only then can they be played and stored in this small device.
The recording studios felt they also had an advantage. While customers purchased entire albums, they had no choice on downloading only their favourite songs. This could have a negative impact on album sales, because by selling individual songs, the relatively bad songs in the albums will not be downloaded. Jobs made a deal with the music companies to sell individual songs at a premium price, say 99 cents or 1$. Their songs which were previously sold in the form of albums could now be downloaded individually without losing much on revenues.
On agreeing to jobs, there was not much risk for loss for these companies because initially iTunes was only compatible with the iMacs and the iMacs sales were not shooting up because they lacked CD burners.
There were only about a million of iMacs in the market, not posing much of threat for the music companies. The music companies found this proposal very alluring and hence all of them signed an agreement .
Apple launched the iPod !!
iMac sales shot up !!
The iPod saved its ancestor iMac and its creator.
I don't think i will have to remind you what happened after the launch of iPod. This device changed the way music was consumed.
The Article has been authored by Ganesh Mulki Kamath, TAPMI, Manipal
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