iPod, iTunes and Steve Jobs

Apple Driving Market Growth Through Technology
By S. Vandermerwe and Marika Taishoff

In 2001, Apple, under the leadership of CEO Steve Jobs, enters the “Digital Lifestyle/Music” “market space” with the introduction of the iPod, a portable digital audio music device. In 2003, it launches the complementary iTunes Music Store, where customers can download songs from the Internet, onto the iPod, for less than one dollar/one euro, per track. In the process, thanks to these innovations, Apple not only exponentially grows what had been a very small market, but also easily dominates that market: by 2004, the Apple iPod becomes the market leader in the field of portable digital audio devices: it has over 50% of the global share, and consumer demand, especially for the latest, cheapest version, seems as strong as ever. The iTunes music store, having sold over 100 million songs worldwide, has 70% of the legally downloaded music market. The object of the case is to consider whether Jobs” strategy will provide Apple, whose share in PCs has been dropping precipitously over the past decade primarily because of the company”s proprietary attitude to its technology, with a new lease on life and long lasting, enduring market growth. Or whether, as with the PC that Apple first invented, Jobs has simply grown a market for others to compete in, and dominate. The case also addresses the role of innovation, and particularly product innovation, in a disruptive technological environment and how this, when combined with creative marketing, can increase top line revenues and growth. The deeper issue however is whether Apple remains a product pusher, as opposed to a truly customer focused enterprise. If indeed it continues to be a product pusher, its offerings will be easy to copy, its revenues consequently short lived, and its financials once again uncertain and volatile.

Case abstract adapted from The European Case Clearing House. Full case available at www.ecch.com