iPod: How It Changed Apple

iPod: How It Changed Apple
Fifteen years ago, the iPod and its iTunes music distribution system were born. No one saw how they were to transform Apple, enable the Smartphone 2.0 era, and unlock hundreds of billions of dollars of revenue for the company.
By Jean-Louis Gassée
Oct 31 2016

Many of the facts surrounding the iPod’s birth and rise are well known. In The Perfect Thing, Steven Levy, one of the Valley’s best annalists (regular readers will note the spelling, this one is meliorative), lovingly and accurately chronicles how the iPod “became a full-blown cultural phenomenon, […] revolutionizing the way we experience music and radio.”

Less lovingly, when Apple’s music player came out fifteen years ago, I quickly dismissed it as yet another MP3 player, one of many since the genre emerged in 1998. Incorrigible gadgeteer, I already owned several such devices including the popular Rio from Diamond Multimedia and one from SanDisk — which continues to make MP3 players to this day. This one will set you back $49.99 for 8GB.

By fixating on the iPod itself, I completely overlooked iTunes, introduced a few months earlier. I wasn’t alone in missing the forest for a tree: As popular as the iPod would become, no one imagined that it would be iTunes that would unleash Apple’s potential as it unlocked hundreds of billions of dollars of revenue and profit.

With iTunes, Steve Jobs managed to break the back, for lack of a better word, of music “majors”, the content owners and distributors, by selling music “by the slice”, one song at a time. Apple’s co-founder would repeat this feat with cellular carriers, starting with AT&T, hypnotizing them into letting the iPhone manufacturer dictate configuration, pricing, and content distribution. (Sadly, unlocking and unbundling hasn’t worked as well for TV programs and streaming video distribution. One can hope…)

The paramount iTunes/iPod innovation was micro-payments. Paying 99 cents on-line? No way. But Jobs convinced the credit card companies and, reportedly, allowed Apple to take losses on some iTunes transactions — only to sell more high-margin iPods.

We can also mention in passing that iTunes was the first Apple app also made available on Windows, quickly followed by an Airport base station management client, if memory serves.

The well-designed hardware/software, iPod/iTunes combo quickly became ubiquitous, boosted by a clever, graphically minimalist, Jobs-like, if that’s the right word, Silhouette Advertising campaign:



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