Monday, January 03, 2011, 02:00 am PT (05:00 am ET)
2011 marks Apple's tenth anniversary of Mac OS X, iPod, Apple Retail
Apple's success with the Mac OS X platform was also tied to the release of the iPod in 2001, which dramatically turned around the public perception of the company. Ten years ago this month, Apple launched iTunes, a free software release built around Casady & Greenes' SoundJam MP music jukebox app, which Apple had acquired the previous year.
The strategy behind Apple's release of iTunes became clearer in October of that year, when the company launched the iPod, a 5 or 10GB music player capable of holding a large library of a thousand MP3s.
While hard-drive MP3 players were not new, the combination of Apple's easy to use iTunes software for cataloging and syncing music on a desktop computer, paired with the iPod's fast FireWire interface and simple operation made the new player unique, and ultimately popular. The iPod also benefitted from its use of Toshiba's new 1.8 inch hard drive mechanism, which allowed the device to be small and sleek, with enough room for a battery supporting all day use.
Competing products typically used very slow USB 1.0 or serial connections, which made music sync lengthy and clumsy. Few were bundled with easy to use software, and many expected users to navigate complex menus on the device to organize or even play their music. Few alternatives offered the thin, small package of the iPod, being based instead around larger 2.5 inch laptop drives.
Apple had quickly brought the iPod to market, using an existing reference design created by PortalPlayer based upon two ARM processors and a custom interface developed under contract by Pixo. The original iPod models offered a nod to the Macintosh with its use of the same Chicago font that had originally been the Mac's default system font.
The iPod phenomenon
Sales of the first year of iPods only amounted to 376,000 units, but helped pad the company's balance sheet because the new devices were profitable. In its second year, Apple expanded beyond the Mac to begin selling iPods to Windows users, initially pairing it with MusicMatch software. The company subsequently sold nearly a million iPods in fiscal 2003. The following year, the company sold 4.4 million, indicating Apple had discovered a true hit. The company was now selling more iPods than Macs.
The iPod franchise branched out with the even smaller iPod mini in 2004, which offered a cheaper, thinner 1 inch microdrive-based option that could compete against smaller flash capacity MP3 players in cost and capacity. In fiscal 2005, the iPod exploded, with sales reaching 22.5 million units, thanks to the low cost new iPod shuffle and the thin new iPod nano, both of which used Flash RAM for storage rather than a mechanical hard drive.
Since 2005, Apple's pace of development with the iPod has increased dramatically, expanding the product category into smartphones with the iPhone and tablets with iPad. A look at the company's progress over the last five years was recently featured in the articleFive years of Apple: 2005 iPod to 2010 iPod touch.
Combined with rapid expansion of iTunes, including 2004's new iTunes Music Store, the iPod became a cultural phenomenon that competitors were incapable of duplicating. Apple's iPod was particularly embarrassing to Sony, which had long reigned as the top name in portable music players with the Walkman. Microsoft was also stymied in its attempt to create a Windows-like licensing model called PlaysForSure, which intended to compete against the iPod using partnerships with hardware makers and independent music stores.
Key to Apple's survival
iPod sales grew rapidly through 2007, when Apple began selling the iPhone and iPod touch as an entirely new mobile platform that leveraged the brand recognition and economies of sale of the iPod along with the technical capabilities of Mac OS X. Without the financial contribution of its iPod sales, Apple may not have survived through the decade as it struggled to sell Macs to an audience that had long associated it with an underdog, alternative niche. The iPod restored Apple as a popular, mainstream brand and earned it respect as a competent product developer and savvy marketer.
Massive global sales volumes of iPods also established Apple as the world's largest consumer of RAM, enabling it to negotiate favorable contracts with producers. Apple leveraged its economies of scale with the iPod to deliver 2007's 8GB iPhone with an unprecedented amount of storage for a smartphone at a time when competitors were only including 128MB or less of storage. More recently, the company has flexed its market power in RAM procurement to bring SSD drives to the mass market with the MacBook Air.
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