The iPod as a Business Model

February 12, 2007
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“The Internet changes everything it touches. It touches almost everything,” said writer John Ellis several years ago. Such an audacious statement is an even more accurate description of the Apple iPod. Within the blink of an eye, it has become the most successful new product in history. Touching almost everything, it has taken the world by storm.

In a split second, it went from zero to 100 mph, so to speak. Even those who don’t own an iPod brand MP3 player make sure they have white earpieces, the pervasive iPod trademark. A recent poll of college campuses benchmarked the iPod’s success when students ranked it No. 1 in popularity, beating out beer drinking for the first time.

But what does the iPod have to do with business? The answer is simple: just about everything.

A good place to begin is by acknowledging that what makes an iPod unique is not its component parts, many of which are reportedly off-the-shelf. What has made the iPod successful is a series of incredibly brilliant insights.

iPOD'S DESIGN SETS IT APART

The design is a combination of an irresistible sleek look, a compelling size, and most importantly, how it works.

At the very moment the world of gadgets has become incredibly complicated, the iPod offers the serenity of simplicity. TV “clickers” are incomprehensible. Who can program a microwave oven, let alone a DVR? Most of us use perhaps 5 percent of our cell phones’ capabilities and even more haven’t figured out how to change the ring tone.

Not the iPod. It’s brilliance rests in its intuitive simplicity.

“People are seeking products that are not just simple to use, but also a joy to use,” said Bruce Claxton, product designer. “That’s the iPod.”

The iPod is the antigadget. Gadgets have buttons and switches that only serve to frustrate users, while the iPod’s total simplicity allows it to become an extension of self. This is what makes it so compelling and essential. As Apple noted, “You can do it all without looking.”

iPOD PUTS USERS IN CONTROL

The revolt against the gnawing feeling of being controlled by economic and social forces came with the onset of free agency in professional sports in the mid-1990s. Today, most Americans like to think of themselves as free agents - as those who are in control of their own destinies.

There’s a well-known photo of a college co-ed holding her iPod. The look on her face suggests she has found nirvana. This is what the iPod is all about: freedom. While the automobile gave young Americans mobility, the iPod gives them control of their worlds. And what the young have discovered is spreading fast. As we all know, it started with music. Every youth has his or her particular tastes in music.

While tapes and then CDs were a precursor, it wasn’t until the iPod that we were given the power of total choice. We can listen to our music, when and where we choose. “You’re free,” is the message of the iPod. We can be in our own private world wherever we happen to be at the moment. There’s an interesting sidebar to all this. We are willing to pay for music and programming if it enhances our sense of freedom.

To understand the attraction of the iPod, it helps to know why it is an unmitigated marketing success.

TOTAL CUSTOMER FOCUS

While every business talks about meeting customer needs and expectations, most of it is hype. Can anyone be serious whose voicemail message says, “Your call is very important to me….” If they really believed the call was important, they might consider taking the call. Or what about all the blabber about “customer care” when the so-called helpers at the “help desk” merely read from a computer screen?

Unlike Microsoft and other technology companies, Apple is, pure and simple, a marketing organization. Hewlett Packard (HP) sells very good printers. Dell sells computers made to order. Yet, as someone pointed out, there is no “Cult of Dell”; there are, however, the numerous “Dell Hell” blogs cataloging thousands of customer service complaints.

Here’s the point: HP thinks about printers; Microsoft thinks about software; and Dell thinks about building computers. Apple thinks about customers; that’s the message behind the company’s “Think Different” campaign. According to reports, Apple co-founder and CEO, Steve Jobs, is totally focused on the customers’ experience with Apple’s products.

As one of the company’s early employees pointed out, “Steve’s strength was that he was always concerned with the end user - how things look onscreen, what the case was like. …,” according to the book iCon Steve Jobs: The Greatest Second Act in the History of Business. “It was this obsession that produced the Mac … and the iPod.”

I CAN'T LIVE WITHOUT IT

Try to take an iPod away from anyone who owns one, or more likely, several, and see what happens. Perhaps this is the point at which the genius of the iPod becomes apparent.

This may be why Matthew David wrote, “I’ve got just one thing to say. I love my iPod. Yes, I am that person, that soul, caught up in the marketing hype that Apple must love. I love you, Pod.”

Perhaps this is why iPods are everywhere. Business executives listen to audio books, podcasts, and of course, music. Plug the iPod into your car’s MP3 port. Watch videos. Now, the tiny device may become the core of home entertainment.

The iPod is education-friendly, too. College professors are posting their lectures for downloading. At Georgia College and State University, they’ve created an iColony with iCitizens that’s built on an iPod foundation. It has become essential because it works for people.

A WORK IN PROGRESS

It may be no accident that the iPod is more like a Toyota Camry than anything else. While General Motors continued to turn out a string of nearly identical sedans, Toyota focused on one, the Camry. Seemingly dull in appearance, sales grew because of the customer confidence in its quality and reliability.

Apple has taken this same highly focused approach with the iPod. About twice each year, the next iterations make their appearance. Now, the iPod product line offers an array of options to fit every lifestyle including incredibly brilliant video models.

What’s coming next is always the question. Will there be a phone? Internet connectivity? E-mail? All of these and more? Why not?

Who would have thought that the iPod would become the heart of the home sound system? Yet, it is exactly that.

The excitement of the iPod is not only what it is today, but also what it can and will be tomorrow. This is what created the “Cult of Mac” and it’s what’s driving the iPod nation.

Against this background, what does the iPod say about business? Although the list is long, here are a few possibilities:

CUSTOMERS DEFINE THE BUSINESS

Some businesspeople talk about customers wanting to talk with a live person, while others say that customers expect personal service. Is this really what customers want? Or are they looking to have their needs met in ways that satisfy them?

With the iPod, Apple introduced a product that allows customers to define how the product is used. In his August column on the iPod in the Washington Post, Jose Antonio Vargas cites comments by Jason Berkowitz, project manager for a software company. At one point Berkowitz said of his iPod, “It becomes an extension of you…. It’s like a window to your soul.” The key is letting the customer define the business.

  • Make it enjoyable. Kids are taught from the time they can walk not to touch the merchandise and to keep their hands to themselves when they’re in a store. At times, it seems as if store salespeople are there to enforce the “do not touch” rule.

    Once again Apple stood the process on its head. They invited customers to play with the merchandise and have a good time. There is a place for small children to use computers. The “Genius Bar” offers free advice and information. On top of all that, there’s a learning center. Compare all that with a CompUSA store. Apple is concerned with the customer’s experience, the other on moving product. The Apple store is entertainment - and that sells.

  • Tear yourself away from the competition. Too many companies take their business plans from the competition’s playbook. It is safe to say that there would have been no Macintosh computer or iPod if Apple focused its future on the competition.

    Even the most devoted member of the “Cult of Apple” admits that the company faltered badly for about a decade with its computer products, even though its operating system was unassailable. It was not until Jobs returned as CEO and gave new life to the “Think Different” mission that change occurred. And that’s when the iPod was born and Macintosh computers began using Intel chips.

    When he introduced the iPod in 2001, Jobs said, “Listening to music will never be the same.” It may have been more appropriate for him to say, “Life will never be the same.”

    The headline on the column by Jose Antonio Vargas was accurate: “The iPod: a Love Story Between Man and Machine.” That’s the test for any business.

    Publication date: 01/29/2007
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