The Wide Lens: A New Strategy for Innovation by Ron Adner

Author:Ron Adner [Adner, Ron]
Language: eng
Format: mobi, epub
ISBN: 9781101561324
Publisher: Penguin Group
Published: 2012-03-01T05:00:00+00:00

The iPod Wins, Three Years Late

The MP3 player market did eventually consolidate around a dominant product, Apple’s iPod. But the iPod, launched in late 2001—three years after the MPMan—was anything but a first mover. How can we understand the iPod’s success despite its delayed entry?

In 1997, the late Steve Jobs returned to Apple, the company he had co-founded as a college dropout, as interim CEO. As the Internet bubble grew, Apple was hungry for growth. Only a sliver of computer users had embraced its Mac offering. In 2001, Jobs noted: “Apple has about 5 percent market share today. Most of the other 95 percent of computer buyers don’t even consider us.”

Jobs was a pioneer of the convergence of digital and media. It is inconceivable that digital music was not on his radar. Still, in Jobs’s early tenure as CEO, and despite his company’s need to create a new avenue for growth, he refused to jump on the MP3 bandwagon. Asked in 1998 about his growth strategy, “Jobs just smiled and said, ‘I am going to wait for the next big thing.’” In 1998, as MPMan and others launched, he didn’t budge. In 1999, as Shawn Fanning introduced Napster (illegally), unleashing a vast catalog of free MP3 content to the world, Jobs still didn’t move. In 2000, Jobs finally decided to start the process of developing an MP3 player.

In 2001, the bubble burst, and in the bleak outlook for all things Internet related the MP3 player was not spared. As a spokes-woman at Intel sadly noted, “With some of the consumers we have talked to, it sure seems like things are slowing down in the MP3 player market.” It was at this dreary moment that Steve Jobs finally launched his player in the market. Why? What had he been waiting for? What did he know?

Jobs knew that, on its own, an MP3 player was useless. He understood that, in order for the device to have value, other co-innovators in the MP3 player ecosystem first needed to be aligned. And in October 2001, when Apple announced the iPod, those pieces were solidly in place: both MP3s and broadband were finally widely available.

Apple waited, and then waited some more—until it finally made its move, putting the last two pieces in place to create a winning innovation: an attractive, simple device supported by smart software. The first-generation iPod for Macintosh retailed at $399, had 5 GB capacity, and could store up to 1,000 songs. It boasted an intuitive interface design and was, for its time, lightweight. But the value of the device was cemented by its seamlessness with the iTunes music management software. Organizing and managing your MP3s was finally a breeze. But unlike other MP3 players, which used a USB cable to transfer music files from computer to device, the iPod relied on a faster, built-in FireWire port, a standard feature on all newer Macs but available on only a fraction of PCs. (FireWire was a favorite feature of Jobs’s, given that it is significantly faster than USB—users could transfer 1,000 songs in less than ten minutes.

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