We will illustrate the transformation of the music industry after the creation and launch of the IPod by Apple, which changed the way we listen, buy and download music. Besides it will illustrate innovations, analysis of company and marketing strategy of Apple. Moreover, it also will say recommendations about their value chain analysis.
For the past decades we changed the way we listen music from the old vinyl to CD and ended in the mp3. Today, technology is so different that it barely resembles its former self. Music lovers of today carry around portable devices that store all of their favorite songs in a piece that can fit in their pockets. With these changes the companies found themselves a new niche in the market but no one did it best like Apple.
In this assignment we will describe and discuss the importance of Value Chain, with swat analysis (describing strengths, weaknesses) and a brief history of the terminology of Apple and how those changes created a new level witch transformed the music business forever.
HISTORY OF APPLE AND IPOD
Apple Computer was founded in 1971 in Cupertino, California on April 1, 1976 by Steve Jobs, Steve Wozniak and Ronald Wayne. and is a American multinational corporation that designs and manufactures consumer electronics and software. The best-known products included the Mac computers, the IPhone and the IPod. For the software side they created the Mac OS X operation system, the ILife for multimedia and the ITunes media browser, this last one created and transformed the way we purchase music, videos, podcasts and movies.
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On October 23, 2001, the company introduced the IPod digital music player. It was targeting the needs of different type of users. It represented Apple’s first strike into the digital music market. The IPod was a hard disk based digital music player that was smaller than most portable tape decks. Hard disk MP3 players had been in the marketplace for several years, but Apple distinguished the IPod from these players in several ways.
INOVATIONS OF APPLE IPOD
The innovation of the Ipod starts at looking at the product itself. Considered for some at piece of art for its looks and design, its can fit in your pocket and sometimes as the size of a Zippo lighter. The IPod could also compete with both flashed-based and hard disk based players using a 1.8″ hard disk, Apple was apple to make the IPod smaller than most other hard disk MP3 players. The company believed the product fit the perfect combination of size and storage capacity.
The masterpiece in this product is the design also. This detail has been missing from ther MP3 players in the marketplace. According with Apple, they used “Fireware as its I/O interface as opposed to the then-prevalent USB 1.1 FireWire was much faster, and allowed for much faster transferring from Mac to Ipod. The IPod was based on the edded ARM7TDMI chips, operating at up to 90 MHsed on the PortalPlayer PP5002 System-on-a-chip, operating at up to 90 MHz each. It had 32 MB of RAM as well, witch was largely dedicated to skip protection”. (www.apple-history.com)
According to the Business Week magazine, by combining technical knowhow with the concept in how the company would sell the music online, the IPod became the most influential new technology in years. Also, wasn’t only about creating a new designed product but how this new device was going to be combined with the way the tracks were going to be purchased. The ITunes was created to give a boom in sales and brought to Apple Inc. a new and profitable market into the music industry.
Another great innovation strategy is giving a good experience to costumers through direct download option with easy-to-use listening option, so that people are ready to pay the price for it. Additionally, the IPod is a connection with other Apple’s products as it must be used with a hand-held product. This way the Apple Co. extends its brand visually and technically creating the connection between the IPod and Mac computers.
There is a selection of different types of iPod’s with different needs. Starts from the Apple Shuffle for those need a device simple and small, to the iPod Nano (one of the best sellers) with include nowadays with a video, camera and combine design and with a good screen, the iPod classic which was the first of them all with bigger size and more storage capacity and finally the iPod Touch, very similar to the iPhone give u the chance to surf in the internet and purchase applications.
VALUE CHAIN ANALYSIS
The Value Chain Analysis is a chain of activities for a firm operating in a specific industry. The product pass through all activities of the chain in order and at each activity the product gains some value. The chain of activities gives the products more added value than the sum of added values of all activities. The concept has been extended beyond individual firms (Michael P, 1985). It can apply to whole supply chains and distribution networks. The delivery of mix of products and services to the end costumer will mobilize different economic factors, each managing its own value chain.
Value chain became a known management’s strong analysis tool for strategic planning. Kotelnikov (2001) defined value chain as a high-level model of how businesses receive raw materials as input, add value to the raw materials through various processes, and sell finished products to customers. Value chain, a crucial tool to business improvement because it adopted the opinion “success in digital economy is the implementation of an integrated value chain that extends across beyond enterprise” (Kotelnikov, 2001)
Analyzing the value chain of a product in this case the IPod, there is a question to be answered. Who makes the Apple Ipod? The answer is clear not the Apple itself. They outsorces the entire manufacture of the device to a number of industries in Asia. By doing that, the cost of the product is lower than if they are produced in USA as the labour and manufacturing is higher than developing countries.
According to New York Times, “three researchers at the University of California, applied some investigative cost accounting to this question, using a report from Portelligent Inc. that examined all the parts that went into the IPod” (New York Times, 2007). In their studies they illustrated the complexity of the global economy and how hard it is to understand by using the conventional trade statistics only. The cost final of the IPod 30-gigabyte video was around $110 and with a final price to the costumer at $299. Having those information, the difference between the cost of the inputs and the value of the outputs is the “value added” at that step, witch can be attributed to the country where that value was added.
By having the components manufactured anywhere, Apple could get the cost product very low with a high profit margin. Continuing with the studies, we can visualize the value added at different stages of production process with the country where the value was created.
The value chain of IPod is a process that add value towards the product in the eyes of the consumer. If for instance the scroll wheel add value, the marketing campaign that makes it seem like a fashion accessory adds value, the price point of the IPod also add value (could not be $5.000 otherwise no one would buy one. But with a price of $299 the consumers will find attractive value in the product and will be success as we can see in history). Consumers are not concerned about how much bonus Steve Jobs will get by the end of the fiscal year or how the product is shipped.
Showing people that they can download music in seconds and watch videos on the go created something unique. Also the ITunes Store was one of the biggest advantage and added a giant value to the IPod product as the internet store is exclusive for the IPod and give you access to the biggest electronic store in the planet.
The success of Apple as a company today is very connected with the creation of the IPod. As one of the most established and profitable IT industry in the world the company has a loyal enthusiastic costumers, that market the products as part of lifestyle. They don’t only recruit new costumers but also retains them. They also uses Apple as reference for new products and wait for the conferences to take decisions.
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STRENGHT, OPORTUNITIES AND BENEFICTS OF THE PRODUCT
Before the creation of the MP3 players, people who wanted a wide variety of music to listen to on the go needed to carry around a walkman plus heavy numbers of CDs cases. Nowadays you can have available thousands of tracks in a device so small that you place it at the palm of your hand keeping it very light and easy to carry.
The product also created something more than just purchasing a device. Became a style of life selling the idea you are cool and ahead of your time. The marketing Apple produced with merchandising became so popular that many rivals started to follow them signalizing a successful product.
After the success of the IPod, Apple focused in a great opportunity to increase the company’s revenue. Creating the ITunes and Apple Store, the interconnection those products attracted towards the IPod was immense. In a very short of time, the Cupertino based Apple became the biggest music seller in the planet, selling more than any other company and attracting more and more consumers towards IPod.
To make the device ahead of everyone else, they updated with a new version called IPod Touch allowing the costumer watch videos, connect to the internet and purchase the new gold egg called Applications. Add these values to the product, the company created more strength and gave the IPod a longer life in the maturation proccess.
WEAKNESS AND THREATS FOR THE IPOD
Has been reported some problems about the quality of the IPOD. Some of the IPod nano has found with a screen fault with result in damage or can even brake under impact. In one of the generation of the IPod Video had fault batteries and the company had replaced the product.
The music industry also has been pressuring Apple to increase the price of the music sold at the ITunes. Many of these companies make more money selling tracks on the ITunes than selling CD in the traditional way (i.e. HMV, Amazon, Play.com).
According with the market, other companies are creating cheaper alternatives to the IPod, with a good design and offering access to more than music content (i.e. Microsoft Zune) allowing you to connect with your Xbox Live. They may not threat directly the product from Apple but can actually steal some costumers.
Some cases of iPod caught fire also create a bad image of quality and safety for the entire company. There is report that some costumers took Apple to the court for those episodes as people got injured in different parts of their bodies.
After Apple’s latest product called the iPhone was released, sales in the original iPod decreased as people found more attractive to get the phone with the Mp3 player already attached making easy to carry as everything was in one only device. That create the cannibalization inside the same company.
THE SUCCESS OF THE IPOD ACCORDING TO SURVEYS AND QUESTIONARIES
Apple always innovate the market with new ideas and products packed in very desarible body of design. The iPod innovated and create two different times, before and after the device. In this topic we will analyse how the public use the Apple mp3 player and what they say for the innovate machine.
According to survey of the iPod users, based in analysis from the financial market, they were willing to swap their PC’s for the Macs as they see more connection between the two machines made from Apple, creating more loyalty towards the trademark.
In many situations people, the market and also competitors started surveys to understand the power of the product iPod as it became one of the greatest invention of this generation. Apple has made today’s market and necessity for consumers to have an Apple product such as an iPod Touch. Almost everyone we know owns an iPod or knows somebody who has one.
In conclusion from my findings above, i have found that Apple strives to succeed and without fail every year launch a new product. The maximizing in their profits as they give costumers new technology adding features and value giving the company at the end of financial year high profit.
The product iPod brought innovation and a whole new level of technology into the market expanding later to the must have iPhone. The all products now is connected and interact with each other as result of the transformation created by the iPod as they brought the eyes of the world towards the company and a loyal Apple followers.
To finalize, the iPod has achieved a great value for their products. Known as premium, everyone pay the extra not only for the latest technology but also for the idea of living, power and liberty that iPod created to make us more connected with the “cool” world of the Apple.
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