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Apple Ipod

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Technology has changed in the terms of portable music and with the invention of the Apple iPod in 2001, the ease and accessibility to download and listen to music has never been easier; and until recently as competitive. The Apple Computer has developed a device that weighs no more than 6.2 ounces (and as few as 3.6 ounces) and can hold up to 10,000 songs. Despite the weak market overall, the market for digital media is undeniably hot and barring a consumer spending meltdown, it should stay that way. In light of current computer market conditions, Apple is wise to leverage a moderately priced consumer product like iPod to generate revenue. The iPod is an excellent opportunity to drive an additional revenue stream. Despite current global economic conditions, information technology is forecast to grow significantly over the next several years. Importantly, many experts believe that IT innovations like the iPod will particularly help drive consumers to electronic stores to purchase ground-breaking technologies due to the cost.

Being in business for almost 30 years, Apple Computers started with two friends in high school; considered outsiders because of their love of electronics. Steven Wozniak "had been dabbling in computer-design for some time when, in 1976, he designed what would become the Apple I." His friend, Steven Jobs, "who had an eye for the future, insisted that he and Wozniak try to sell the machine, and on April 1, 1976, Apple Computer was born." (http://www.apple-history.com/frames/). It was not until the Apple II was introduced at a tradeshow in 1977 that the business started to take off.

One of the most recent products developed by Apple which has become very successful has been the iPod. The iPod is a slick, tiny device that allows users to download songs from a specific website and this unit "holds" the songs in which they can be played at any time. The iPod is thought of as a handheld jukebox. It has not been any easy success ride for this product. First launched in October 2001, at a cost of $399, many skeptics were uncertain that this product would become an item that would be found in homes. The concern was the fact was that "only Macintosh users, less than a twentieth of the marketplace, could use it." (www.msnbc.mcn.com/id/5457472/site/newsweek/). Strictly for personal entertainment, this product has recently been remodeled to allow holding more songs and now is facing strict competition. The biggest advantage of the newest version is the lower price down to $299.

"Sony Electronics will begin selling two hard-drive music players this fall which, combined with its new music download service, will create an iPod-like parallel universe." (http://news.com.com). Sony will now become a competitor against the original portable device. The difference will be about $100 - $200 higher in price for Sony product; but storage space is higher is this unit. This fall will bring additional players to the market as a number of companies are introducing their own versions. "Creative Labs will unleash its Zen Portable Media Centre" (www.technewsworld.com/story/35313.html) in August which includes a 3.8 video screen and plays 80 hours of music. At the same time, Samsung will release their version of a portable music device. Both of those will retail at $499, again higher than the iPod, but with additional features. "September also sees the release of Hewlett Packard's entry into the digital player market with a re-branded version of the iPod. It is rumored to have a 60-GB capacity." (www.technewsworld.com/story/35313.html). This market is going to become very cluttered with each company trying to outdo the other with extra benefits.

Although sales of the iPod have already beat expectations, the reduction in price will create even more buzz resulting in continued exceeding sales. Like any technological product, the iPod has a demand that is price elastic. By having the ability to download legal songs within seconds and keep them on a unit that is lightweight and easily mobile; customers are in high demand for the iPod. Having the dependable Apple name behind the product has and will continue to assist in demand. With advances in technology and the ability to make computer chips smaller but yet more powerful, this will remain a competitive item. Apple's strategy is to lose money on the music store and make it back when people buy the iPod, the player that works with the store. This is a great except the iTunes Music Store (where songs are downloaded for a fee) is not going to be the default forever no matter how superior it is to the competition. Apple would be best advised to practically give the cheap players away to get people locked into the iTMS and subsequently locked into iPod's. The only way to guarantee this is to make sure they have been using iTMS from the beginning. Apple and low-price are like mixing oil and water. Nevertheless, this pricing strategy is similar to what movie theatres charge for overpriced popcorn and soda. For a mere 50 cents more you can get the super jumbo size. I think this is the same strategy.

The present iPod models are very expensive, and so the rumors were that the new ones would cost $99, turned out to be wishful thinking. It was announced that the new 4GB models would cost $249. If you pay $50 more, you can get a 10GB iPod. There are many MP3 players which offer the same set of features offered by iPod, but none of them can match the elegance of an iPod. Also Apple is not a company known for low priced devices. They may not be market leaders in terms of hardware, but they have a cult following, which swears by their products.

Some strategies to enhance revenue of this product can include:

o Stay dedicated to the advertising, others may come on strong but will their funding be able to continue?

o Dominate the market with the originality of the product - iPod is the leader not follower.

o Create a buzz with available downloadable songs. Offer exclusives for an additional cost by signing with record labels not available through other companies.

o Keep up with technology and availability of new products

o Keep the costs low. With continued market dominance and high demand, sales will remain high.

o Develop business relationships with other players (i.e. Real Player) so customers can download off those sites as well.

Apple Computer has introduced lower-priced versions of its iPod digital music player with longer battery life, positioning itself against rivals trying to use lower prices to undercut iPod sales. The

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