Steve Jobs, who returned to Apple in 1997 after being ousted more than a decade earlier, saw the emerging category as an opportunity to give Apple’s old computer business modern appeal. An avid music fan, who ranked the Beatles and Bob Dylan among his favorite artists, Jobs believed that exploiting people’s love of music would help them switch to Macintosh computers from Microsoft-powered PCs, which had more than 90 percent market share.
“You did not have to do any market research,” said Jon Rubinstein, who led Apple’s technology at the time. “Everyone loved music.”
Rubinstein helped accelerate product development by discovering a new Toshiba hard drive during a trip to Japan. The 1.8-inch unit had the capacity to store 1000 songs. Essentially, it enabled a Sony Walkman-size digital player with a capacity greater than anything else on the market.
iPod’s development coincided with Apple’s acquisition of an MP3 software company that would become the basis for iTunes, a digital jukebox that organized people’s music libraries so they could quickly create playlists and transfer songs. It drove Jobs’ vision for how people would buy music in the digital age.
“We think people want to buy their music on the internet by buying downloads, just like they bought LPs, just like they bought cassettes, just like they bought CDs,” he said in a 2003 lecture.
At the time, a service called Napster was plaguing the music industry, allowing people to share any song with anyone around the world for free. Jobs leaned into the misery of the music industry by marketing the ability for new Macs to copy CDs with the commercial slogan: “Rip. Shuffle. Burn.” The campaign put the music industry in Apple’s corner, according to Albhy Galuten, a manager at Universal Music Group at the time.
Perhaps the most important contribution of the iPod was its role as a catalyst for the creation of the iPhone.
Galuten said that the record companies eventually agreed to let Apple sell songs on iTunes for 99 cents. “We gave up because we had no leverage,” Galuten said. “The easiest way to fight piracy was with convenience.”
The $ 399 first-generation iPod price tag in the United States dampened demand, limiting the company to sales of less than 400,000 units in the first year. Three years later, Apple released the iPod Mini, a 3.6-ounce aluminum case that came in silver, gold, pink, blue and green. It cost $ 249 and had 1,000 songs. Sales exploded. By the end of the financial year in September 2005, it had sold 22.5 million iPods.
Apple enhanced the power of the iPod Mini by making iTunes available to Windows computers, enabling Apple to present its brand to millions of new customers. Although the maneuver would later be hailed as a stroke of business, Jobs opposed it at the time, former executives said.
Soon iPods were everywhere. “It lifted like a rocket,” Rubinstein said.
Still, Jobs insisted that Apple make the iPod smaller and more powerful. Rubinstein said the company shut down production of its most popular product ever – the iPod Mini – to replace it with a narrower version called the Nano, which started at $ 200. Nano helped the company almost double its unit sales to 40 million next year.
Perhaps the most important contribution of the iPod was its role as a catalyst for the creation of the iPhone. As mobile phone makers began introducing devices that could play music, Apple executives worried about being overtaken by better technology. Jobs decided that if that happened then Apple would be the one to do it.
iPhone continued to benefit from the mix of software and services that made the iPod a success. The success of iTunes, which enabled customers to back up their iPhone and put music on the device, was reflected in the development of the App Store, which enabled people to download and pay for software and services.
This article originally appeared in The New York Times.
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