Connecting the dots: Why the iPod changed the world?

Via Business Insider.

“You can’t connect the dots looking forward; you can only connect them looking backwards.”
                   Steve Jobs, Stanford Commencement Address, 2005

In 2006 it was clear that mobile phones and MP3 players would converge. Nokia, the smartphone leader at the time, already incorporated mp3 players in their phones. In Japan, KDDI had the most advanced mobile music service in the world, selling millions of songs per month downloaded from mobile phones.

For Apple, the iPod was at risk. At that time the iPod had become the product that had turned around Apple. iPods were more than 50% of Apple’s revenues in 2006 — see chart. Nokia was set to go for the iPod. Apple had to defend. The iPhone development was a matter of survival. Eat or be eaten.

Before the iPhone was unveiled in 2007, anyone would have bet that handset makers (and telcos) were in better place to win the race for the converged phone/MP3 player.
Few would have bet that a company with no experience in mobile would succeed to put a solid product in place so quick. In the early 2000s all main handset makers came from telecom vendors: Nokia, Ericsson, Siemens, Alcatel, Motorola, NEC coped the top of the charts. Even Sony had to join forces with Ericsson to play in the field. Microsoft venture into smartphones had given expensive and unstable smartphones after many years of experience with PDAs.

Then the genius of Steve Jobs made it. Leveraging on Apple’s core competency in making computers, they made a leapfrog. With no legacy to respect, unlike Nokia.

Today the iPhone is more than 50% of Apple’s revenue. It was the stepping stone without which the iPad had not had the form and success it had in changing personal computing forever.

The iPod today is less that 5% of Apple’s revenues. It went from 50% in 2006 to less than 5% in 2012. Had Apple failed to win the battle for the convergent phone/Mp3 player, Apple would have not even survived with a leading product such as the iPod.

It’s the perfect model for a market dominant player to lead disruption. It was the leader in the MP3 segment who drove its cannibalization and won. Cannibalize to survive. Easier said than done.

Connecting the dots
If Jobs wouldn’t have bet on the iPod—which at the time was not an obvious product for a computer maker—, Apple would not have been in such a good position to enter mobile and reinvent it. And without the iPhone experience, the iPad wouldn’t have been the hit that has changed personal computing. In hindsight, without the iPod, the tablet might have not existed as we know it.

 

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