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iPods and iTunes
- 1. Jobs’ Next Challenge Roller Coaster Moon, Sung Jin Hong, Eun Soon Park, Ji Hong
- 2. 1. Company Overview 2. Diagnosis of Problems 3. Alternatives 4. Recommendation 5. Q & A Team: Roller Coaster 2
- 3. 2006, MacBook with intel chip 2003, iTunes 2001, iPod 1998, iMac 1996, Acquisition with NeXT, rehiring Jobs 1994, PowerMac family 1991, Powerbook 1987, MacII 1985, First ever quarterly loss, laid of one-fifth of employees 1985, Resignation of Jobs 1984, Macintosh 1983, Apple Lisa 1977, Apple II April 1, Foundation The early Lisa and The “golden Attempts at New The intel Macintosh age” reinvention beginnings partnership years 1976 1980 1985 1989 1991 1993 1995 1997 2005 Team: Roller Coaster 3
- 4. Unit Sales by Product Line($M) Sales and Profits($M) Source: http://www.reghardware.co.uk/2008/11/18/apple_25_year_report_card/print.html Team: Roller Coaster 4
- 5. 1. Company Overview 2. Diagnosis of Problems 3. Alternatives 4. Recommendation 5. Q & A Team: Roller Coaster 5
- 6. Worldwide recorded music revenue Symptoms Digital download $40,000 Napster, Wal-mart Virgin, Sony Device Medion $20,000 Smart Music Phone Illegal hacking of DRM Millions RealNetwork DRM was not infallible $ Causes 2004 2005 2006 2007 2008 2009 2010 Attractive Market Low Entry Barrier Physical CDs Digital(Mobile & Broadband) Walled Garden Strategy Source: http://www.isuppli.com/Abstract/P8183_20061127142035.pdf (Own DRM Restriction) Team: Roller Coaster 6
- 7. Opportunity & Strength Potential growth in digital content market Favorable brand Image, Loyal Customer Obstacle Content Copyright vs. Piracy High substitution products Lack of compatibility Decision What’s Apple’s Next? Digital Music vs. Beyond iPod Team: Roller Coaster 7
- 8. 1. Company Overview 2. Diagnosis of Problems 3. Alternatives 4. Recommendation 5. Q & A Team: Roller Coaster 8
- 9. PRO • Contents & Service • Broaden customer’s selection • Benefits & Easy Access channel differentiation • Keep customers loyalty • Various payment tool CON • Combine iPod with WIFI • Cost Burden • Price diversification • Possibility of profit diminish • Agreement with music labels Team: Roller Coaster
- 10. PRO • Extension of contents • Deliver many types of contents • Keep consumer-centric brand • Expansion of device • Another innovation for Apple • Higher customer accessibility • To provide Hardware & software CON & installation services • To connect key product • Intense competition • High cost on R&D & services -> iLife • Lack of experience Team: Roller Coaster
- 11. PRO • Expansion of • Direct relationship • More control over the end-user devices and industry • Market imitative • Develop a mobile phone - iPod + Smartphone CON • Wireless network provider • High entry barrier • Uncertainty of leasing network • No experience Team: Roller Coaster
- 12. Pros Cons • DRM is not perfect • Prevent illegal copies or piracy • Disturbing a user cause of lack of DRM compatibility • Achieving interoperability • Disclosing some secrets of tech. License DRM • Charging a licensing fee • How to quickly repair the Technology • No worry about infringing damage caused by such a leak • Any player can play music • The best alternative for consumers • No longer guarantee to protect DRM free • Apple customers not willing to buy the music from third party services Team: Roller Coaster
- 13. 1. Company Overview 2. Diagnosis of Problems 3. Alternatives 4. Recommendation 5. Q & A Team: Roller Coaster 13
- 14. Criteria Alt .#1 Alt. #2 Alt. #3 • Leverage core competence • Transit iconic brand Strategic fit • Create new market • Cost for R&D, Alliance, Content Copyright • Expected Revenue Profitability • Time for achieving BEP • Market Competition • Market initiative Market • Not matured Market Growth • Provide convenience and new experiences Customer • New technology acceptance value Team: Roller Coaster 14
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Editor's Notes
- Good afternoon folksAs most of you already know, I am 성진 one of the Roller coaster team member consist of 은순, 지홍Today, The title of my presentation is job’s next challengePlease save your questions until our team finish presentation.
- Apple was established on April 1, 1976 by Steve Jobs, Steve Wozniak, and Ronald WayneApple grow up PC based products H/W and S/W such as Macintosh, Mac OS until 2001 After that Apple have started music related product and service.
- In this slide, 2 graph contain unit sales, and sales and profitsAt Left chart, You can see dramaticallyrise of iPods unit sales since 2004It positive impact on net sales but net profits shows a gentle slopeAs you see in chart, iPods and iTunes might helpe their market share continue to steadily growbut they can’t guarantee apple’s future.Let move on to check what challenge were faced with Apple.
- iPods and iTunes continued to be extremely popular and success so far, but apple is not sure of retaining theircompetitiveposition.Because many competitive device and service are threatening AppleNapster: Unlimited song with monthly charge $12.5, Wal-mart: $0.88 per song Medion: low cost and almost copycat of iPOD, Smart Music Phone by Samsung, Sony, SiemenSeond Illegal hacking of DRMReal Network: compatible with Apples’ DRMDRM was not infallibleWhy many competitors jump into digital music industryThe global market for digital recorded music is expected to grow nearly 600% from $2.7 billion in 2005 to reach $14.9 billion by 2010, according to iSuppli research.
- The industry now is embracing digital distribution, and this segment has quickly grown.In the mean time, Apple is a dominant player in online music service and a portable device with favorable brand image, loyal customer, while challenged by rampant piracy.There is also a high product substitution in the innovative and fast moving IT consumables market. So iPod and iTunesrule today, but tomorrow's technology might be completely different. It is time to decide for apple’s next digital music vs beyond iPod.