Page 228 - Battleground The Media Volume 1 and 2

The Tunes Effect | 0

computers be encased in exotic hardwoods, and a famous 1984 Super Bowl
ad introducing Macintosh computers implicitly compared Apple’s competitors
to Big Brother. Apple has aggressively promoted a branded “digital lifestyle”
throughout its history. The company’s products are noted for innovative hard-
ware and software that is easy to use. Among other things, Apple introduced
the mouse, the graphic user interface, color monitors, and laser printers into
personal computing.
Despite these innovations, Apple has captured less than 2 percent of the global
market for personal computers. Why is this the case? Apple has kept control
over its computer operating system, rather than licensing it to other manufac-
turers (except for a brief, unsuccessful experiment in the mid-1980s). From its
inception, Apple rejected the component model followed by its competitors in
favor of an end-to-end business model that binds hardware and software into a
complete package. The Wall Street Journal explained the difference:

In the component model, many companies make hardware and soft-
ware that runs on a standard platform, creating inexpensive commodity
devices that don’t always work perfectly together, but get the job done.
In the end-to-end model, one company designs both the hardware and
software, which work smoothly together, but the products cost more
and limit choice. (Mossberg 2006)
Apple introduced its iPod digital music player in October 2001 for $399, and
the dangling white cords of its headphones quickly became a status symbol. By
August 2005, an estimated 21 million iPods had been sold, accounting for one-
third of Apple’s overall revenues. A month later, in September, Apple unveiled
a lower-priced version, the iPod Nano. The New York Times hailed the Nano as
“gorgeous, functional, and elegant . . . to see one is to want one” (Pogue 2005),
while the Wall Street Journal stated that the player, the size of five credit cards
stacked together, was “gorgeous and sleek . . . beautiful and incredibly thin . . . I
am smitten” (Mossberg 2005).
Apple’s users pay a premium for its elegance and user-friendliness. The com-
pany rationalizes its profits on grounds that it devotes massive resources to
upgrading existing designs and developing new products. However, its competi-
tors have quickly incorporated Apple’s technological innovations into their own
products and offered them at lower cost. As a result, Apple has moved further
into Web-based services while maintaining its tradition of end-to-end control.
The coupling of the iPod music player and iTunes online music service is a case
in point. Apple’s strategy with iTunes was based on two principles: all down-
loads were priced at 99 cents each, and these downloads could be played only
on iPods.

ThE iTunEs “ExPEriEnCE”

Apple unveiled its iTunes music store in April 2003. The iTunes service is
intended to create an “experience” as much as a store, and “personalization” is a
key part of the “experience.” Users can post playlists to iTunes and compare their