Product Life Cycle Analysis For The Apple Ipod

The alarm clock rings and its time to go for a jog and get the morning routine off to a good start. After my morning jog I take a shower while listening to my favorite high-energy-time-to-wake-up music. The weather channel says it is going to be a rainy morning, so I grab my umbrella and head for the door. During the car ride I toggle between the news and my French audio lessons. All of these events are done through the use of a little device that seems to be everywhere you look. For the past years we have seen how APPLE Computers Inc. has not only introduced the Ipod into the market for music players, but created the new must have pop icon. The following is a brief analysis of the product life cycle of iPods.

iPods were first introduced to in 2001 and has since grown into a recognized cultural symbol. Designed and marketed by Apple Computer, iPod is a brand of digital audio/video players that stand apart

from the rest due to their user friendly interface and sleek design. Customers can carry their entire music collection and more in their pockets. Although Apple Computer already had a huge following of loyal costumers, the iPod has created a new generation of Apple fanatics that simply cannot get enough of the iPod and all of the iPod attachments that have since developed.

THE GROWTH STAGE

Currently the iPod finds itself in the growth stage of its product life cycle. It has shown a steady growth rate as demonstrated in the sales reported by Apple Computers for the past 15 quarters. The most recent quarters have shown a significant increase in the sales volume of iPods, a good indicator that the iPod market is expanding. It appears as though there is now definitely a public awareness of the Apple iPod worldwide.

Competition is also quickly increasing as new players are being incorporated into the market. Some of the main competitors include Creative Technologies, Dell and Sony. All of which create similar players that incorporate design and functionality. Although some of these are household names none has been able to dethrone the iPod from being the icon for digital jukeboxes. The first casualty that fell to the iPod was the iRiver Rio that could not compete with the loyalty people have for Apple.

Part of the iPod secret is the iTunes software. This is a platform where you can download music into your iPod and organize the files. It offers a library of over three million songs from very diverse genres of music. Others have tried to mimic this concept but have not been able to create the following that iPod has. An example of these failed ventures is the Sone Connect store which is attempting to offer Sony's MiniDisc player as an alternative to Apple's iPod. Even Wal-Mart, Amazon.com and Tower Records are also seeking a piece of the action by selling individual songs for a cheaper price than iTunes by adding these retailers the market is growing and becoming more and more competitive. It can be a safe assumption that Apple's iTunes internet downloadable music will partly replace the traditional channels through which music had been distributed in the past.

It is evident that since its emergence into the market this little monster has gobbled up the market share of digital music gadgets. Apple has been able to directly penetrate the market and enable a quick adoption for the iPod. Now the iPod defines the category of personal music players and sets the standards for their innovation.

EXPECTED LENGTH OF CYCLE

Like Theodore Levitt stated in his Harvard Business review article (1965), there is a life cycle for all products. This cycle has new product development, market introduction, growth stage, mature stage and decline that ultimately lead to market termination. It is difficult to picture a decline in iPod sales since they are so strong in the current market. But, in a market that seeks innovation it is understandable that what is in today could be out tomorrow. In order to prevent being phased out like the Sony walkman in the late 90's, Apple continuously renews the iPod and presents new developments that strengthen the product.

The first generation of iPods has been discontinued and is now simply thought of as memorabilia of times gone by. In fact we are currently witnessing the 5th generation iPod. This new line is far different from the original. Not only is it color but it also has the ability to play videos. As the newer versions come in so does the growth of the industry. The iPod phenomenon has developed an entire industry for the personal digital music player. There is now advertisement that is designed solely for iPod podcasts. Users are able to download their favorite TV shows free of ads, but advertisers are quickly finding ways to let themselves in this new medium. With so much interest being put in the iPod and its new developments it is even more difficult to picture the decline stage of this product life cycle: But, inevitably it shall come.

The current growth stage is probably coming to a quick halt after five years of continuous growth. The more the market is identified and the product is placed and recognized the closer it gets to being in the mature stage. Once in this stage we could probably picture another five to seven years of maturity before reaching the decline stage and being replaced by a new development.

Quarter Sales

2002 Q4 140,000

2003 Q1 219,000

2003 Q2 80,000

2003 Q3 304,000

2003 Q4 336,000

2004 Q1 733,000

2004 Q2 807,000

2004 Q3 860,000

2004 Q4 2,016,000

2005 Q1 4,580,000

2005 Q2 5,311,000

2005 Q3 6,155,000

2005 Q4 6,451,000

2006 Q1 14,043,000

.

Figure 1

Sales figures reported by iPod on the Apple Computers Annual sales reports

COST AND VALUE

The iPod pricing strategy is very simple, but genius. The more storage you want the more you pay. But the more you pay the more you get for your money. In other words the more storage you want the better price/storage ratio you are paying.

Earlier in this analysis iTunes was