Scribd
Upload
66 views23 pages

CS 453 E-Commerce Technologies Sweet Spot Case Study

- Steve Jobs and Steve Wozniak founded Apple Computer in 1976 after dropping out of college. They named the company after Jobs had worked on an apple farm and was a fan of the Beatles album "Apple". - In 2003, iTunes was created by Apple to address the lack of legal music download options after Napster was shut down due to lawsuits. iTunes offered a large selection of songs at 99 cents each and helped popularize digital music downloads and digital music players like the iPod. - iTunes was immediately successful, selling over 275,000 songs in its first 18 hours and over 10 million songs in its first month. However, some major artists and record labels were still hesitant to participate.

Uploaded by

dineshpadhiyar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
66 views23 pages

CS 453 E-Commerce Technologies Sweet Spot Case Study

- Steve Jobs and Steve Wozniak founded Apple Computer in 1976 after dropping out of college. They named the company after Jobs had worked on an apple farm and was a fan of the Beatles album "Apple". - In 2003, iTunes was created by Apple to address the lack of legal music download options after Napster was shut down due to lawsuits. iTunes offered a large selection of songs at 99 cents each and helped popularize digital music downloads and digital music players like the iPod. - iTunes was immediately successful, selling over 275,000 songs in its first 18 hours and over 10 million songs in its first month. However, some major artists and record labels were still hesitant to participate.

Uploaded by

dineshpadhiyar
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
You are on page 1/ 23

CS 453 E-Commerce Technologies Sweet Spot Case Study

11 September, 2003 Ryan K. Dickey

Background

Founders of Apple Computer:


Steven Wozniak and Steven Jobs Friends from high school Both dropped out of college to work in industry 1 April, 1976, company founded

Background

The name:
Steve Jobs had worked at an apple farm
Big fan of the Beatles album, Apple Could not come up with a

better name

Why iTunes?
Fall of Napster Lawsuits from the RIAA against individuals Huge demand There were no legal 800 pound gorillas

Creator?
Jeff Robbin, SoundJam developer Hired from Casady & Greene

Overview

What does iTunes do?


Large database of mp3s Download at a low price Large selection of music Search options Organize and play mp3s

Overview

iTunes advantage:
Hundreds of thousands of mp3s Preview songs for free, Download for 99 / song Virtually every category of music Exclusive iTunes tracks

Personalized play lists

Overview

More iTunes advantage:


Displays album art while playing AAC MPEG-4 audio iPod sync Audio books

Overview

Success

Opening day:
275,000 downloads in first 18 hours Equaled number of legally downloaded songs over a six month period last year These results are unprecedented

Success

Surprise:
Sold more than 10 million songs since launch in April

One million in first week alone


Less than 1% of computers nationwide are compatible with iTunes

Success

Competitors:
Existing competitors: mp3.com buymusic.com listen.com

Success

Future Competitors:
Sony plans on releasing an internet music service next spring

Amazon.com will sell single tracks


America Online, MSN, RealNetworks and Yahoo are creating plans

Financial

Financial

Stock information:
Traded publicly as AAPL Currently trading for approximately $22.18 (as of 9 / 10 / 03) Average Volume: 3,763,000

Breakthrough

The iTunes difference:


Other groups such as eMusic, Liquid Audio and RioPort have failed

Offered over 200,000 tracks by quality acts with no strings attached


Painless transaction process

Breakthrough

More difference:
Combine ease of use with up to date technology (AAC encoding)

Apple is already a brand name


Low / no cost to reproduce merchandise Low / no inventory Secure payment

Problems

Potential problems for iTunes:


Major record labels are resisting, while sales are plummeting (25% this year alone)

Some bands have not released their music:


Red Hot Chili Peppers, Metallica, Led Zeppelin, the Beatles

Problems

More problems:
Price is too high Kazaa and other programs still exist Apple must depend on the RIAA to push users toward a legal solution

Prediction

iTunes will be highly successful:


Major record labels will continue to join Database of mp3s will continue to grow Price will drop as sales increase Opening up to the PC market by the end of the year

References
[1] http://www.apple.com/itunes a, Source of all graphic images and feature descriptions b, Apple Reports Third Quarter Results [2] http://www.businessweek.com Byte of the Apple by Charles Haddad [3] http://www.washingtonpost.com

a, Sympathy for the File Swapper by Cynthia L. Webb


b, Universal Slashing CD Prices by Frank Ahrens [4] http://www.apple-history.com/

References
[5] http://www.wired.com/news [6] http://www.nytimes.com a, Music Download Suits Could Raise Backlash, AP b, Girls? Check. Cristal? Check. iPod? Check by Neil Strauss [7] http://www.cnnfn.com Stock information [8] http://www.bayarea.com/mld/mercurynews/ [9] mp3.com, listen.com & buymusic.com Logos

working
Network Protocol iTunes uses Apple's proprietary Digital Audio Access Protocol (DAAP) to transfer shared music between devices on a network.

You might also like