Business

PERFECT PITCH

Apple’s music box works—and makes a statement

MICHAEL SNIDER March 1 2004
Business

PERFECT PITCH

Apple’s music box works—and makes a statement

MICHAEL SNIDER March 1 2004

PERFECT PITCH

Business

Apple’s music box works—and makes a statement

MICHAEL SNIDER

KARA FRASER’S FRIENDS used to get a chuckle when they saw how the 29-year-old illustrator packed for a trip. Invariably, Fraser—who travels frequently from Toronto to New York and Montreal for work, and to visit family in Moncton, N.B.-would load up with art supplies, a change of clothes and a huge stack of compact discs. Music plays a big part in Fraser’s life: she calls it her creative inspiration while she’s painting, and on the road, nothing makes the kilometres go faster for her than SolsburyHill by Peter Gabriel. “I have very eclectic taste and whenever I travel I bring a range of music,” she says. “So often my biggest carry-on was my CD collection.” Fed up with hauling even a tiny selection of her 530-CD library, Fraser dropped more than $800 on an iPod, the hottest digital music player on the market. “I finally decided to get one,” she says, “and after I tried it I thought to myself, ‘What a godsend.’ Now I travel with 4,325 songs and they can play continuously for nine days. How sweet is that?”

Sweet indeed. Apple’s iPod, a slim, white and simple-to-use gadget, has exploded into mainstream popularity. The unpretentious white earbuds that identify users as they bob along in an audio cocoon have become common sights on bus rides, in the gym or in the park. Apple has sold more than two million iPods since launching the gadget in late 2001—nearly 735,000 in the final three months of 2003 alone. Retailers simply can’t stock them fast enough. “Anything that has the iPod name on it has done extremely well,” says Jamie Tetreault, corporate merchandise manager for Future Shop in Burnaby, B.C. “What inventory I can get just blows off the shelves.” About the size of a deck of cards, and possessing between five and 40 gigabytes of storage space, the ultra-chic device has already captured more than 30 per cent of the lucrative market for digital music players. And despite growing competition from high-tech giants such as Dell and Microsoft, Apple’s share could soon jump. Last Friday, the iPod Mini went on sale in the U.S. (due in Canada in April), which has less storage space but is less expensive and comes in five different pastel colours.

Call it an iPhenom. Often, high-tech toys that are viewed as cool at first ultimately disappoint because they’re confusing to use or quickly become redundant as newer models hit the market. But iPods, like so many of the products produced by Apple, engender remarkable brand loyalty. Alan Middleton, a marketing professor at York University’s Schulich School of Business in Toronto, believes that’s because iPod is more than just a great gadget. “To make something a success, it has to have charisma,” explains Middleton with a chuckle. “All through its ups and downs, Apple has has good designers. So the thing looks good.”

The first digital music player hit the market in 1998, just before college students started using a cool music-sharing program called Napster. By the time iPod launched in October 2001, early adopters had already bought their first MP3 players and been disappointed. Few of the early models had a big enough hard drive to hold more than a few hours of music, and they cost far more than a CD player. Meanwhile, iPod’s message was simple: 1,000 songs in your pocket and song-a-second downloads from your computer. “It was a gadget that managed to fulfill all of the unfulfilled promises of the previous generation of MP3 players,” says Max Valiquette, president ofYouthography, a national research and marketing company that gives iPods to young consumers who take part in their surveys.

The rise of digital music spurred iPod sales, and file-sharing networks such as Napster and Kazaa made downloading music popular. Apple’s iTunes Music Store made it legal, and potentially lucrative: launched less than a year ago, but only in the U.S., the buck-a-song service sold one million tracks within a week. When Apple opened the door to Windows users last October, weekly sales increased to 1.5 million songs. In a relatively short time, Apple managed to become the hottest seller of MP3 players, and arguably the best place to buy music.

Chris Chamberlain, a 42-year-old Calgarian, is president of an oil and gas services company and spends a week out of every month in some far-off location like China, Brazil or Bahrain, lending his expertise in seismic instrumentation to international clients. For Christmas, Chamberlain bought his then 11-year-old son, Ty, an iPod. Exercising a father’s right to “test” the toys before wrapping them, Chamberlain fiddled with the new 20-gigabyte unit. “I was blown away with how easy it was.” Now, Chamberlain travels with his own iPod (a 40gig model) and stores his CDs in two huge drawers of an armoire. “I took my entire music collection and loaded it on to my computer,” says Chamberlain. “I don’t have any use for CDs any more.”

Arguably, iPod’s success can be attributed directly to Apple. No other high-tech company can boast such unwavering support from its small but influential customer base. MacHeads—devotees of the company’s Macintosh personal computers—tend to be well-educated, creative types. The Cupertino, Calif., company’s products have style: in 2001, New York City’s Museum ofModern Art included the elegant, Plexiglas-encased Macintosh Cube to its design collection. “Apple is definitely cool,” says Gavin Reedman, 26, a Toronto Web site designer. “Whenever I go to agencies and see people with Macs, I just assume that that person thinks on the same wavelength as I do.”

Middleton has a theory about that. “Part of the way we complete ourselves as personalities is in the products we buy and use,” says the marketing prof. “And if you own and listen to a product that is considered tech cool, then you are tech cool.” It’s a message Apple has employed in its print and TV advertising for iPod, which shows a silhouetted hipster grooving against a neon background with the bright white gadget plainly in view. That techno-sexiness, a reputation earned through both design and slick marketing, has paid off. Hot New York DJs cart tunes to clubs on their iPods. Hip-hop stars like 50 Cent rap about their prized gadgets. “You cannot create a phenomenon unless your brand or product is directly endorsed with examples like that,” says Valiquette. “That’s absolutely the Holy Grail for anyone trying to create a phenomenon.”

Despite the buzz, iPods have their detractors. In December, unhappy customers filed five separate class-action lawsuits claiming Apple misrepresented the life of the iPod’s rechargable batteries. Apple now promises to replace dead units, even after their warranty is up, for US$99. But the biggest disappointment so far, especially for Canadians, is the inability to buy music from the iTunes store anywhere outside the U.S. “We’re working on iTunes being available in Canada,” says Willi Powell, a strategic development manager with Apple. “There are international agreements that take time to establish, but it’s something that is currently being worked on.”

Fraser, the artistic traveller, has no complaints. Buying an iPod isn’t life-altering, she says, but it makes life convenient. “I liquidated half of my CDs, because they are kind of irrelevant now,” she says. “I invited friends to look through my collection and I just gave half of them away.” Which is what happens to the last great gadget. IÎR

ÎPODS & ITUNES BY THE NUMBERS

31 percent of all MP3 player sales

2 million iPods sold since October 2001 launch

55 per cent of total MP3 player revenues

US$1 billion total MP3

player sales in 2003 US$2.5 billion projected

100,000 orders of new iPod Mini

30 million ¡Tunes store downloads

70 per cent of legal downloaded music market through iTunes

100 million projected iTunes Music Store downloads for 2004

250 (and counting) accessories made for iPods, including holsters, microphones and FM transmitters

10,000 songs (or 650 hours of music, or 27 days) on 40-gig iPod

Apple has added colourful Minis to its iPod line