This document outlines Apple's success with the iPod music player over three time periods from 2001-2010. It details Apple's business model, which involved partnering with other companies to develop hardware and software. The iPod offered consumers an easy to use portable music device holding 1000 songs in a small size. Key to Apple's growth was the iTunes store, which generated significant revenue streams. By 2010, iPod sales accounted for 24.5% of Apple's net sales and helped establish Apple as one of the most admired companies worldwide.

1. Jelena Kirillova
Nadi Liis Laaneväli
Boriss Laaneväli

2. PURPOSE
• Identify the reasons of Apple success
• Analyze the iPod business model
development
• What are Apple’s swift growth key factors in
global music area?
• To learn how to grow fast and succeed

3. Apple Inc.
Product range from $59…$7,000
 Electronics
 Computers
 Software
Worldwide sales
 Retail stores
 On-line stores
 Direct sales force
Most Admired*
 2008 in USA
 2008…2010 worldwide
* by Fortune magazine

4. iPod
• iPod is a line of portable media players designed and
marketed by Apple and launched on October 23, 2001.

5. iPod Business Model I
Infrastructure Offer Customer
Partner Network Key Activities Value Customer Customer
Propositions Relationships Segments
 OEM (Original  Hardware design „1000 songs in your
equipment  Lovemark  Massmarket
manufacturers):  Sofrware pocket“
 Switching costs (Mac owners)
 Sony (battery)  Marketing  Simple & easy to use
 Wolfson (Codec/Dac)
 Small size (lighter
 Toshiba (Disk drive) than cell phones)
 Texas Instrument
(FireWire) Key Resources  Apple design
Distribution „Music is part of
 Linear Technology (Power  More memory Channels everyone's life“
management)
 iPod hardware  Plays all music  Apple stores
 LG Display (LCD display)
formats
 Synaptics (scroll wheel)  Apple brand  Apple.com
 People  CD quality
 Record companies
 Marketing companies  Content & agreements  Fast file transfer
 Fast battery charge
Cost Structure Revenue Streams
Variable costs: Fixed costs:  iPod sales (2002) - $143 millions or 2,5% / net sales
 iPod  Music records  Music products (2002) - $4 millions
 Software design
 Marketing  Apps Store
 Software licences
Finance

6. iPod Business Model II
Infrastructure Offer Customer
Partner Network Key Activities Value Customer Customer
Propositions Relationships Segments
 OEM (Original  Hardware design
equipment  Lovemark  Massmarket:
manufacturers):  Sofrware  Simple & easy to use  Switching costs  Teens (primary)
 Sony (battery)  Marketing  Ultraportable  iTunes  Younger adults to
 Wolfson (Codec/Dac)
 Apple design age 29 (secondary)
 Toshiba (Disk drive)
 Texas Instrument (FireWire)  Fashion
 Linear Technology (Power Key Resources  Intuitive & Fun Distribution
management)
 Apps
Channels
 LG Display (LCD display)
 iPod hardware  Apple stores
 Synaptics (click wheel)  Additional features
 Apple brand  Apple.com
 Record companies  Doc connector  iTunes store
 People
 Marketing companies  USB  Electronic store
 Content & agreements
(BestBuy)
 iTunes software  Windows support
Cost Structure Revenue Streams
Variable costs: Fixed costs:  iPod sales (2004) $1.3 billions – 15,8% / net sales
 iPod  Music records  Music products (2004) $278 millions – 3,4% / net sales
 Software design
 Marketing  Software licences
 App store
Finance

7. iPod Business Model III
Infrastructure Offer Customer
Partner Network Key Activities Value Customer Customer
Propositions Relationships Segments
 OEM (Original  Hardware design
equipment  Lovemark  Massmarket:
manufacturers):  Sofrware  Simple & easy to use  Switching costs  Teens
 Sony (battery)  Marketing  Apple design  iTunes  Adults
 Wolfson (Codec/Dac)
 Smaller
 Toshiba (Disk drive)  Active people
 Texas Instrument (FireWire)  Apps
 Linear Technology (Power Key Resources  Accessories Distribution
management)
 iPod family Channels
 LG Display (LCD display)
 iPod hardware  Apple stores
 Synaptics (touch wheel)  Co-products
 Apple brand (Nike, HP, StarBucks  Apple.com
 Record companies , Car manufactures)  iTunes store
 People
 Marketing companies  Electronic store
 Content & agreements
 Car companies  Web store
 iTunes software
Cost Structure Revenue Streams
Variable costs: Fixed costs:  iPod sales (2008) $9,2 billions – 24,5% / net sales
 iPod  Music records  Music products (2010) $4,9 billions– 7,6% / net sales
 Software design
 Marketing  Software licences
 App store
Finance

8. CONCLUSION

9. MuSky Business Model
Infrastructure Offer between Customer
Partner Network Key Activities Value Customer Customer
Propositions Relationships Segments
 Skydiving
organizations  Becoming de facto  Entertainment during  Jumping with MuSky is
standard for skydivers take-off time fun!
 Professional
 Skydiving clubs  Entertainment between  Have-to-use Skydiving
 Hardware design
jumps
 Skydiving  Software development  Skydiving Enthusiast
accessories  Integrated digital
 Marketing altimeter
manufactures
 Integrated Audio/
 Hardware Key Resources Video/Camera Solution Distribution
manufactures
 Cable Free Solution Channels
 Software  Hardware  Automatic sync with  Sports equipment shops
manufactures PC
 People  Skydiving sport clubs
 Marketing  Jumps History Analysis
 Content & Agreements  Internet sales
companies  3D jumps models
Cost Structure Revenue Streams
 MuSky sales
Variable costs: Fixed costs:  Software sales
 MuSky components  Hardware design
 Accessories sales
 Software design
 Marketing  Maintenance
 Audio/Video content sales
Finance

10. MuSky
Wireless Audio Signal
Wireless Video Signal Helmet with embedded
Auto Sync wireless headset