How Apple is Handling the Mature iPod Market

Wow!  Look at how quickly the iPod jumped to Quadrant 3 in Moore’s model!  Apple is now facing market saturation with iPod and, despite very little growth from iPod and a slowing US economy, is managing to do quite well.

iPod with iTunes is a lot like how we sell ink into our printers.  A big difference, though, is that the iPod is priced considerably higher than it costs to make so Apple actually makes money on the device.  Apple also allows users to put content from sources other than iTunes on the iPod without repercussions.  Yet, Apple doesn’t seem to be screaming about people not using iTunes and, in fact, iTunes has recently become the #1 retailer of music.  Why is this?  Well, despite my hatred, iTunes is drop-dead easy to use and at $.99/song or cheaper if you buy the entire album, Apple isn’t charging outrageously for music.   Topping all of this, iPod is a great product that customers love and it seems that Apple has parlayed this love into getting people to buy Macs.

An interesting thing this article talks about is how the different iPod products are highly differentiated.  Let’s look at them:

They look very different, except for the mini and the classic, however, if you compare the size, you will see that the mini is tiny compared to the classic model.  Each product has very different capabilities and memory capacity.

Shuffle — 1 or 2-GB, no screen, all music is shuffled, clips onto clothing
Nano — 4 or 8-GB, screen, small form factor
Classic — 80 or 160-GB
Touch — 16 or 32-GB, touch screen, wireless internet, accelerometers

For instance, the Nano is great for the gym, the mini is cheaper alternative to the classic for those that don’t have a large music collection yet.  The touch is basically a little mini-internet-browser-computer wrapped in a cool music player.  These products clearly speak to different customer wants (nobody “needs” and iPod) and iPod owners have been known to have more than one iPod to meet a lifestyle want.  Unfortunately for us, as houses integrate computers onto a home networks, households only need one networked printer rather that one printer for each computer.  This is great for the consumer, but a change for us because this inherently means, going forward, there will be fewer and fewer install bases for our supplies. (I suppose it’s good that we are de-emphasizing sales in terms of the number of boxes.)

I think the important thing to observe about Apple is how they have taken customer’s interest in a hot product like the iPod to draw people to their stores and to lead customers to explore other Apple products in general.  The iPod experience is quite pleasant and that tends to paint Apple in a good light.  I imagine since people like iPod, then they think, well maybe Apple makes a good computer too and then give Apple a chance.  Apple is small company compared to to other MS based computer manufactures, but they are a threat as shown by their sales growth in Macs.  There is a point at which Mac use becomes compelling enough for folks to look beyond the “morality” of the Mac vs. PC question and onto price and features.  Like what has been said before, a great company will emerge from an economic slump stronger than before the downturn.  Apple’s got cash and growth despite the downturn.  In the absence PC innovation through this rough patch, Apple could really surprise everyone in a year or two.

Here’s a link to the article.


Consumers cut Corners on Food, but Not Electronics

Some rather interesting and seemingly backwards thinking is discussed in this article from the New Yorks Times.  It seems that like myself, many Americans are making different food choices and spending as if we are in a recession.  For the most part the trade off are meat and name branded goods.  On the other hand people are not necessary skimping on gaming or electronics.   Why is this?  Even in my own little world I have this weird thinking going on in my head.  I’m conciously cutting back hard on the household food purchases, but at the same I’m frustrated that our 4-year entertainment laptop is barfing on the playback latest high-def video files.  As for the food, I can report from grocery shopping this weekend, it difficult to distinquish more store brand products from name brand, so I actually did that switch a while ago (much to my husband’s chagrin).  Cooking is very flexible, so you make what you can with what you’ve got — it really isn’t that big of deal to change things around — at least for now.  I don’t understand why I think it’s okay to consider buying a computer now, though, other than I’m delusional.   I have a friend who is behaving the same way, skimping on food, but recently purchased a DSLR camera to capture her kids while they are young because they won’t sit still long enough for her point-and-shoot.

Personally, I not sure about what to think about “recessionary” spending and the priorities of Americans.  In a way I think it makes it seem like the whole lot of us is crying crocodile tears over food cost when our solution is to switch to a store brand or to substitute pork for beef while still continuing to buy electronics.  On the other hand, I don’t know what to make of the “news” in this article.  The changes in spending don’t seem that drastic to me.  Of course there’s also the possibility that we’re all delusional.  I doubt it though.  In many ways and economic slowdown makes for great news — so it’s tough to say what the real situation is when the creation of a dire situation benefits the news providers.

The Decline of Network News

Here’s an interesting article from Ad Age about the decline in viewership of and advertising during the network news.  Some “Duh” points brought up is that fact that the desired core demographic of upper income 18 – 49-year olds are not at home during the evening news hours (4 – 7PM).  Consequently, the average age of evening news viewers is 60 — retired folks I imagine.  Personally, I don’t bother watching the local or evening news broadcasts because they are neither informative nor entertaining.  I get my news from the radio, via the Internet, and reading print magazines — that is if I care to get the news.  Sometimes I skip the news that isn’t tech related due to fatique.  I know that sounds bad, but honestly has anything really changed in the last few weeks with regards to the US Presidential Election, Iraq, and the US economy?  I would like to get some world news, but believe it or not, International news is kinda hard to come by in the US.

Interestingly, Ad Age is also running a series of articles on the decline of the newspapers.  The article run today speculates as newspaper readers die, they aren’t being replaced with new readers.  I wonder if that’s the case for network news as well.

Moving on, the article is careful to explain that the news is not no longer relevant.  Rather, people have more choices for how they consume the news — TV, radio, and the Internet via computers, cellphones, and other mobile devices.  As such, it seems that advertisers can diversify their ads efforts.  In my own experience, I see that news websites have a lot more videos now.  I find the videos to be a pain for news items that could be described in 3 paragraphs or less.  This is due to the load time for the video and the unavoidable 30-60-secs of ads that is tacked on to the front of the stream — sooo annoying.  So much for high speed Internet … dear gosh the ISPs need to hurry up an upgrade their infrastructures.

On the whole, though, I’d say that the most useful and detailed news comes from online and print magazines.  Broadcast and Internet news amounts to a bunch of sounds bites that generally remind people of the major headlines.  The print magazines, though, like newpapers have nice long meaty articles.  Unlike newspapers thought, most magazines are weekly, bi-weekly, or monthlies.  Since they are easy to transport, a magazine can be taken almost anywhere for convenient reading at the reader’s leisure.  Perhaps this contributes to the continued success of magazines.  Perhaps this, too, could be the future of the newspaper — fewer issues, small form factor, and glossy media.  I think I would get a weekly San Diego/San Diego county news magazine if there was one.  What about you?

Anyhow, use the link given in the first sentence to read the article.

Indra Nooyi’s Graduation Remarks

Apparently her remarks angered some folks.   Personally, I don’t get it.  I think it’s a wonderfully thoughtful speech and it resonates with my thinking about the role of the US and its standing in the world.  I think the speech is quite encouraging — although her continental analogies are a bit antiquated and not exactly PC.  Clearly, though, she is a thoughtful person.
Indra Nooyi’s Graduation Remarks

Here is the commencement speech that set off a blogosphere bonfire

Following is the transcript of the address given by Indra Nooyi, president and CFO of PepsiCo (PEP ), at the Columbia University Business School graduation ceremonies on May 15: