Ironically, the story of the iPod starts with Bill Gates. In a January 2000 keynote address at the Consumer Electronics Show in Las Vegas, Gates revealed Microsoft’s grand plan to usher in the next age of technology — the “consumer-electronics-plus” era. His vision was to create a digital bubble around consumers through devices that would give them easy access to their favourite music, news, entertainment, and photos. Of course, the centre of this system would be a Windows OS PC. And what he said served — in the words of Brent Schlender — as a forecast, a warning, and a blueprint. At this point, 90% of the world’s personal computers ran on the Windows operating system. Microsoft’s software was also running the servers used by governments and big corporations to store huge amounts of data.
By contrast, Apple was just trying to stay afloat. Jobs had launched the iMac a couple of years ago, but sales had started to flag. While a community of diehard Mac loyalists still existed, Apple was mostly operating in a niche of the personal computing market. All signs pointed toward Microsoft leading the world into this new age. Gates had the vision and the resources to take that decisive step towards the future; they were seen as the most likely victors.
Gates’s speech prompted an emergency off-site meeting for Apple’s top executives to discuss the direction of the company. The discussion was focused around the new burgeoning consumer-tech age. It was safe to say that Apple’s attempt at entering this space through its video-editing application iMovie had failed. Launched in 1999 as part of a new generation of iMacs, it hit the market just as digital video cameras became affordable. So why didn’t it work? Although very well designed, editing a video through iMovie was a time consuming process. Users would only try it out on the off chance that they found themselves with a lot of free time. Apple needed to create something that consumers would come back to more regularly. Perhaps even on a daily basis. The big question was what that would be.
In the summer of 1999, Napster’s viral success had sparked the digital music revolution. A software application built by college students, it allowed anyone with an internet connection to upload, download, and share MP3 files. Worse, it was free.
If that sounds too good to be true, that’s because it was. Napster gave rise to sweeping piracy issues which all but crippled the record label’s pre-existing business models. The record labels did not take this sitting down; they sued Napster and eventually got the service shut down in 2001. But the entire Napster episode had made one thing very clear — digital music had arrived, and it was here to stay.
Apple missed the digital music boom because Jobs, back from exile for his second stint at Apple, had been too busy getting the company in shape — trimming the product line, cutting the fat from the workforce, etc. But now with Apple finally stable again, it was ready to do new things. The executives on the retreat realised that the answer was staring them in the face — they could launch a digital music management application to capitalise on the boom. And so iTunes was born.
Apple preferred to develop its own software from scratch. But since they were already late to the party, they used some existing software as a base. They did this by acquiring a company called SoundJam — founded by two ex-Apple employees, SoundJam’s software let Mac users use portable MP3 players and gave them an interface to manage their music on their computers. The acquisition — which was a clear sign of Apple’s intention to j ...
The rest of this article is for members only.