THE WORLD ACCORDING TO iPOD

by Ken Orr, Fellow, Cutter Business Technology Council

iTunes milestone: 500 millionth download.

-- Chicago Tribune, 18 July 2005

The number of legal tracks downloaded internationally tripled to 180 million in the first half of 2005.

-- International Federation of the Phonographic Industry (IFPI), 21 July 2005

Apple's iPod has suddenly revolutionized the music business. These little devices with the cool thumb controls are showing up everywhere. The iPod has spawned iShuffle, iTunes, podcasting, and soon iVideo -- a whole, highly profitable, cottage industry. At about US $1 per download, Apple is even making money from people downloading things (i.e., songs from iTunes) that they were already able to download for free, something that industry experts predicted would never happen. Organizations everywhere, like Sony and the record companies, are racing to play catch-up with Apple.

In a sense, the iPod represents a new platform that began first with PDAs (remember the Newton?), extended into smartphones and MP3 players, and now is the fastest-growing segment of the technology world. Taken by itself, the iPod is not a very advanced piece of technology. It is simply a very small computer with a very small hard drive and some audio circuitry -- not a lot different for its time than the Sony Walkman was. It is simply the right packaging at the right time.

What is most interesting about the iPod/iTunes/podcasting explosion is that the popularity of the iPod has leveraged a "networked" music industry in ways that no one could have expected, and it did it in such a short time (which should not have been a surprise). As more people bought iPods, there were more potential customers for iTunes, and since iTunes is simply digital audio in a new format, there were also more people who were now potential customers for iBooks, iNews, and whatever else you can download -- and, voila, "podcasting." [For 15-plus years, people at the MIT Media Lab have been talking about the move from "broad" casting to "narrow" casting. Cable TV and the Internet have literally fractured the media market into millions of channels instead of a dozen or so. The Internet now provides thousands/millions of channels, which is great for individuality but is hell for advertisers.]

In a way, the iPod represents a coming together of marketing and technology, or of what my friend and colleague Luke Hohman calls a new "marketecture." By coming up with a slick design and an even slicker user interface, things that Apple has always been known for, Apple is a hot property again. But the iPod phenomenon is not an isolated incident; it is representative of something far more important -- the integration of "smart products" and "smart networks." In this new world, smart products and smart networks will increasingly come together to create new marketplaces based on truly disruptive technologies.

-- Ken Orr, Fellow, Cutter Business Technology Council