The Rise And Fall Of The iPod
Irene Kim: This transformed the way we listen to music.
And it helped turn Apple into
one of the most valuable companies in the world.
Apple has sold more than 400 million iPods
since launching them in 2001
and over 35 billion songs.
Clip: This is an excellent rectangle.
Kim: But sales have been in decline
for over a decade.
How did the iPod go from being
one of the most popular gadgets
to being basically nonexistent?
In 1999, the US music industry
had its biggest year yet.
Around this time, two things were exploding in growth.
Over 40% of households had a computer.
Clip: Welcome!
Kim: And the internet was rapidly gaining users.
Clip: You've got mail.
Kim: A new market for digital media was emerging.
CDs made up over 80% of US music revenue at the time.
You could listen on a big stereo, a portable CD player,
or rip an entire album to your computer.
But CD players and early portable media players
had a lot of issues.
They were big and clunky,
would often skip during playback,
and neither held many songs.
Apple saw this as an opportunity.
It considered the competition totally inadequate,
and it wanted to create something that was
smaller and more powerful.
But Apple didn't know exactly
what this device was.
Until its former head of hardware,
Jon Rubinstein, met with Toshiba
at a Macworld expo in Tokyo.
Rubinstein was shown a 1.8-inch hard drive,
which was incredibly small for the time.
This new hard drive combined storage
and portability.
Exactly what Apple was looking for.
Apple's new media player was now possible.
The first iPod was announced on October 23, 2001.
Steve Jobs: iMac, iBook, iPod.
There it is, right there.
[audience clapping]
Kim: It had a 5-gigabyte capacity,
cost $399,
and promised to hold 1,000 songs in your pocket.
In 2020, that might sound a bit underwhelming.
Compared to a 2019 iPod Touch,
it had 84% less storage
and, adjusted for inflation,
cost almost $400 more.
And it was super chunky.
But compared to other products at the time,
it looked and functioned better.
It held a lot more songs,
and the now iconic scroll wheel
made it easy to navigate a big music library.
Lisa Eadicicco: Before the iPod, there really
wasn't an easy way
to take a lot of music with you on the go.
It really set the stage for Apple
to be the dominant player
when it comes to mobile devices.
Kim: But not everyone saw the iPod
as the success it would become.
Initial reviews were critical due to
its high price and limited functionality.
The New York Times quoted one analyst who said:
"It's a nice feature for Macintosh users.
But to the rest of the Windows world,
it doesn't make any difference."
Eadicicco: It seemed like an expensive product
that only targeted a relatively small portion
of computer users.
What really made the iPod so successful,
and it really boils down to one thing,
was that it was very easy to use.
Kim: The iPod did one thing,
and it did it really well.
Eadicicco: Back in 2001, it was actually,
you know, pretty sleek and portable.
The iPod was almost like a status symbol.
You wanted to show off your music collection.
Kim: But Apple wasn't relying on just the iPod.
Nine months earlier, Apple released iTunes,
a digital music player for Mac.
Eadicicco: The ecosystem was a little bit more fragmented
when you get into other companies
and the way they do things.
They all had proprietary software
that just didn't work as well as iTunes
and wasn't as easy to use.
Kim: And the iPod's FireWire connector
transferred songs faster than USB.
You could put a CD's worth of songs
onto your iPod in 10 seconds.
In April 2003, Apple launched the iTunes Music Store,
which sold hundreds of thousands of songs for $0.99 each.
The store sold over a million songs in its first week.
But iTunes was only available on the Mac,
which had less than 3%
of the global computer market share.
So six months later, Apple surprised everyone
and released iTunes for Windows.
Jobs: I'm here to report to you today
that this has happened.
[audience laughing]
ITunes for Windows is probably
the best Windows app ever written.
[audience clapping and laughing]
Kim: Now anyone could use an iPod.
In its first eight months,
iTunes sold 25 million songs.
And iPod sales exploded year after year.
Eadicicco: The iPod became kind of like
the face of, you know, portable MP3 players,
and it made it really difficult for anyone else to compete.
And it also convinced people, you know,
if you like iTunes and you like your iPod so much,
then maybe you would like using a Mac too.
Kim: But it wasn't just consumers;
the music industry loved the iPod too.
In the early 2000s, piracy was growing fast.
Napster had gained 80 million users in just three years.
The music industry saw file-sharing companies
like Napster as its biggest threat.
Lars Ulrich: It is clear, then,
that if music is free for downloading,
the music industry is not viable.
Kim: ITunes bridged the gap between the music industry
and consumers by providing an easy
and affordable way to buy music online.
Jobs: We're gonna fight illegal downloading
by competing with it.
Kim: In 2004, the president
of the Recording Industry Association of America
told Newsweek, "The iPod
and iTunes store are a shining light
at a very bleak time in the industry."
Over the next couple of years, Apple upgraded the iPod
and released more models at various price points,
like the Mini, Shuffle, and Nano,
which brought larger storage, better portability,
and new features, like video playback.
Eadicicco: For the people who had massive music libraries,
there was, like, the big Classic one.
And then, if you really just wanted
to take a few songs with you,
you had the little Shuffle that you can clip onto you.
They really tried to think about
every type of person who was buying an iPod
and what they would want from it.
Kim: In 2007, Apple released the iPod Touch,
a touch-screen iPod that had apps,
games, and an internet browser.
Sales peaked in 2008
with 54.8 million units sold.
In an interview with Wired in 2004,
Will Smith called the iPod "the gadget of the century."
Eadicicco: I think anybody who grew up in the early 2000s
remembers those iPod ads.
It also marked this shift from being a computer company
to a personal-electronics company.
Without the iPod, you could really argue that, like,
who knows if there would be an iPhone today.
Kim: But the device's success
wouldn't last much longer.
Months before the iPod Touch launched,
Apple released another product you might have heard of.
Jobs: An iPod,
a phone,
and an internet communicator.
This is one device.
And we are calling it:
iPhone.
Eadicicco: So, if you had all three of those things in one,
you probably didn't need to have a separate device
just to listen to music anymore.
Kim: Adding insult to injury,
Apple called the music app
on the original iPhone iPod.
The rise of the iPhone and the fall of the iPod
have a direct relationship.
IPod sales began to decline in 2008,
while the iPhone's growth was massive.
At the time, Apple was still releasing
new models of the iPod.
But it would soon abandon its own product.
In 2009, then Chief Financial Officer Peter Oppenheimer
said, "We expect our traditional MP3 players
to decline over time as we cannibalize ourselves
with the iPod Touch and the iPhone."
In 2011, iPhone sales overtook the iPod.
Three years later, Apple discontinued the iPod Classic.
At the time, the iPod was less than 2% of Apple's revenue.
It was clear that the iPod's days were numbered.
On an earnings call in 2014, Tim Cook even said,
"All of us have known for some time
that iPod is a declining business."
Finally, in 2017,
Apple discontinued the Nano and Shuffle.
These were the last of Apple's devices
that didn't connect to the internet,
which meant they couldn't use the services
that Apple was focusing on,
like the App Store, Apple Music, and Apple TV Plus.
But the death of the iPod
also closes a chapter on gadget history.
Single-purpose devices like the iPod Classic
feel antiquated next to smartphones and tablets
that are essentially portable computers.
Unlike the Apple Watch, which acts as a companion
to your smartphone, the iPod was just redundant.
Even though it defined a product category,
it couldn't save itself from its own company.
But it was also hurt by a larger music industry trend.
As streaming services like Pandora and Spotify grew,
people started buying music less.
Even Apple is replacing iTunes
with its streaming service, Apple Music.
In fact, streaming is now the largest source
of US music industry revenue.
But the iPod isn't completely dead yet.
Apple refreshed its iPod Touch in 2019
with a faster processor and more storage options.
Eadicicco: So the iPod isn't totally irrelevant.
It can certainly feel that way.
A new iPod touch kind of just
gives Apple another device
that people can access their services on.
Kim: And iPods still have a few uses.
They're good devices for kids, going to the gym,
or for people who still like owning music.
But in 2020, when our devices
can do everything and go everywhere,
it seems unlikely that a single-purpose gadget
could find mass success again.
