I just read the iTunes chapter of Steve Job’s bio last weekend and it just completely full of business lessons. Here are some I observed:
Background: Consumers wanted to download songs into their computer, into their iPods, and there was no easy way. Buying CDs offline and then ripping them into the computer was a bit too inconvenient. So consumers used to download using file sharing networks. Piracy. Apple solved this grave problem for the music industry, by creating a way for people to download songs legally from their computer and pay for them. iTunes store was the solution.
- Apple solved this problem in a way that kept the consumer in mind. Consumers could buy individual tracks from the album (and were not forced to buy the whole album). Completely untraditional.
- Sony was in a much better position to do exactly what Apple did, probably better. But organizational mis-alignment was a huge handicap for them. (Music and tech departments could not work together to come up with something that worked for both). Organizational mis-alignment can make you lose on huge opportunities.
- The pitch that Steve made when revealing the product was 1) High quality music 2) A way to try songs before you buy 3) Good karma (no stealing). Steve talked about ‘Karma’. A sales pitch that directly hits the soul. Wow !
- The end-to-end integration between iTunes, iMac and iTunes was completely seamless from day 1. That says something. When you launch a product, make a compelling story. Think through the experience.
- A Million songs sold in 6 days. Obviously huge success, but it also tells that Apple’s infrastructure could scale to support that kind of traction in the first week itself. When going live and trying to make it big, keep high standards for your platform infrastructure.
- Microsoft and Sony tried replicating the same model with their devices, clouds, but Apple kept launching newer & better versions of the iPod. It was very hard for the competitors to grab a significant market share. Lesson: For product companies – the speed of innovation and delivery is the ultimate competitive advantage.
Would like to hear your thoughts on these / any other observations you made on iTunes.