Apple Marketing Strategy
- Part 2
The reasons of the iPod success.
First, the iPod was a very practical object,
a very practical Music tool.
In it you could store thousands of songs, hundreds
of CD's - converted into mp3 or aac files -
and bring your favorite music with you everywhere,
in a small device which fit in your pocket,
and listen to your music with the iPod earbuds
The iPod was very practical for commuters, on
their way from home to their workplace and back,
during those boring 40-60 minutes in the subway,
or in the bus or train, without having anything
interesting to do.
Listening to their own favorite music with an
iPod was a pleasant way to fill that time.
The iPod was appealing especiall for the young
generations: those from 16 to 28, which were
the majority among the early adopters.
Second, it was easy and pleasant to use and
navigate among songs and albums.
The iPod menu system was intuitive and fast,
the click wheel control was smart and practical,
especially from the 3rd Generation onwards.
Easy, intuitive and appealing User Interface
was a key factor, and Steve Jobs has always
been very exacting on this aspect of Apple products,during
the development stage.
Third, the iPod was a beautiful object, thanks
to Jonathan Ive's sleek and attractive design.
The aestethics and the usability made that 'Cool
Factor' that has been key to Apple success in
the last 9 years, which has been incorporated
in all the Apple products design.
We shall expand later on the Apple 'Cool Factor'.
Fourth, the sinergies between the iPod and iTunes,
the music online store. Although the strength
of this sinergy became important especially
in later years.
Fifth - and very important - the iPod (from
the second generation of 2002 onwards) was compatible
not only with the restricted world of Apple
computers, but also with Windows (Microsoft)
This was a key feature.
Wouldn't Apple have accomplished this, the iPod
would have been remained stuck in a ghetto.
(and Apple revenues and profits would have been
completely different in all the later years,
up to today).
Sixth, the iPod could read not only the 'aac'
files - Apple proprietary music file system
- but also the much more popular mp3 files.
Most users and music lovers, infact, were ripping
their own CD's, and the CD's of their friends,
into mp3 files, very few were doing it using
the Apple 'aac' files.
The mp3 format was also the most popular in
the online peer to peer exchange platforms.
The iPod success was due especially to word
of mouth, much more than to conventional advertising.
Happy iPod users were the most efficient marketing
'tools' and testimonials that Apple had to promote
and increase iPod sales.
Then, the imitation factor was also essential:
"Cool!, I want to have it, too!" -
has been the typical reaction phrase when happy
and proud iPod owners were showing their iPods
to their friends.
Still today, word of mouth and happy costumers
are the most efficient marketing tools for any
On the other hand, in the first 3-4 years, Apple
invested very little in iPod communications
and advertising, especially outside the US,
and this was a bottleneck factor that affected
iPod sales, impeding product awareness among
millions of potential costumers.
It was a serious mistake, on the side of Apple.
Why Apple invested so little in iPod communications
This is still a mystery.
Finally, there were few iPod competitors on
the market, and none of them had the aesthetic
beauty, nor the appeal, nor the enticing and
fast usability of the iPod.
Thus, with the iPod, Apple was playing in a
virtually virgin and no competition market.
In the critical years - between 2002 and 2006
- the iPod simply ridiculed all its competitors.
Apple had always used white as the color of
So it did with the iPod.
White is the color of washing machines, and
of bathroom appliances.
Many Apple costumers and potential costumers
simply did not like it white, for psychological
or simply aesthetic reasons. Many complained
with Apple, they wanted their iPod to be black.
For several years, their requests fell on deaf
Then, finally, Apple understood, and made their
first black iPod.
It was a huge success.
Apple marketing executives - and Steve Jobs
- understood the lesson, and both for the iPods,
both later for the iPhones, they gave the option
to their costumers to have their iPod and iPhones
white or black.
It could seem a trivial aspect, but it is not.
Aesthetics and personal tastes have a huge role
in customers' purchasing decisions.
in a new realm. Music.
It needs to be remarked, with emphasis, that
with the iPod, Apple had entered a completely
The iPod was not a computer.
The iPod was a Music device, a small and portable
Thus, it needed a complete change in Apple executives'
Infact, the Apple Executives had a computer/technology
mindset and background.
And no experience, and poor background in Music.
None of the Apple executives had a significant
This was reflected in the marketing and communications
that Apple executives employed for the iPod.
And in the bottleneck factors which affected
the iPod distribution network.
Apple executives were treating the iPod as a
'computer peripheral', not as Music device.
Apple could have made a strong marketing campaign
for the iPod with a strong and widely recognized
rock band, as the Rolling Stones, Pink Floyd
or Led Zeppelin, And build on that synergy.
Only in 2005 Apple started to do something about
it. And it was little, and too late.
But they chose U2 as their Music testimonial.
This confirms the lack of Music culture that
we wrote above.
In 2005 U2 was a band in full decline, with
no creative ideas left anymore, a band which
had just made a few hits 20 years before, a
temporary phenomenon which had rapidly faded
The poor U2 music tune that Apple used for the
launch of its Video iPod, back in 2005, confirms
Infact, U2 had been a poor musical act.
They did not have the charm, the music power,
and the eternal, timeless appeal of the great
rock bands - as the Rolling Stones, Pink Floyd
or Led Zeppelin - or the Beatles.
But, having a so poor Music culture, Apple executives
were uncapable to even recognize this.
The lack of a strong Music culture, and the
lack of a Music oriented attitude in the marketing
and communications of the iPod was a key bottleneck
factor in slowing the iPod sales potential
in the fiirst 3-4 years.
Apple Executives, as well as financial analysts
and marketing analysts, were expecting a significant
'halo effect' to develop. A 'halo effect' which,
from the iPod + iTunes success, and their powerful
reverberation on the Apple brand value, would
significantly push sales of Mac's - the Apple
This never happened. The 'halo effect' was marginal.
We can make the key question, now:
Where would Apple be, today, without the iPod?
without the iPod, there would be no iPhone,
without the iPod, Apple revenues would not be
$156 billion, but $10 billion.
And its stock market capitalization would not
be $500 billion, but $20 billion.
the iPhone came.
In 2005, with the improving revenues and profit
figures pushed by the iPod sales, financial
analysts began to show an increasing interest
the Apple stock had started to rise, and to
be suggested as a 'buy' by a number of financial
The Apple brand value perception was also growing.
In 2005-2006, the cellular telephone market
was considered a mature and saturated market,
with narrow margins, dominated by Nokia and
And by the Blackberry in the high end, especially
in the business and corporate world, which were
needing email writing, sending and receiving
capability on their cellphone, with a suitable
keyboard for texting messages.
A mature and saturated market with a fiery competition,
such as the cellphone market in 2005-2006, was
allowing narrow margins, therefore was unanimously
considered unappealing by financial and business
When rumours came out, in 2005-2006, that Apple
was in the process of developing a cellular
telephone, financial and business analysts were
at best 'skeptical'. To be true, the consensus
among financial analysts was that the 'Apple
cellphone' would have been a terrible flop.
Some of them were privately saying that they
were suspecting Apple executives had gone completely
mad, to enter such a saturated and non-profitable
Very few, among the business analysts, had the
more objective attitude to just 'wait and see'.
Then, the day came, and the iPhone was launched.
But Apple began with 3 huge, terrible mistakes.
We expand on them onwards.
When the iPhone was launched, in June 2007,
it made an impact. It impressed.
The touch user interface and the sleek and beautiful
design by Jonathan Ive and his team made it
a masterpiece of technology and design.
The iPhone was decidedly a superior product.
had a host of pluses against the competition
(Nokia, Motorola, Blackberry) It was a highly
innovative product, a different product from
the other cellphones on the market at the time.
By 2013, with 500 million iPhones sold, and
with Apple stock market capitalization at $500
billion, it was easy to affirm that the iPhone
has been a game changer.
It surely has.
Jumping on the bandwagon is human beings' favorite
But in 2005-2006, before it came out, things
And the perception was different when the iPhone
first came out.
No-one, in 2006, would have imagined that an
'Apple cellphone' would have sold 500 million
units in 6 years.
No-one would have thought this even in June
2007, when it was launched.
It has to be noted that, to reflect its change
in product lines, in 2007, after the iPod and
Apple modified their official societary denomination,
from "Apple Computer Inc." to "Apple
But which were the 3 serious marketing strategy
mistakes that Apple made, in the launch of the
The 3 Mistakes that Apple
made when it launched the iPhone.
To purchase an iPhone, you had to sign a 24
months contract with AT&T.
You had to 'marry' AT&T.
And many potential costumers did not want this
you were locked on a 24 months contract with
AT&T. An expensive contract.
In the end, if you were wanting to buy an iPhone,
its real cost was more than 2000 dollars.
Why forcing your costumers to sign a contract
with a service provider?
And why a single provider, not giving any other
Why not letting your costumers simply buy an
iPhone, and let them free to arrange a contract
as they please?
Infact, there were numerous complaints by iPhone
costumers and potential costumers, on this issue.
Even, a widespread hacking practice took place,
significantly called "jailbreak":
on several websites appeared step by step instructions
on how to hack the iPhone software to let it
operate with a different service provider.
Infact, 3.3 million iPhones were sold in the
US between June andl December 2007, but only
2 million contracts were signed with AT&T.
Were did the remaining 1.3 million iPhones go?
It has to be remarked that the iPhone jailbreak
practice infurated Apple executives, who, instead
of recognized their marketing strategy mistake,
criminalized the jailbreaking behaviour, to
the point of blackmailing costumers doing the
On June 29, 2007 the iPhone was launched in the
It was put on sale only in the US, and in no other
nation in the world.
Only in November 2007, 5 months later, the iPhone
was launched in a few other countries.
To be precise, it was launched in just 3 other
countries: UK, Germany and France.
In each of these countries with the same silly
formula that Apple used in the US, forcing the
costumer to sign a 24 months contract with a service
provider, and in each country with a different
provider: O2 in the UK, T-Mobile in Germany, Orange
This was a bad marketing choice by Apple.
There were millions of potential costumers all
around the world who were wanting to buy an iPhone,
but couldn't, because in their own country it
was not on sale.
Many of them went to such length to ask to their
friends in the US - or traveling to the US - to
buy one for them.
Finally, only on July 11, 2008, one full year
after the initial launch in the US, the iPhone
was put on sale in other countries, in Europe:
Italy, Spain, Switzerland, Austria, Ireland,
Denmark, Norway, Sweden, Finland, Netherlands,
Belgium; and in Australia, New Zealand, Canada,
Japan, Mexico, Brasil.
It was already the 3rd generation iPhone, the
iPhone 3G and 3GS.
Why so late?
Besides, it is interesting to verify the jam
and confusion of different prices, terms and
monthly fees charged by the service providers
in the European countries: O2 in the UK, T-Mobile
in Germany, Austria and Netherlands, Orange
in France, Swisscom in Switzerland, Vodafone
in Italy, Telia Sonera in Denmark, Norway, Sweden,
It was the perfect formula to confuse potential
iPhone costumers and push them away.
A self-hammering marketing strategy by Apple.
In our opinion, this was a totally wrong marketing
strategy by Apple.
Infact, numbers do not lie:
from July 2008 until the end of 2013, Apple
sold a total of 500 million iPhones.
From June 2007 until December 2007 - when the
iPhone was available only in US - only 3.3 million
iPhones had been sold.
#3 - iPhone Pricing.
On June 29, 2007, when the iPhone was launched
in the US, its retail price was $599.
Just 3 months after, Apple reduce the iPhone
price to $399 - a 33% rebate - .
This was an unelegant way to betray and exploit
the iPhone early adopters - Apple most faithful
And infact, many of them complained with Apple.
A smart and attentive company must not indulge
in such serious mistakes, betraying their most
faithful customer base.
Apple had other 3 better options:
- Apple could have waited 1 year before reducing
the price of the iPhone, or:
- Apple could have delayed the iPhone launch
for 3 months, or:
- Apple could have set the iPhone retail
price at $399, since the initial launch.
Besides, in July 2008, the iPhone 3G was sold
66% less than the launch price of just one year
This is not a serious pricing policy.
Each of these 3 mistakes constituted a bottleneck
factor which confused costumers, and seriously
hampered the iPhone sales potential in the first
year and a half.
However, in the following years Apple corrected
and amended these mistakes, and things went
smoothly and successfully for the company.
Infact, from 2008 until 2013, Apple sold 500
in 2012 alone, Apple sold 120 million iPhones,
in 2013 Apple sold 120 million iPhones.
Ultimately, the appearance of the iPhone on
the market caused the death of the Blackberry,
and the loss by Nokia and Motorola of their
dominant position in the cellular telephone
The reason is simple:
The iPhone was a clearly superior product.
Its touch control features, and its enticing
user interface made it become a sort of 'cult
Then, after many rumours, Apple in 2010 launched
Since 2001, there was a need in the market
for a device which was smaller than a notebook
computer, and significantly lighter than the
usual 5-6 pounds, but bigger and more powerful
than a cellular telephone, and still highly
A sort of 'intermediate device', between a notebook
computer and a cellular telephone.
This gap began to be filled by a generation
of so-called "netbooks", which started
to appear by the end of 2007, especially from
brands like Acer, Asus, Dell and Samsung, for
a cost typically between $200 and $300.
They were weighting around 1.5 pounds, and were
like a sort of smaller brothers of notebooks,
light enough, less powerful, but powerful enough
for simple tasks and applications "on the
go", and with a foldable screen, like the
They were having a discrete success, in the
years 2007-2009, and their appearance demonstrated
That there was a demand in the market for devices
with this kind of features.
In 2008 Apple began to study the opportunity
and, while there was some skepticism even among
the Apple Executives, they finally launched
the iPad, in January 2010.
The iPad was similar to the netbooks for features,
size and weight.
It was highly portable. But it had two features
that strongly differentiated it from the netbooks:
The screen was not foldable, but embedded in
the iPad body, and especially, the iPad fully
exploited the enticing Touch Technology that
Apple had previously developed for the iPhone.
Thus, in many respects, the iPad was a sort
of bigger iPhone, without the telephone capabilities,
with a touch interface, touch makeshift keyboard,
a photo and video camera, wifi and mobile internet
connection, no hard disk (just an embedded flash
memory) and no USB connection.
Both at the launch, both before, many financial
and business analysts were skeptical about the
iPad, and were dubious if the market was wanting
such a device.
A device with many features, but also with many
Moreover, the iPad price was considerably high
- around $500-$700 - a price much higher than
However, after some months of perplexity and
skepticism, it became clear that Apple, once
more, got it right.
The iPad starting selling in the millions of
units, and by 2011 it became a fashion, almost
ubiquitous, both in the US, both overseas.
As we wrote above, from 2010 to 2013, Apple
sold 200 million iPads.
in 2012 alone, Apple sold 60 million iPads,
in 2013 iPads sales will reach 100 million.
As a matter of fact, the appearance of the iPad
eliminated the netbooks from the market, rendering
them unappealable and obsolete.
The appearance of the iPad started the tablet
frenzy, and several other brands jumped on the
tablet bandwagon (after Apple), and started
to manufacture and sell Tablet Pc's, copying
many of the iPad features, and eroding just
a small part of Apple iPad marketshare.
Of course, and this was inevitable, both the
iPad, both the iPhone started to cannibalize
the iPod sales, especially from 2011 onwards,
but, given the iPhone and iPad sales, this is
not of big concern to Apple, which continues
to enjoy its golden years.
But, as we wrote above, without the iPod, no
iPhone, no iPad would have existed, Apple would
have continued to be just a computer manufacturer,
and its revenues and profit numbers - and its
stock market capitalization - would be much
different from what it is today.
And there are more secrets of Apple to be known.
There is no doubt that Steve Jobs has been a
great genius - a business genius and a marketing
genius - and there is no doubt that most of
what Apple is today is owed to him and his skills
Steve Jobs was a great communicator, one of
a kind, and was a man with a vision.
And he fulfilled the Vision he had in mind.
It remains to be seen if - deprived of Steve
Jobs's guidance - Apple will be able, in the
coming years, to continue their impressive pipeline
of innovative and successful products, or if
they will remain "sitting on their current
<< Back to Apple
Marketing Strategy - Part 1
This essay on Apple Marketing Strategy has been
first written in 2003, then extended and updated
in 2007, in 2010 and in 2013.