iPOD+ iTUNES SOFTWARE
(2001)
Reconstruction of the Digital
Music (mp3) Player Industry
INSEAD Blue Ocean Strategy Institute 2012
Digital Music (mp3) Players in the late
1990s
Target customers
Technologically literate teens and twenty year
olds, MP3 file traders
Flash MP3 Player
Hard Drive MP3 Player
OR
•Inexpensive ($100-$200)
•Small size
•Small storage (1 CD songs)
•Expensive ($300-$800)
•Bulky size
•Big storage (up to 5,000 songs)
•Poor navigation system
Strategy Canvas of the MP3 Player
Industry
High
Hard Drive MP3 Players
Offering level
Flash Memory MP3 Players
Low
Price
Player
size
Storage
capasity
Ease of
use
Ease of
navigation
Ease of
Music Trahsfer&
Organization
iPod
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Targeted non customers: the over 34-year-olds
Great capacity of hard drive players (5GB=1,000 songs)
Portability and ease of use of flash memory
Simplified user interface with one wheel & four buttons
iTunes software application
Simple to use software to transfer music from CD to player
Automatic & fast synchronization with iPod
Automatic battery charge from the computer
Easy to manage digital music collection
Fun to use
Sleek design unlike conventional electronic devices
Priced at $399
1,000 songs in your pocket
Strategy Canvas of the MP3 Player
Industry
High
iPod + iTunes s/w
Offering level
Flash Memory MP3 Players
Hard Drive MP3 Players
Fun
Low
Price
Player
size
Storage
capasity
Ease of
use
Ease of
navigation
Ease of
Music Trahsfer&
Organization
Fashion
iTUNES MUSIC STORE (2003)
Reconstruction of the Digital
Music Retailing Industry
How digital music was bought
Subscription
based music
services
Trade up/down
P2P network
(File-sharing
network)
Legal
Good quality
Limited rights
Complex pricing methods
Limited selection
OR
Free
Wide selection
Simple & Easy to use
Illegal
Poor quality
iTunes music store
Apple’s blue ocean strategic thinking:
• Instead of trading up/down between the subscription-based music
service and the free file-sharing network, Apple looked across these
two strategic groups.
• Apple saw untapped demand for legal channels of digital music with a
wide selection at a price that appeals to the mass of potential buyers.
Eliminate
Piracy concern
Complex pricing method
Raise
Music quality
Music selection
Simplicity & Ease of use
Create
Reduce
Restrictions in
using purchased music
Pay per song
30 seconds free sampling
Automatic sync with iTunes
(easy file
management & transfer to a mp3 player)