The iPod is 10 Years Old Today

First Generation iPod

First Generation iPod

As I reported on my Day in Tech History show, the iPod was introduced on this day in 2001. Steve Jobs got up on stage and talked about a change. They wanted to get into the digital music revolution, which was not doing too well. Jobs stated that Sony and Sonic Blue were trying their hands at this genre, but there was no real market leader.

Then Apple became that market leader.

The “First Generation iPod” came in models of 5 GB and 6 GB starting at $399. At the standard MP3 rate of 128 kbps, you could put 1000 songs on the device (as Steve put it – “That is some people’s whole music library”). The iPod connected to iTunes (which was a program you could only get on the Mac at the time) and used the Firewire port for connection.

Jobs also called the device the “Ultra-portable”, whereas the (then) iBook was the mini-portable. The first iPod was the size of a deck of cards, so you could easily put it in your pocket.  With the 100 hour battery life, you could listen to music hours on end.

How iPod Changed the Mobile Landscape

Even though Kramer created the first one, Steve Jobs and Apple changed the landscape. It was amazing how this little device shaped the 21st century. Records, cassettes, 8-tracks and CDs would soon start to give way to the digital download.

Legal Issues with Apple

The company was in battle from three main angles – One, for download piracy issues and the other from Apple records (the Beatles record label). Apple records made an arrangement with Apple computers that since they didn’t do the same thing, Apple records would not go after them. However, that all changed when the iPod came out. Eventually they settled, and in 2010, the Beatles finally appeared in the iTunes store.

The third was for the iPod itself. The idea actually was first created in 1979. British inventor Kane Kramer put together the first digital audio player, which he called the IXI. The device could only play one song. He patented the idea, but did not renew in 1998. However, Kramer did eventually get credit for his creation.

So here we are, ten years later. This version of the iPod has made it’s way as the iPod Touch, iPod Nano, iPod Shuffle, iPhone and iPad have joined in this “Digital music revolution”. You can still get what is now called iPod Classic with 35x more storage and a color screen for $249. But it really was on October 23, 2001 that Steve Jobs turned this market upside-down.

The One Thing Apple Did Wrong this Year

First of all, I know there are going to be people disagreeing on this, so let’s just say we’ll agree to disagree….

I have seen a few articles on the web talking about the 10 things that Apple has done right and the 10 things Apple has done wrong. While I look at some of the items on these lists, I agree with it for the most part. You can probably guess some of the things like Apple and AT&T, the Tablet rumors, not upgrading the Mac Pro, etc.

All in all, there is one thing that I think Apple should have done this year and didn’t really do. It’s something that was on Beta News top ten list of things they did right. But I disagree:

Apple did not lower the prices enough.

Back in June the gossip was that Apple was lowering prices on their Macbooks. Everyone was a flutter with a possibly “affordable” machine. But in the end, the reality was that the Intel Dual core laptop started at $999. If you wanted a more affordable Mac – The mini only costs $599.

Now if you compare that to a PC Laptop – 2.66 Dual core with 2 GB DDR3 memory and 250GB hard drive, you will find that price is at about $700. It is said that 30% of the macbook sale is profit. That is about $300 for the Apple name and OS. Apple is expected to have sold about 3 million new machines in this quarter alone, meaning $300 million in sales – or (if numbers stayed the same year round) $1.2 Billion.

Before we move forward – I realize that Apple has to answer to investors. Making profit is key, especially in this economy. However, this last year and a half has not been good to some. Most companies have tried to lower prices so people can buy more and re-stimulate the economy.

Apple didn’t do anything viable for the average consumer.

If they would have done the same thing as with the original Macintosh, then I would be more sympathetic to the cause. Basically, Apple – Back in 1985 – started a program to build, or even rebuild school computer rooms. I was lucky enough to go to a High school that had received 30 Macintosh Classics from this program.

But in this go-around they didn’t. They pretty much profited the money from the sales.

I am all for making a profit in any economy. PC manufacturers would always complain that the problem with building computers was they would only make a couple dollars from selling because the competition was so high. That is why companies made support plans – to make some extra cash on a sale.

My problem lies with the fact that a low end Macbook is not affordable to the average consumer. That is why Microsoft made the PC hunter commercials. A Mac for $1000 whereas a PC Notebook for $500. Yes, it might have a slightly slower processor to it, but will the average consumer actually notice a500 Mhz difference? We could also talk about how AMD processors would match the speed and keep the price low. But let’s not get into THAT argument.

Add to it Apple’s other interests, like iPhone sales, which are great. It costs them $179 to build a 16 GB model. Now while you are saying “That’s OK, I only paid $199 for the phone”, the reality is you didn’t. AT&T picked up the difference for the exclusivity. A $400 difference.

Here is how it works – AT&T pays Apple a monthly fee per phone on their system. So within 2 years, AT&T will pay Apple around $400 for your phone ($12-15 per month). Making Apple about $400 on your $179 iPhone ($600 in total). Of course, if you buy the phone outright, it will cost you $499.

Now we will talk stocks: This last week, Apple shares rose to $209 – the highest they’ve ever been. Why is that? No other reason than the fact that a rumor is going around about a Tablet that might be coming.

Really?

I could go on with numbers, but I think I made my point. Apple could have easily dropped a Macbook to $700, and a Macbook Pro to $900. They would have then sold Apple care for $70 a year and still made a tidy profit.

So the rumor of the Tablet is it will sell for $600. I would venture a guess to say it will be more $800 (if this rumor comes true). Why? Because Apple doesn’t want to “Cheapen” the computer experience for anyone. And they certainly don’t want to lighten the pocketbooks.