Thinking of iPods for Christmastime

• Advertising.
  Their ads are catchy -- using a soon-to-be hit single with an ad style that people associate with the iPod. They keep the ads consistant -- a primary colored backdrop, the black filled in person, and the highlighted white iPod and headphones is very recognizable as an iPod ad.
  
• iTunes.
  Apple's free music software (that also doubles as a store). What Apple's done right is to make getting music onto the iPod easy. Plug the iPod into the computer and iTunes does the rest.
  
• Price
  
  iPods are still affordable enough to make good gifts, yet expensive enough to prevent a person from buying it themselves on impulse.
  
• Limited Choices.
  
  Prior to the iPod mini, there was only the choice of 3 different sizes of the iPod, and there was only one color -- white.
  It wasn't until last year that they began offering the iPod in different colors. Presently they have 6 sizes of iPods, in two different colors for a total of 10 different iPods one can choose from. They've been careful enough not to overlap sizes and prices too much so that consumers aren't befuddled over which one to purchase, and wise enough to reduce the number of colors down to two (to minimize on inventory).
  
• User Interface
  
  The menu system on the iPod is simple and easy to use. You can very quickly find what you are looking for.
  

Is it possible to dethrone Apple as the King of Digital Music Players? Is it possible? Yes. Is it likely? No. Why? I think this is a complex question, and it helps to look at the type of people who are buying MP3 players.

First you have an audience that wants an iPod. They may own another brand of digital music player, but for whatever reason are dissatified with their purchase and think that the iPod would be a better choice for them. They might also be a person who has never owned an iPod before but saw their friend's iPod or played with one in the store. They might have never seen an iPod in person, but saw the commercials. Whatever the case, they've decided that the Apple iPod (and no other media player) will make them happy.

Second, you have an audience who refuse to convert to owning an iPod. They'll stick with whatever brand they own. This group is actually very similar to whose who have an iPod already. They are loyal to their brand because of sunk costs. In purchasing an music player, they are likely to also have purchased other accessories. They are likely to have bought music for your device in a format that only their brand of player can play. They are also loyal because they have a sense of ownership in owning that company's product.

Third, there are the people who already own an iPod. They have one, they use it, they bought accessories, it makes their life better. The Apple iPod dominates the digital media player market, with a really large market share.

In order to crush Apple's market share, all you really need to do is one thing: convince everyone who has bought an iPod that they made a mistake, and that Brand X Media Player Y is better. This is hard, because the majority of iPod owners are satisified with their purchase -- they don't want to upgrade to a new player, and here's the problem that Apple has to face -- part of the satisfaction that comes with an iPod ownership comes with their experiences in the last few months. iPod battery capacity only lasts a few years before it can no longer hold a charge. If Apple can manage to have these customers upgrade (and stop using their old iPods) before this happens, then those customers will still have a very positive feeling about the iPod. However, the more problems the iPod has near the end of life, the less happy customers are going to be. A company that wants to take market share from Apple would have to wait for the right point to advertise the iPod's flaws, and convince them that their product is better. If it is possible to make their product compatible with the iPod line of accessories, even better.

Apple knows this flaw, and they know this strategy -- after all, they convince people to upgrade their iPods for the latest model everyday. Every model they introduce is better than the last one in some way. First it was more space, then photos, then color screens, then video. Their next shuffle I can almost guarantee will have a color screen. At some point, they will run out of features and improvements to add to the iPod. It is at this point where the majority of iPod users will consider what they have "good enough", which leave the market open for competitors. That day is coming soon, but people are reluctant to change and switch, and I suspect that converting iPodders to another brand will be nearly impossible. Here's the really scary thing that competitors must also think about -- with the iPod being a recognized brand, Apple can now brand future products as "iPod". For instance, how about the iPod Time, an iPod squeezed into a wristwatch? Or the iPod Athlete, an iPod with heartrate monitor, pedometer and other athletic functions? The possibilities are endless. Right now Apple has a generalized product designed for mass appeal. That's not to say that strategy will continue into the future as more specialization takes place in the media player market.

I think that the iPod will sell well this holiday season, and continue to sell well for the next 2 to 3 years. There's nothing on the horizon able to challenge the iPod product, and if I'm right, 2 to 3 years is about the time to transform iPod into a new type of product.

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