Jan. 10th, 2004 @ 10:10 am
Kudo's to Apple... it's working...
Having full access to all of the tools necessary to go out and P2P download any song I really want, I was just kicking around the iTunes music store and saw some songs I wanted... and clicked buy. I downloaded Dido and some Pink... and I just bougt an iPod mini.
Apple's strategy is working. It's not about the core service (which doesn't make money)... it's about the supplementary or support services built around the core service upon which you can make a fortune.
Current Music: Pink - God is a DJ [Electroheadz Remix]
I find Apple's strategy a bit confusing. The conventional wisdom is that you sell the buy-once unit as a loss leader, then make money on the repeat purchases of the little items. For years Xerox made little or no money on copiers, it was all paper and toner. And they practically give away razor handles to make money on the blades. Etc.
So I'm thinking that Apple's current strategy is only temporary. They must be planning for a day when they can actually make money off the music downloads, because in the long term that's a much more stable model.
Anyway, I agree they've done a great job with the iTMS. It just works.
I disagree.... I think their model is fine. Create a service that everyone wants... and then build products that integrate with that service best. With planned obsolesence and technological advances it shouldn't be hard at all to create a constant revenue cycle out of it (every software package on the planet lives off of this cycle, doesn't it?)... add to that the novelty that Apple blends in... sweet style that everyone wants for the moment, but passes faster than the seasons, and you end up with an upgrade cycle that is actually FASTER than technological advances. Apple's got it right on the head, IMHO.
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