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Notes on tech

Notes on technology, business, enterpreneurship, economy, markets along with interesting general tidbits.

iWow at the iPod Economy

12/23/2004 04:34:00 PM, posted by anand

An article by Andy Kessler about how the hugely success iPod might have played a role in dollar deficit, set me thinking about how big the iPod economy is.

For some of us, iPod might be synomyous with Apple known for making ultra chic products. But behind the scenes there are quite a lot of companies that actually contribute to the compact music (err.. now even photos) device that we call iPod. Some of them build hardware, some of them co-brand the iPod and some even supply the content that is played on the iPod. So in-effect the iPod seems to be like a huge juggernaut that carries with itself a set of players who are dependent on it for their fortunes. Since its launch in December 2001, there are now (4Q - 2003) about 4.4 million consumers who have bought an iPod. At $300 (avg. price) per iPod, Apple is minting some serious dough. Ofcourse, this reflects in their share price too which is trading at a P/E of over 90.

List of some companies that make the iPod happen:
Hitachi and Toshiba - mini disk drives.
Sony/Sanyo - rechargeable batteries
Synaptics - Click wheel
Inventec - Puts together the final iPod as we see it (Manufacturer/Assembler)
PortalPlayer - Silicon chips that form the gut of player
HP - co-branding iPod by HP
Music companies - songs

And ofcourse, the Grand-daddy of all - Apple that conceptualized, designed and launched the iPod, sits on top of the food chain. Flip to the back side of any iPod that you'll see 'Assembed in China' alongside 'Designed by Apple in California'.

Then there is iTunes which serves as a legitimate source for purchasing songs ala carte. Ofcourse, iPod existed even before iTunes was launched, but the latter helps expand the iPod economy. iTunes also acts as an outlet for music companies that are either too lazy or head-in-the-sand types to have not launched their own pay-by-the-drink store for music yet.

Lastly, there is a whole mini-economy that revolves around selling accessories that help connect/extend/enhance the iPod. Going by the iPod demand this Christmas, I believe all the players involved (specially Apple) are going to have a VERY MERRY CHRI$TMA$!

Pssst: btw, I dont own an iPod yet. I am waiting on the iPhone that Apple is jointly developing with Motorola, which hopefully should have some music playing capabilities also.
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