The idea factory

Is music a zero sum game?

Consider the following:  Clearchannel has stumbled badly, along with most of the radio sector. Their "Hamburger helper" strategy has clearly backfired. The attempt to paint an inability to sell out ad times as a customer friendly move didn’t fool anyone. That’s before we talk about satellite radio, which hasn’t even begun to hit its stride.

The big labels are floundering; They never knew what to make of digital. Their inability to get ahead of the digital distribution curve, their horrific handling of P2P, and their self inflicted PR wounds will likely dog them for years to come.

And Microsoft, well, their attempt to be all things to all people — a function of their enormity — has yet to really pay off. The most interesting thing about the Redmond behemoth is that they cannot seem to make a profit in any arena where they are not leveraged to a monopoly. (you should know my disclosures on MSFT by now).

Lets look at an entirely different approach to music and technology: Apple.

They make really cool products. Beautifully designed, innovative in the way the address consumer needs, technologically transparent and elegant. They truly have become an idea factory. And its paid off in spades for them (see chart below).

Only a handful of companies have been able to establish themselves, reinvent and reinvent again what they actually are — while remaining true to a core set of beliefs. For Apple, that’s user friendly, well-designed interface, products that delight.

How many other companies have done that? I can think of a few besides Apple: Harley Davidson, G.E.,  3M, The Gap (i.e, Banana Republic and Old Navy),and to some degree, American Express. IBM certainly has successfully reinvented itself. If you consider all the divisions Sears created,than you have to include them also: Dean Witter, Allstate, Discover, H&R Block and Coldwell Banker.

In the technology sphere, however, how often does that actually happen?  Dell is the low-cost, direct-to-consumer PC builder. Will they succeed at becoming a consumer electronics company — or will they at most be a PC maker that happens to also sell inexpensive Plasma TVs?

That’s what makes Apple so interesting as a  company . . .

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An iPod a Day

Apple’s shares have soared to new heights since the company introduced its popular music player:

1. Sept. 29, 2000: Apple’s stock tumbles after warning of earnings shortfall amid weak sales of its G4 Cube computer.
2. Oct. 23, 2001: Apple introduces its iPod digital music player.
3. Jan. 7, 2002: Redesigned iMac computer with a flat screen is released.
4. April 28, 2003: iTunes Music store opens and sells one million downloads in its first week.
5. Jan, 6, 2004: The smaller iPod Mini is introduced. Apple says it has sold two million iPods to date.
6. July 12, 2004: iTunes downloads top 100 million.
7. Jan. 12, 2005: Apple says it sold 4.6 million iPods in December quarter and more than 10 million to date.
8. Feb. 11, 2005: Apple announces 2-for-1 stock split.

Source: WSJ