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The iPod is now 10. The original 5Gb scroll wheel model launched in October 2001. In the years since, Apple has shipped 321m units.

Everyone looks to Apple’s current dominance — who could have imagined writing that phrase a decade ago — and contrasts it with the troubled mid 1990s period when the company almost failed. The iPod was the turnaround product that proved that Apple could diversify outside of the computer business. It established a new revenue source and boosted morale. Without the iPod, Apple would not have tackled the smartphone and tablet markets in the way they did.

For those seeking to understand the iPod and learn from Apple’s turnaround in the last decade, here are the ten key iPod takeaways:

1. Success does not happen overnight, companies have to persevere with a strategy. In its first year on sale the iPod sold just 376,000 units. To compare, in Apple’s most recent quarter it took on average five days to sell that many iPods. Also, RIM shipped 700,000 tablets in its first six months — many more than the initial iPod — and yet that product line is widely considered to be troubled and struggling.
2. Product quality is more important than being a first mover. The iPod wasn’t the first mp3 music player. The market had started in the late 1990s. Apple launched the iPod against multiple players and initially it cost much more than other devices that had more features. What Apple executed differently was that the iTunes sync software made it supremely easily to transfer music from a Mac or PC onto the player. Apple set sync to be automatic once a user plugged their iPod into a computer. At the time, competitors argued ‘drag and drop’ was easier. They may have been right that it was easier to set up initially as users did not need to install any new software on their computer, but drag and drop took much longer to do each time a person wished to update their iPod than a painless automatic sync. Drag and drop was a hassle in day to day use. Apple’s solution was fast and elegant.
3. Apple leveraged openness and compatibility to establish the iPod and maintain its lead. Like Sony, Apple has the reputation of being highly proprietary. While there is truth in that generalization, it’s far from the whole truth. Apple has repeatedly leveraged open standards in its products and been selective about which parts of a product to keep closed and where to allow third party development or standards. The original iPod was mp3-compatible, unlike Sony’s ATRAC-only portable media players of the same era. Apple’s adoption of the AAC format and DRM copy protection was added much later. Apple rapidly moved to offer a Windows version of the iPod in July 2002 which dramatically widened the addressable market for the iPod, rather than tying the iPod to be solely a Macintosh peripheral as would have been the reaction of many companies. With the third iPod design, Apple added the dock connector and created a vibrant market for third party accessories that acts as a significant barrier to competitors seeking to overtake the iPod due to the numerous  iPod peripherals available as a result.
4. The iPod drove people to the iTunes music store, not vice versa. The music store launched 18 months after the iPod, but to begin with only in the US. By the time the store opened in three European countries in spring 2004, Apple had already sold 3.7m iPods. Unlike competitor music stores of the time, Apple integrated the music store into their PC and Mac app — rather than delivering it as a website — this placed the music store right alongside the tools people used to update their iPod and listen to music. In retail, store location and in-store product placement is everything. Apple made sure their digital store emulated traditional retail strategy. Read the rest of this entry »