The death of the iPod? Christensen takes on Jobs

January 10th, 2006

Clayton Christensen, author of The Innovator’s Dilemma and The Innovator’s Solution (these are must read books), answers some questions in an interesting Business Week article.

Christensen discusses how Apple is on a path to mess up yet again (this time with the iPod) by using a proprietary strategy. I was an early adopter of the iPod, and am a member of the Cult of Mac. I have been impressed with Apple’s iPod strategy from the start. They’ve done an incredible job handling the product line and I’ve been amazed with their string of innovation successes combined with their ability to dictate what is cool. That being said, there has been one thing that I’ve been worried about - and Christensen hits it bang on.

I can’t see Apple maintaining a strangle hold on the portable music market forever with a proprietary strategy. Innovators and market leaders are already becoming cranky with the strategy. Can the larger population be that far behind?

Actually, I bet they probably are, so long as Apple continues incredible innovation and maintains an uncanny ability to dictate what is cool. However, (and sadly) they’re going to be in some serious trouble the second an iteration of the iPod isn’t so innovative or (gasp!) isn’t hip. The market is maturing - look at the record number of downloads that occurred at the end of 2005 - and the threats are developing along with the market.

Once the technology matures and becomes good enough, industry standards emerge. That leads to the standardization of interfaces, which lets companies specialize on pieces of the overall system, and the product becomes modular. At that point, the competitive advantage of the early leader dissipates, and the ability to make money migrates to whoever controls the performance-defining subsystem.

The same day that the other members of the Cult of Mac are celebrating Apple’s innovative new products I find myself worried for them.

Open up the iPod. Let the goodness that is iTunes spread from one MP3 player to the next, until, finally, it is inside every single MP3 player produced. Carve out the niche before you are left with nothing. It’s a risky thing to do when you’re a public company sitting on the throne, but secure a smaller piece of the kingdom before you’re stripped of all your land.