Chapter 8: The Birth of the iPod in:

Joachim H. Becker, Sven Pastoors, Ulrich Scholz, Rob van Dun

Towards Sustainable Innovation, page 159 - 170

A five step approach to sustainable change

1. Edition 2017, ISBN print: 978-3-8288-3903-8, ISBN online: 978-3-8288-6655-3,

Tectum, Baden-Baden
Bibliographic information
155 chapter 8: the bIrth of the Ipod Rob van Dun The following case study about Apple’s iPod will provide a valuable example of how to innovate in the high-tech sector, but also contains Entrepreneurial Management (chapter 5), Entrepreneurial Strategies (chapter 6) and Fostering Innovation (chapter 7) and as such will serve as a holistic case study on innovation. The birth of the iPod The destiny of Apple changed drastically 10 years ago with the release of a deceptively simple digital music player. On October 23, 2001, Apple lifted the curtain on the very first iPod, which packed 5GB of music storage into a sleek white box no bigger than a deck of cards. Apple chose to unveil its portable digital music player in a low-key special event held on Apple’s campus in Cupertino. The press and Apple fans alike met the iPod with severe scepticism. Pundits openly wondered what business Apple had selling consumer music gadgets. Many proclaimed doom (not the first or last time Apple’s future was called into question, mind you). 156 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation By 2004, the iPod became a wildly successful product for Apple, and certain myths and legends sprung up about its creation. When historians 100 years from now recall the legacy of Steve Jobs, they will no doubt mention the iPod in the same breath. But while Jobs had an integral role in the birth of the iPod, no one man created the device. A diverse team of Apple employees and contractors brought the iPod to life. A twinkle in Jobs’s eye Apple’s relationship with digital music started innocently enough, from seemingly unrelated events in 1999. That year, Steve Jobs discovered the latent potential of a long-dormant Apple-invented technology: FireWire. The serial bus standard enabled data to be transferred at alarming speeds compared to common standards of the time. Apple realized that with FireWire, Mac users could transfer videos shot with digital camcorders (which already used the standard) and edit them on their computers. The next round of iMacs, Steve Jobs decided, would contain FireWire ports. Apple approached creative app giant Adobe to author a simple, consumer-friendly movie editing application, but Adobe declined. That’s when Apple decided to create iMovie and feature the Mac as the centre of a “digital hub” strategy, where the Mac served as the nucleus of an ever-expanding digital media universe. By the late 1990s, digital music had become big news. Illegal file sharing site Napster, in particular, shoved the issue in everyone’s face. Despite the legal issues, it quickly became apparent to most in the tech industry that Internet-downloaded MP3s were the future of music distribution. Around 2000, Apple realized it had a large hole in its upcoming digital hub strategy when it came to music. To fill that hole, Apple bought the rights to SoundJam MP, a popular Mac MP3 player application, and hired three of its creators to work at Ap- 157 Chapter 8: The Birth of the iPod ple. One of these men, Jeff Robbin, would head development of an Apple-branded digital music application. Robbin’s team simplified SoundJam and added CD-burning features to create iTunes, released in January 2001. As iMovie had done with FireWire-attached camcorders, the iTunes team naturally sought to allow users to transfer songs from iTunes to the portable MP3 players of the day. They had trouble. The need for the iPod Behind every successful product lies a problem in search of a solution. The inspirational problem, in the iPod’s case, involved the pitiful state of the young MP3 player market in the late 1990s. Portable MP3 players had been around since the mid 1990s, but Apple found that everyone on the market offered a lacklustre user experience. Steve Jobs had a strong term for gadgets like that: “crap”. Everyone at Apple agreed. Figure 8.1.: The original iPod, announced on October 23, 2001. Flash memory-based players of the era held only about a CD’s worth of songs. Hard drive players held far more, but were relatively big, 158 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation heavy, and they sported difficult-to-navigate user interfaces that did not scale well when scrolling though thousands of songs. Moreover, most portable media players (PMPs) used the pokey USB 1.1 standard to transfer music from a host computer to the player, which made the user wait up to five minutes to transfer a CD’s worth of songs. When moving thousands of songs, the transfer time could shoot up to several hours. Considering the poor state of the PMP market, Jobs decided that Apple should attempt to create its own MP3 player, one that played well with iTunes and could potentially attract more customers to the Mac platform. He assigned Jon Rubinstein, then Apple’s senior VP of hardware, to the task. Rubinstein began preliminary research for ideas on how to proceed. From the beginning, he had two ingredients in mind: a speedy FireWire interface to solve the transfer problem, and a particular 1.8-inch 5GB hard drive from Toshiba that could make Apple’s music device smaller than any other hard drivebased player on the market. With most of Apple’s engineers tied up in Mac-related projects, Rubinstein sought help from outside the company to further determine the feasibility of an Apple music player. Through personal connections, Rubinstein heard about a man with the right qualifications and experience to do the job. He gave him a call in January 2001. Exploring the possibilities On that day in January, Tony Fadell happened to be riding on a ski lift when his phone rang. It was Jon Rubinstein calling. He invited Fadell to visit Apple to discuss a potential project, but he kept quiet about its exact nature. Rubinstein felt that Fadell made an ideal choice to explore Apple’s portable digital player options due to Fadell’s ample handheld com- 159 Chapter 8: The Birth of the iPod puting experience. He had worked at General Magic (on an OS for PDAs called Magic Cap) and later at Philips Electronics, where he led development of a Windows CE-based palmtop computer called the Nino. At Philips, Fadell had seen the potential of digital audio players through an encounter with Audible, an Internet audiobook vendor that wanted to bring its digital audio products to the Nino. Fadell considered himself a devoted music fan; he enjoyed deejaying events in his off hours, and he fantasized of a day when he didn’t have to drag his bulky collection of CDs between gigs. He began to wonder if Audible’s approach could be the solution to his problem and brainstormed ways that he could combine digital audio with music. Fadell explored the idea at Philips, but found little interest in the ideas among management. After a brief stint at Real- Networks, Fadell left to form his own digital music company called Fuse Systems. Fuse developed a digital jukebox that would rip CDs to an internal hard drive, but the company had trouble raising funding in a time when venture capitalists fetishized software over hardware. Fadell had received the call from Rubinstein just as Fuse ran out of money. Fadell went into initial talks with Apple in February 2001, thinking at first that Apple wanted to build a PDA. Soon, Apple offered Fadell a six-week contract as a hardware consultant. Just after signing, Rubinstein revealed Apple’s true intentions. “Apple thought that they could bring a better [MP3 player] to market and they asked for me to do some designs,” said Fadell in an interview with Macworld. “How could one be built, what kind of components, how much would it cost, and to do all the basic research and design for what was to become the iPod.” 160 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation Figure 8.2: The Philips Nino, a Windows CE-based palmtop computer that Fadell helped develop prior to the iPod. Apple paired Fadell with Stan Ng, a veteran Apple product marketing manager, to help him mesh with the company’s unique culture. During that six-week period, Fadell met with almost everyone he knew in the handheld industry while keeping his true goals secret. He studied competitors’ products and settled on the need for a small, ultra-portable device with a large capacity and long battery life. Fadell brewed up three prototype designs for a potential Apple music player, each model crafted from foam core boards with rough interface graphics pasted on. Lead fishing weights gave each mockup the approximate weight of a final device. “It was all very, very rough,” recalls Fadell. “I only had six weeks and it was only me really doing all the work.” When his contract expired in mid-April 2001, Fadell presented his prototypes to Apple executives, including Steve Jobs, in an important meeting. Fadell purposely offered his two least promising mock-ups to Jobs first (one of which would have used flash memory, the other with removable storage) and hid the third under a decorative bamboo bowl Jobs kept on the conference room table. As Fadell 161 Chapter 8: The Birth of the iPod predicted, Jobs liked the third mock-up best. During the same meeting, Apple’s Senior VP of Worldwide Product Marketing, Phil Schiller, presented mock-ups of a player featuring the now familiar scroll wheel. Schiller personally thought of the idea as a solution to a troubling interface problem at the time. Other MP3 players used plus and minus buttons that would move, one item at a time, through a list of songs, which would grow tedious if the unit held a thousand songs – basically, you’d have to push the button a thousand times. With a wheel, a quick flick of the finger would navigate through the list at any rate the user wanted – especially since Apple would make the scroll speed accelerate the longer you spun the wheel. Steve Jobs liked the ideas he saw and offered Fadell a job at Apple to continue his work. After a period of uncertainty, Fadell joined Apple full-time in April 2001. The iPod project – then code named “P-68” – had officially begun. Forming a team With Apple’s portable music project officially in gear, Fadell needed to settle on a release schedule. After some consultation with Apple’s marketing department, Fadell decided that iPod would ship during the 2001 Christmas shopping season, which only gave him six months to form a team, develop a product, get it manufactured, and push it out the door. While Apple dominates financially today, 2001 marked an uncertain time for the company. The recent tech stock crash loomed fresh in everyone’s minds, and Apple was just barely breaking even financially. The company’s main focus was on the Mac computer line, and it had few resources to spare for other projects. Fadell knew he had to finish iPod quickly so Apple wouldn’t shut down the project; he had to justify its existence as a financial drain on the company. He also felt that competitors would beat Apple to market with a similar device if Apple didn’t work as fast as it could. To build the core iPod development team, Fadell hired engineers from his start-up company, Fuse, and veterans from General Mag- 162 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation ic and Philips. “We weren’t able to take other engineers or other resources from other parts of Apple, because they were already constrained,” says Fadell. “We couldn’t shut down the Mac to build the iPod, right?” Apple placed Fadell’s team, which consisted of about 25 regulars and a varying number of contractors, in what could be considered the Siberia of Apple: one of the oldest, dingiest buildings on its campus. (The building was so dilapidated that Apple had to kick the iPod team out after a couple of projects to substantially renovate it.) The iPod team’s open cubicle workspace made for a rowdy and playful environment. Fadell tells of the team members’ attempt to write their initials in wet concrete outside the building (they were caught), and about the time one of the engineers accidentally stuck a screwdriver through a lithium polymer battery. It exploded, causing a nasty fire that sparked an internal FBI-like investigation scene with Apple Legal looking on. Hashing out the details With the launch deadline looming, Fadell’s team didn’t have time to develop all of the iPod’s components in-house. While the power supply and display design drew from Apple’s expertise, the heart of the iPod, a specialized MP3-playing chipset, came from a San Jose company called PortalPlayer. A company called Fostex would manufacture the included Apple-designed earbuds. Fadell says earbuds were an obvious design choice because they’re more portable, harder to break, and don’t mess up your hair like traditional headphones do. Meanwhile, Jeff Robbin, the programmer in charge of iTunes development, began work on the software end of the iPod. With so little time to debug a custom operating system to run on PortalPlayer’s MP3 chipset, Robbin sought the help of Pixo, a Cupertino company that ultimately provided the iPod’s basic OS. 163 Chapter 8: The Birth of the iPod Robbin’s team, which included Apple interface designer Tim Wasko, would create the high-level user interface and music playing software in the iPod, as well as the version of iTunes that would sync with the iPod at launch. Both teams put in long hours creating the device: 18 to 20 hours a day, seven days a week, according to Fadell, which took such a toll on his personal life that his girlfriend broke up with him. While developing the iPod, Apple used a shoebox-sized prototype that enabled easier debugging while also obscuring the ultimate size of the device. Even within Apple, not everyone was certain of all the iPod’s intended characteristics. And what characteristics it would have. As with all its products, Apple wanted the iPod to stand out visually. While the software and hardware teams chugged away, Jonathan Ive’s industrial design group got to work crafting the exterior appearance of the iPod. iPod’s outer beauty After dozens of prototypes, Ive’s team settled on a design: a simple box, the size of a pack of cards, clothed in a white polycarbonate front that set into a mirror-finish stainless steel case. Figure 8.3: The Braun T3 Pocket Radio, designed by Dieter Rams, an inspiration of Apple’s Jonathan Ive (picture courtesy of The Museum of Modern Art). 164 Pastoors · Scholz · Becker · van Dun: Towards Sustainable Innovation Two elements dominated the iPod’s face: a simple rectangular display, and the now-iconic scroll wheel, which (unlike late models) physically moved when you spun it. The iPod’s physical appearance eerily resembled the Braun T3 Pocket Radio designed by Dieter Rams, one of Ive’s admitted design heroes. Ive intended the iPod’s “shockingly neutral” white and stainless steel case to set it apart from a world of black and dark grey portable digital gadgets. The iPod would have no removable battery door, no on/off switch, and no screws. Apple would seal the iPod’s inner technological wizardry away from the prying hands of the user, silently conveying a simple message: it just works. The finishing touches So much about the iPod was new for Apple. Coming from a company accustomed to selling computers, Apple wasn’t quite sure how to sell a consumer music gadget, which undoubtedly would be aimed at a different audience than the Mac. Even the label on the iPod’s box demanded special consideration for Apple: as a consumer audio gadget, the iPod had to comply with different trade laws regarding warning labels than those for the Mac. To help with those tasks, Apple brought in outside experts who would assist in crafting the initial iPod marketing campaign. One of those experts, a freelance copywriter named Vinnie Chieco, gave the iPod its name. In response to Steve Jobs’ digital hub strategy, Chieco began brainstorming about what interfaces with a hub. Chieco imagined a spaceship as being the ultimate hub from which a smaller craft – a pod (think “Shuttle pod” in Star Trek) – could come and go. Better yet, iPod wasn’t descriptive of the music player’s function, allowing the iPod’s capabilities to evolve over time without needing a name change. Steve Jobs liked it, and the name stuck. After considerable work, Apple marketing managed to pull together a campaign that emphasized style and fashion over tech specs, which were familiar approaches for personal audio products. It would turn out to be a winning strategy. Source: Edwards, 2011. 165 Chapter 8: The Birth of the iPod Training questions: 1. Explain, in your own words, why companies should seek innovative opportunities within their internal and external environment. 2. What is the difference between process needs and customer needs? 3. Why are changes in demographics such a reliable, unambiguous and transparent source for innovation? 4. Explain in your own words the unique risks of high-tech and knowledge-based innovations. 5. Explain what sources of innovative opportunity are exploited by Apple in the iPod case study. Recommended literature: Schumpeter, Joseph A (1976). Capitalism, Socialism and Democracy, New York. Drucker, Peter (1985). Innovation and Entrepreneurship: Practice and Principles, New York. Christensen, Clayton M. (2003). The innovator’s solution: creating and sustaining successful growth, Harvard. Internet resources: Edwards, Benj (2011): The birth of the iPod. Macworld. Online: [Accessed 25 April 2015]

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With sustainability having gained a lot of momentum over the last years and companies implementing strategies to create corporate sustainability, there are lots of opportunities for innovation. Thus, the two concepts of sustainability and innovation should not be considered separately – they are closely interlinked with one another. The main goal of sustainable innovation is to develop new products and technologies that have a positive impact on the company’s triple-bottom-line. To meet this aim, they have to be ecologically and economically beneficial as well as socially balanced.

In order to help companies to improve their sustainable innovation process practically, this book is structured into five possible phases of a sustainable innovation process:

Awareness of a sustainability problem

Identification & Definition of the problem

Ideation & Evaluation of the solutions

Testing & Enrichment of the solutions

Implementation of the solutions & Green Marketing