Case Study

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1.Explain how the iPod is helping Apple achieve increased PC sales. The tremendous success of the iPod music player has helped Apple to increase its PC sales especially its iMac and Notebook range of portable PCs through what is termed as the “halo effect”. In brand marketing, a halo effect is one where the perceived positive features of a particular item extend to a broader brand. Apple’s iPod not only dominates the MP3 market, but it is regarded as iconic and the huge increase in accessories for the iPod such as carrying cases, adaptors, microphones and software is a testimony to the statement. The success of the iPod helps to reposition Apple as a lifestyle brand and in turn this has had positive effects on perceptions of Apple’s other products including its PCs. Satisfied iPod owners are confident with Apple's PCs and this helps Apple to increase its PC sales.

2.What are the potential benefits and limitations of licensing the iPod software to other MP3 manufacturers? There are several potential benefits and limitations of licensing the iPod software to other MP3 manufacturers. Firstly, it would benefit Apple by establishing its software as the dominant standard platform in MP3 players through mass production by other manufacturers. Apple has never been very good at very high volume manufacturing and at very low costs themselves and through licensing of the software, mass production by other manufacturers would enable MP3 players to be sold at very low costs which in turn would increase demand by consumers. Widespread use of the software in the mass-produced MP3 players would thwart off pressure for alternative standards pushed by other companies such as Microsoft, Real Networks and others and help establish it as the dominant standard for the digital music player market just like what Microsoft did with its Windows operating system for the global PC market. Secondly, there are other complementary manufacturers such as automobile and cell phone...
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