“from the Mp3 Invention to the Ipod Innovation: the Disruption of the Music Industry”

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TABLE OF CONTENT
INTRODUCTION ......................................................................................................................... 4 I. FROM INVENTION TO INNOVATION : .......................................................................... 5 A) Invention of the MP3 Format and the birth of the MP3 player. .................................... 5 B) Revolution of the economic structure: the market before and after the launch of the Ipod. 6 C) The creation of the iPod: innovation or imitation? ........................................................ 7 II. APPLE’S KEYS OF SUCCESS: .......................................................................................... 8 A) The Silicon Valley: a strategic location. ........................................................................ 8 B) Decision making, production and organization. .......................................................... 11 C) Steve Jobs: a visionary entrepreneur and innovator? .................................................. 13 III. Conclusion ...................................................................... Erreur ! Signet non défini. IV. References ............................................................................................................... 15 4

INTRODUCTION
(Confirmation)
For the written assignment, I would like to talk to you about the MP3 players industry, at the beginning and more precisely about Apple and the first iPod. Although, Apple doesn’t own the invention of the MP3 format, which was invented in the late eighties, Apple introduced its own MP3 player, the iPod only in 2001and managed to be the firm which popularized the portable music player in the world. It is particularly interesting to analyze how Apple managed to be the leader on this market, selling its product on a price exceeding the average market price, 3 years after the invention of the Mp3 format (relation to Schumpeter’s Framework). Moreover, Apple clearly revolutionized the musical industry through iTunes, which represents 83% of the online music sales (Dosi: incremental/radical innovation?). We can also discuss about Apple’s headquarters located in Cupertino, California; right in the middle of the Silicon Valley. This place is well known for being the largest high technology innovation/corporation center; which leads to the discussion of Scott’s theory about geographical location and entrepreneurship and innovation. I will tackle the main strength of Steve Jobs’ decisions, as he was one of the most remarkable visionary entrepreneurs over the past century; and also seen as an innovator; which can be questioned by Schumpeter’s definition of an entrepreneur. Furthermore, I will analyze the market before and after the launch of this new product and describe what decisions, which procedure, what kind of organizational management and production process (human labor and technology) he took to successfully achieve in a long term perspective (relation to product life cycle; Dosi: demand pull/technology push?) To summarize, the analysis of Apple’s iPod and iTunes, I will go through the idea, to the strategy and the decision and implementation taken to make it become leader on this market; relating it to the different theories studied in classes and new relevant references. 5

I. FROM INVENTION TO INNOVATION :
In this part, we are going to analyze the market situation of MP3 players from the beginning until the launch of Apple’s MP3 player and the consequences of it. A) Invention of the MP3 Format and the birth of the MP3 player. At the origin of the MP3 format or MPEG-1/2 Audio Layer 3 is the German organization Fraunhofer-Gesellschaft. Karlheinz Brandenburg as a member of this organization, worked on developing this project in a group with employees from Philips (Leon Van de Kerkhof), TDF CCETT (Yves Francois Dehery). They based their work on the MUSICAM and ASPEC format on which they added their new technologies to result in the MP3...
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