Ipod in Japan: Can Apple Sustain Ipod Craze?

CASE 10

iPOD IN JAPAN CAN APPLE SUSTAIN JAPAN’S iPOD CRAZE?

INTRODUCTION

On January 12, 2005, Apple Computer, Inc. announced revenue of $3.49 billion and a net profit of $295 million for its fiscal first quarter that ended December 25, 2004. This was the highest quarterly revenue and net income in Apple’s history. These were surprising and serendipitous results for Apple given that as late as 2002, critics wondered if Apple could turn waning market share and losses back around again. From its Apple IIe glory days of the 1980s to its crippling loss of PC market share in the 1990’s, Apple has certainly experienced its share of ups and downs.

Enter iPod.

During the last quarter of 2004, while Mac unit growth rose 26 percent, iPod experienced 525 percent unit growth. During the same quarter, Apple shipped out over 4.5 million iPods. As of Apple’s press conference in January 2005, Apple had sold over 10 million iPods. iPod has single-handedly revitalized Apple’s business, totaling $1.21 billion in sales, or a third of its total revenue, in the first quarter of 2005. Apple has completely reversed its fate and revived its global brand equity with the introduction and smashing success of its iPod family of products, namely iPod and iPod mini, but not excluding iPod Shuffle, iPod Photo, and a myriad of iPod accessories. In the process, Apple has taken the music electronics industry by surprise by creating a stylish standard inmusic players that speaks to the savvymusic consumers who desire to make a fashion statement while digitally organizing their tunes. In Japan, iPod has enjoyed record sales and its ‘‘halo effect’’ has even boosted revenues on other Apple products, such as iMacs and iBooks. With its small, cute shape and trendy colors, the iPod mini has rocked the portable music player scene with an average of 5,000 visitors to Apple’s TokyoGinza store each day. Apple’s global brand equity has skyrocketed, as iPod has become a high-end fashion statement able to hold its own with the likes of Prada, Coach, and Louis Vuitton. More importantly,