Vega+Strategy+Report

TO: Proximity music team FROM: Jen Vega DATE: January 7, 2010 SUBJECT: iTunes strategy report

Below is my iTunes strategy analysis. ITunes is the leading website for downloading digital content legally. It has seen a consistent growth since inception and is likely continue due to its ability to provide consumers with legal and innovative products and services.


 * Profile**

ITunes is a digital media player application used for buying, playing and organizing music and video files (Wikipedia 2009). ITunes launched in January 2001 by Apple Inc. It is currently headquartered in Cupertino, California, and Apple’s CEO and co-founder is Steven Jobs (Apple Inc.)

To date iTunes has sold over 8.5 billion songs and over 200 million podcasts to date. It’s downloads account for 88% of online music downloads worldwide (Wikipedia). In the fourth quarter of 2009 Apple Inc. reported that iTunes sales had increased 22% from 2008.


 * Competitive Landscape**

There are two driving forces that shape iTunes competitive landscape.


 * ITunes media content rights, hardware, software, and distribution- these three together create barriers to entry for competitors. Having the hardware and software for innovative products that others can’t replicate create a competitive landscape.


 * Apple’s brand name- a well know brand name with a history of good service and products creates a competitive landscape.


 * ITunes Business Strategy**

Apple’s business strategy is to effectively manage numerous product introductions and transitions. It is continuously adding new music and videos. In April 2008 iTunes surpassed Best Buy and Wal-Mart to become the number one music seller in the United States. FreeAllMusic.com and Limewire offer music for free to compete with iTunes, but these sites either download media illegally or the user must watch a commercial. ITunes allows users to download music, podcasts, movies, books, and applications for Apple phones and iPods legally and without commercials.

Many companies offer online music and video downloading capabilities legally, such as Rhapsody, Amazon, and Best Buy, but Apple’s iTunes is the most used. ITunes provides ease of use and different products available to download making it a one stop shop for consumers.


 * Gen Y Implications**

ITunes provides Gen Y users with a variety of products to download from a company with a strong brand. Gen Y users are loyal to quality brands, such as Apple Inc. The Gen Y population has become more technologically advanced than previous generations, by carrying mobile phones and ipods. They are the digital media generation.