When the skies are filled with flying cars piloted by our silver-jumpsuited descendants, history will look upon 2005 as The Year of the iPod (Again). Whereas 2004 established the iPod as a genuine phenomenon, 2005 proved that Apple’s music player had moved beyond mere fad to institution.
Mention iPod and your audience knew you spoke of the world’s most popular music player. The pejorative MP3 player denoted music-player wannabes—lesser devices that would have to do because an iPod was unavailable or, in the earliest days of 2005, financially out of reach.
But 2005 saw iPods become more affordable, as Apple not only introduced a low-cost flash-based music player but cut prices on more sophisticated models as well. The year also featured Apple’s rivals stepping up their efforts to take on both the iPod and the equally popular iTunes Music Store, with varying degrees of success. And Apple played a central part in another audio trend, as its music player and online music store contributed to the explosion of podcasting.
Let’s look back at the major musical happenings of 2005.
The ever-evolving iPod
Anyone playing the iPod poverty card were thwarted early on in the year when Apple CEO Steve Jobs used his Macworld Expo keynote to unveil the iPod shuffle—Apple’s first flash memory-based iPod. Offering capacities of 512MB and 1GB for $99 and $149 respectively, these iPods were designed to dominate the low end of the MP3 player market. Available the day of the announcement, shuffles flew off the shelves. To accompany the new iPods, Apple released iTunes 4.7.1, a version of the program that offered shuffle compatibility complete with a new AutoFill feature that randomly packed the iPod with MP3 and AAC files from a user’s music library.
The iPod mini and iPod photo underwent updates of their own in February. Late in the month Apple announced a second-generation mini available in capacities of 4GB and 6GB priced at $199 and $249. A new $349 30GB iPod photo replaced the older 40GB model and Apple dropped the price of the 60GB iPod photo by $150 to $449.
The iPod update parade paused during the spring, but Apple was hardly resting on its laurels; the company delivered on a promise made in February to provide an adapter for copying photos directly from a digital camera to a color iPod—the iPod Camera Connector. During March’s South-by-Southwest music conference in Austin, Texas, Apple also rolled out its Custom iTunes Prepaid Cards, small cards that would allow recipients to retrieve a specific track from the iTunes Music Store. Bands found the cards a great way to promote their latest singles during the conference. Finally, May saw the release of iTunes 4.8, which incorporated contact and calendar syncing (a feature longed for by Windows users) and video playback. That last feature would prove to be a significant addition later in the year.
Apple’s Worldwide Developer’s Conference in June served as the launching pad for the fourth-generation color iPods. Largely a rebranding of the previous iPod photo, these “new” iPods came in 20GB and 60GB capacities and sold for $299 and $399, respectively—another price drop from the iPod photo offerings. This announcement was accompanied by news that Apple was knocking $20 off the price of the 1GB iPod shuffle, now selling it for $129.
Apple rolled out the last of 2005’s iPod overhauls at two separate press events in the fall. The first, featuring a performance by Kanye West, announced the death of the iPod mini and the birth of the 2GB and 4GB iPod nano ($199 and $249 respectively). The September event also marked the release of the first iTunes-compatible phone, the Motorola Rokr, and the unveiling of iTunes 5.
The nano was a hit from the get go—though concerns about the durability of the nano’s screen arose shortly after the diminutive, flash-based iPods shipped. The Rokr was received with less enthusiasm. Reflecting some of the sting of the Rokr’s poor reception, Motorola CEO Ed Zander famously quipped, “Screw the nano!”—comments the executive later said were taken out of context while claiming that it was “only a matter of time” before Apple built a smart phone of its own.
Apple’s second music event took place a month after the first, with the company replacing the just-released iTunes 5 with iTunes 6. Steve Jobs also took the wraps off the 30GB and 60GB iPod with video. Available in the same black or white cases as the nano, these iPods included 2.5-inch color screens and—like the nano before it—lacked the previous full-sized iPods’ Remote Port connector.
To feed the $299 and $399 fifth-generation iPods, Apple stocked the iTunes Music Store with a slim collection of television shows from ABC and Disney, Pixar short files, and music videos, all sold for $1.99 each. Apple reported that 1 million of these videos were sold in their first 20 days of availability. In December, NBC followed suit by making some of its programming available through iTunes—including such current programs as The Office, Law & Order, and The Tonight Show, and classic programs such as Alfred Hitchcock Presents and Dragnet.
The upshot of all these iPod releases? A boost to Apple’s financial outlook. The company shipped nearly 6.2 million iPods in its fiscal third quarter—a 616 percent jump in iPod sales from the year-ago period. Other good news for Apple was the report that the iTunes Music Store sold its 500 millionth track in July. Early in the following month the iTunes Music Store opened in Japan and sold 1 million tracks in four days. And as the year drew to a close, iPods remained in high demand with 1GB iPod shuffles in short supply. The now-discontinued iPod mini remains a hot item on both eBay and Amazon—often selling for more than the original asking price.
Catching up with Apple
Outside the Apple sphere, other companies pursued their digital music strategies as well—to greater and lesser degrees of success.
Napster fired one of the earliest shots across Apple’s bow, using the Super Bowl to launch a marketing campaign for its subscription-based Napster To Go service (a campaign marked by some fuzzy math on Napster’s part). Also during February, MP3.com founder Michael Robertson announced a new music download service called MP3tunes. The service, originally intended to sell unprotected MP3 music files, changed focus later in the year (presumably due to lack of support from major recording labels) to offer subscribers web-based storage and browser-based access to their music collections.
After a year of struggling to promote its Walkman digital music players and Connect online music service, Sony compounded its woes by issuing copy-protected music CDs that could make Windows computers more vulnerable to security breaches. The company released a patch to address the security issue, but even the patched version was plagued with problems. The company eventually recalled millions of affected discs.
As 2005 draws to a close, Apple’s online music store faced a new Mac-compatible challenge from Real Networks. The company unveiled a version of its Rhapsody subscription music service that works on the Mac. Unlike with the Windows version of the service, however, Mac subscribes can only listen to music online—there’s no option for downloading music from Rhapsody to a Mac or a portable music player. Meanwhile, in the latest bid to make iTunes Music Store content available to portable players other than the iPod, Navio Systems declared its intention to reverse-engineer Apple’s FairPlay encoding system some time in 2006.
Perhaps the most persistent—and voluble—challenge to Apple came from Creative Labs and its Chairman and CEO Sim Wong Hoo. In March, the executive who ended 2004 by declaring “war” on the iPod, proclaimed “Clearly with the success of the Zen Micro and our shipment of more than 2 million MP3 players last holiday season, we have gained huge momentum and are putting our competitors on the defensive.” Apple, managing to maintain its composure, refused to erect barriers around its Cupertino campus.
Creative’s war-on-the-iPod proved costly—for Creative. In June, the company warned investors of softer-than-expected MP3 player sales. Shortly thereafter, the company was making news of a different sort, claiming a patent on automatic hierarchical categorization of music by metadata—and, by extension, the iPod’s interface. In December, Creative vowed to aggressively pursue its patent.
An iPod partner also fell by the wayside in 2005. Reflecting the “Here today, don’t let the door hit you on the way out” nature of Carly Fiorina’s mid-summer career, Hewlett-Packard added an HP-branded iPod mini and an HP iPod shuffle in July, only to kill the whole HP-does-iPods deal shortly after Ms. Fiorina was issued her walking papers.
The power of podcasting
Podcasting didn’t get its start in 2005, but this was the year the technology of creating downloadable audio files really rose to prominence. The first hint at how big podcasting would be came in the spring; a Pew Internet & American Life Project study stated that more than 6 million people had downloaded podcasts. At the same time, Macworld got into the podcasting game with its first podcast.
Podcasting got its biggest boost when Apple shipped iTunes 4.9 at the end of June. That version of the music application added download and subscription support for podcasts within the iTunes Music Store. Additionally, the program included features for managing those podcasts and moving them on and off an iPod.
Just two days after iTunes 4.9 was released, the iTunes Music Store clocked more than 1 million podcast subscriptions, many of which to programs offered by mainstream media.
New models, enhanced capabilities, huge demand, a little more than impotent squeaks from the competition. Is there any doubt that the digital music scene was dominated by the iPod—again? Though Macworld will soon release official predictions for 2006, here’s our unofficial hint: Short of hell freezing over, look for the iPod to maintain its Top Dog position throughout 2006.