iPod and iPhone - Successful Business Innovations

 

Apple introduced Apple iPod in 2001. Apple iPod business generated total revenue of $537 million in Q4, 2004 (three years from launch), and was already 22.8% of Apple's total revenue of $2.35 billion in Q4, 2004 (easily eclipsing the 5% mark - although electronics and computer segments do show higher average percent revenue from new products - check Figure 1 below). Apple iPod business generated total revenue of $1.82 billion in Q2, 2008, (within seven years from launch), about 24.2 % of Apple's total revenue of $7.5 billion in Q2, 2008 (well ahead of the 15% threshold). Apple iPod business has consistent or better margins than Apple's hardware businesses. As a matter of fact, iPod saved Apple and made Apple successful again. iPod delivered 5.5% of total Apple revenue in 2003, within the first three years of launch, and delivered 34.6% of total Apple revenue in 2007, within the first seven years of launch.

What about the newly launched iPhone from Apple? Is iPhone equally successful as iPod, or better? iPhone is off to a fast start. In the latest quarter, iPhone innovation produced net revenue of $419 million, or 5.61% of Apple’s total revenue of $7.4 billion. This is staggering, since iPhone was only introduced one year ago. It took iPod more than two years to achieve the 5% mark; iPhone achieved this mark in just one year. If iPhone continues the momentum, it could achieve the 15% mark before end of 2009.

Business Innovation Monthly Report

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