Harvard Business School Working Knowledg e Archive

Behind Apple's Strategy: Be Second to Market

8/29/2005
IPod is a household name and Apple continues to dominate the digital music market with its latest offerings. Will podcast-editing tools be next? Here's what Apple might be thinking on a strategic level, from Strategy and Innovation.

Apple Computer's recent domination of the digital music environment provides a surprising example of the disadvantages of being first to market. The innovative computer company that has become a leading force in the music space appears to have built a core strength around figuring out how to succeed at being a deliberate and very smart second (or even third) to market.

Indeed, with such prominent early exceptions as the mouse and the graphical user interface, Apple has rarely succeeded because of an appreciable first-to-market advantage. NEC beat Apple to the notebook computer, and Rio and Eiger Labs both had MP3 players long before the iPod was ever introduced. Sony's ACID, Cakewalk's Pyro, and others offered desktop music-editing software before Apple ever released its option.

Despite this seeming disadvantage, Apple has managed to lead these markets because it has been able to initiate several new-market disruptions in music and computing, including iTunes, iMovie, and GarageBand, the company's eighteen-month-old music-editing software suite.

In each case, Apple reached consumers unavailable to its predecessors though the virtues of good design, ease of use, clever marketing, and smart distribution. All these efforts were aimed at making sure potential customers understood the substantial differences between the first-to-market technologies that preceded GarageBand and the appealing, thoughtful technologies that Apple's product offers to attract inexperienced consumers.

For its part, GarageBand affords a good example of how to create new-market disruptions with smartly designed technologies. Using GarageBand software, individuals with no previous recording and editing experience can create their own home-based music studios, where they can post new music and remix versions of older music online.

Approachable from the start
Once other software-based desktop music-editing suites such as Sony's ACID had already forced low-end disruptions to more expensive hardware-based digital audio workstations, Apple smartly surveyed the marketplace and discerned that any competitive software platforms would win or lose based on ease of use. Therefore, Apple stressed GarageBand's approachability from the start.

The initial version of GarageBand, released in December 2003, made a point of simplifying Apple's Logic Pro platform, a professional music-software suite developed by Emagic, the German software developer acquired by Apple in 2002. Some of Logic's most complicated features were eliminated, including the advanced equalizers and sound transformers, as well as the ability to combine sixty-four different recorded music sequences (tracks) at the same time. (GarageBand users can work with up to eight tracks.)

Apple smartly surveyed the marketplace and discerned that any competitive software platforms would win or lose based on ease of use.

In return, users can edit music files through the same intuitive drag-and-drop process that characterizes other Apple software. Such formerly complex functions as deepening a voice are now a matter of adjusting a single sliding icon. And users can select a live instrument for recording (through cable or microphone) simply by plugging an instrument into the computer and using a pull-down menu. The track, once finished, can be integrated into any of the other platforms that fall under the iLife digital software suite, which comes free with the purchase of a new Mac or Mac Mini. For instance, a user could incorporate the song using iMovie—a video-editing suite similarly released as a simplified version of Apple's professional video-editing software, Final Cut Pro.

Ease of use has been the obvious focus in Apple's advertising campaign for the product. When Steve Jobs unveiled GarageBand at Mac Expo in 2004, he asked recording artist John Mayer to join him onstage and record a new song directly into the Macintosh computer that was set up near the podium. Within ten minutes, Mayer recorded several guitar tracks while Jobs, who is not an experienced musician, brought up loops from GarageBand and built background tracks for the song. Jobs then used the "Export to iTunes" function to convert the finished song file to Apple's own proprietary music format and post it on a GarageBand playlist. Though all these functions had been available to home recording artists on other software packages, this was the first "one-click" solution—easier and more intuitive than any offered by any of its competitors.

Building momentum
As expected, Apple's software has gained appreciable momentum with desktop musicians in the year since Mayer's performance. MacJams.com, an online community for users of Apple's GarageBand software, has posted more than 7,500 songs made with GarageBand in the past eighteen months while a separate online community, iCompositions, has posted more than 12,600 songs.

By comparison, EMI, the U.K.-based music recording and publishing conglomerate, started operations in 1931 and has slowly grown to become the largest music publisher in the world, holding the rights to just more than one million compositions. The two standalone Web sites mentioned above, with little or no ability to attract (let alone pay) musicians, have compiled 2 percent of EMI's seventy-four-year, million-song catalog in less than eighteen months.

How many of these songs are being published by first-time musicians? iCompositions does not survey its users in this fashion, but the majority of the songs (3,450 of the 12,600) fall into the electronica/ambient category, pointing to music that is manufactured entirely at the computer, without incorporating instruments, live voice, or other outside sound. While professional artists from techno artist Moby to Brazilian-born electronica star Amon Tobin have done work in this area, it is also the traditional domain of people new to music-editing software. MacJams.com does not provide comparable statistics, but a survey of the site suggests a similar proportion of ambient/electronica musicians.

Apple's own sales practices promote a strong new-market effect. The software is inexpensive (approximately $79) and is bundled as part of iLife. Apple shipped more than one million Macintosh units in the first quarter of 2005. Users purchasing these units suddenly have a recording studio at their fingertips—whether they planned for it or not.

Like many other developers of disruptive technologies, GarageBand's developers have faced tradeoffs between power and utility.

This push approach, supplying all new Mac customers with the software, is complemented by pull from amateur musicians who find the software "good enough" for serious studio work. In August 2004, independent folk guitarist Steve Sobek established himself as the first recording artist to release a complete album produced entirely on Apple's GarageBand software. When asked why he chose to create a full album in GarageBand, Sobeck responded, "I wasn't thinking that big at first. I was . . . just relieved that I could finally record songs on a program without having to read a 500-page manual."

Even as they've been making inroads into the amateur-music scene, Apple has enjoyed unexpected traction in the professional recording world. This past April, Trent Reznor, the lead singer of Nine Inch Nails, placed a version of his new single, "The Hand That Feeds," online in the GarageBand format to encourage home remixing. Other musicians, including Ed Robertson of Barenaked Ladies, now use GarageBand to sketch out and polish songs prior to studio recording sessions. Seminal punk rocker Tom Robinson has just remixed the title track off one of his earlier works using nothing but GarageBand.

Like many other developers of disruptive technologies, GarageBand's developers have faced tradeoffs between power and utility. Clearly, GarageBand is not as powerful as professional studio programs such as Apple's own Logic platform or Steinberg Cubase. Apple has responded to this fact by providing software such as Logic Express, which allows GarageBand files to migrate up the ladder to professional studio applications. The GarageBand platform also integrates with other beginner media programs such as iMove, which are packaged within the Apple iLife software suite.

What's ahead
In addition to clearly disrupting the desktop studio production environment with such products as GarageBand, Apple continues to expand toward new media markets. Apple has announced plans to support popular, prerecorded radio shows called podcasts on iTunes. We expect GarageBand to follow with podcast-editing tools. Apple has also received multiple requests to release, through its iTunes service, new music that can be edited using GarageBand. If Apple decides to go this route, we can expect another round of explosive, new-market growth in desktop studio production, no doubt handled with the same savvy attention to marketing, design, and ease of use that the company has recently displayed.

Reproduced with permission from "Has Apple Hit the Right Disruptive Notes?" Strategy and Innovation, Vol. 3, No. 4, July/August 2005.

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John Boddie is a senior associate at Innosight. He can be reached at editorial@strategyandinnovation.com.