THE IPOD ECONOMY
Beth Snyder Bulik
October 18, 2004
It's the white, white world of the iPod economy, an exploding universe in which marketerssuch as Hewlett-Packard, Kate Spade, Bose and BMW are tapping into Apple's portablemusic player to boost their own sales and brand equity.
Apple last week wowed investors by announcing a 44% year-on-year increase inprofit to $106 million on revenue of $2.35 billion, up an impressive 37%. A 344%increase in sales of iPods, and a 600% increase in sales from Apple's iTunes musicprogram, fueled the results.But the iPod itself is just the beating heart of a growing body of marketing centeredon the device.Not only is there an array of over 1,000 peripheral devices-from carrying cases tocables-devised to add to the MP3 player's functionality, but big marketers with their own histories of ingenuity are lining up to ally themselves with the product, baskingin the iPod's marketing glow.Not that Apple, which has encouraged most of the associations, is complaining."Apple has spawned something very powerful. The iPod is not just a consumer-electronics device, it's a cultural icon," said Michael Gartenberg, director of research at Jupiter Research. "And Apple understands that. By making strongassociations with other very strong brands, it establishes the iPod as a platform,ultimately using that as a way to get the iPod experience into consumers' hands."free skins Apple partners include Bose, which recently plastered Grand Central Terminal inNew York with ads for its iPod SoundDock. It followed the lead of HP, whichlaunched a multimillion-dollar ad campaign for its Apple iPod from HP in August-adsthat owed much in style to Apple's own feted iPod commercials. HP followed up lastweek with the release of HP downloadable tattoos for both the Apple and HP iPodspromoted in a Rolling Stone giveaway of 1 million Universal Music Group artistsskins.HP also distributes the iTunes software as part of its deal, including an iTunesdesktop icon on every new HP computer. HP accounted for 6% of all iPod sales inthe third quarter.That push followed BMW of North America's big summer play to get car buyers to"iPod your BMW." BMW VP-Marketing Jim McDowell said he came up with the ideawhen his iPod kept slipping off the seat in his new 7-series BMW. Apple iPod owners index high with BMW owners, said Mr. McDowell. He alsopointed out that both are a "third space" for consumers. The automaker's researchshows that BMW drivers often consider the time spent in the car as the best in their