From the January 2006 issue of Entrepreneur

Is Apple Computer's iPod the greatest consumer product of our time? At minimum, it's an undeniable success. Over 20 million units have been sold since its launch in 2001. It has managed to cross social and demographic barriers--with everyone from soccer moms to Wall Street executives sporting white ear buds. The portable audio player has created an entire economy of accessories and imitators, single-handedly grabbing the music industry by the ear and pulling it into tomorrow. The iPod has become the icon of cool, and every entrepreneur should pay attention.

Jeremy Horwitz, editor in chief of iLounge, a leading online iPod authority, says entrepreneurs can take away three critical lessons from the iPod. First, he says, "Timing and execution are everything. Being first in an emerging market is neither as important nor as lucrative as designing the right products and services to cater to second- and third-stage growth."

Michael Gartenberg, analyst at Jupitermedia Corp., says a lot of experts were initially skeptical of the iPod's success because it was late into the market. Horwitz adds, however, that it was the first player to marry substantial storage capacity with great looks, small size and simple controls.

The second lesson, says Horwitz: "A smart company can command a premium for successfully blending off-the-shelf technologies into a new and useful product." Essentially, the iPod is a portable hard drive (in the Shuffle and Nano models, a flash drive) hidden inside a simple and beautiful enclosure, accessed through intuitive menus, buttons and a scroll wheel. "Separately, these parts were forgettable, but together they became unforgettable," says Horwitz.

The third lesson is Apple's approach to pricing. "Instead of creating a good product and knocking down the price until everyone could afford it," says Horwitz, "Apple has sold stripped-down versions at lower price points and hoped demand would follow." This strategy helped create Apple's bestselling music player, the iPod Mini.

While useful, these lessons don't wholly explain the iPod phenomenon. Leading up to the release of the first iPod, audiophiles were cramming their PC hard drives full of music. This enabled listeners to develop long lists of songs, but once they stepped outside, the music stopped playing. Apple recognized the demand for complete portability and offered the first device that would put an entire music library into one's pocket. This concept was much more revolutionary than the Walkman or Discman, which only made new formats portable. The iPod changed the rules. Just how revolutionary was it? Well, if you were to change the engine in your car, you'd still drive it the same way. But if you could make it fly, you'd have a transportation revolution. Making music fly is no easy task, but as Gartenberg proclaims, "Apple is not afraid to be bold."

It's a boldness that even the most daring entrepreneur would hesitate to emulate. Would you dump your bestselling item? That's what Apple did with the Mini, to make room for the Nano. Why drop the Mini? Because the Nano is smaller, offers better functionality (color screen and flash drive), and keeps what works. The same can be said about Apple's latest venture, the video iPod--it's a logical evolution.

What's next? Apple, notoriously tight-lipped, refused to comment; however, Horwitz ventures a guess. He believes consumers can expect a redesign of the full-size iPod, optional Bluetooth add-on and an "iPod sport" model, which he says is long overdue.

Revolution to evolution, the iPod has become more than just great hardware and software. It has invigorated the art of music and empowered the consumer to be curator. If not the greatest product of our time, it's certainly part of the discussion.