iPod in Japan: Can Apple sustain Japan's iPod craze? (Case #19, Notes)
Overview
What started as a high school buddy entrepreneurship company and blossomed into a globally recognized brand, Apple revolutionized home computing in the 1970s. After a decade of success with the Apple IIe, Apple saw its PC market share shrink from 20% in the 1980s to a mere 5% by 1999 as IBM-compatibles and Microsoft flooded the market. After the initial rebound of iMac in 1999, Apple experienced stagnant sales and by 2002, industry experts were again wondering whether Apple could get back on its feet again.
Once again dumbfounding critics, Apple has completely reversed its fate and revived its global brand equity with the introduction and smashing success of its iPod family of products, namely iPod and iPod mini. In the process, Apple has taken the music electronics industry by surprise by creating a stylish standard in music players that speaks to the savvy music consumer who desires to make a fashion statement while digitally organizing her tunes.
In Japan, iPod has enjoyed record sales and its "halo effect" has even boosted revenues on other Apple products, such as iMacs and iBooks. With its small, cute shape and trendy colors, the iPod mini rocked the portable music player scene with an average of 5,000 visitors to Apple's Tokyo Ginza store each day. Apple's brand equity in Japan has skyrocketed, as iPod has become a high-end fashion statement able to hold its own with the likes of Prada, Coach, and Louis Vuitton. More importantly, iPod has become the product that defines digital music player.
Although iPod and iPod mini are dominating Japan's music player market, it remains to be seen whether this "little white hope" can sustain its popularity and continue to produce a significant "halo effect" in Japan. While iPod has become the standard for digital music players in Japan, it could prove to be just another fleeting, consumer fad. Particularly troubling is the uncertainty of iTunes in Japan as well as the foreboding possibility of high-tech, music-enhanced cell phones that could render the iPod obsolete in Japan, one of the most saturated cell phone markets in the world.
One of the main reasons Apple has been successful in Japan is its ability to constantly evaluate its products from the Japanese consumer point-of-view and continuously launch new and improved versions of its products while keeping a half step ahead of the trend as well as its competition. Clearly, Apple must continue to do just this in order to prolong its iPod honeymoon in Japan. Ultimately, whether or not iPod can sustain its success in Japan and keep Japan as a major profit center for Apple is as unpredictable as the iPod craze itself.

Discussion Questions
1. How has iPod's marketing strategy played a key role in its success in Japan?
2. Is iPod's distribution channel strategy effective?
3. What challenges will the integrated cell phone/mp3 player present for iPod?