A History of the iPod: 2000 to 2004

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More than any other product from Apple, the iPod has changed the company and the world. Before its introduction, MP3 players were the realm of small companies with limited budgets that were unable to provide content. After the iPod, the entire industry evolved and grew to the point where the largest computer companies in the world have major interests in the digital music industry.

Part 1: 2000-2004

Part 2: 2005-present

iPod Innovation

Tony Fadell, former employee of General Magic and Phillips, envisioned a brand new MP3 player. Unlike the bulky flash memory-based MP3 players from Rio and other companies, Fadell wanted to deliver a small, hard drive-based player that was linked with a content delivery system where users could legally obtain and download music.

The first company he pitched it to was RealNetworks in 2000, where the CEO, Rob Glaser, was already in control of a large content delivery system through Real’s premium radio and television channels. Real could not rationalize going through the trouble of releasing an accessory to their already profitable system, and Real would be caught off guard when the iTunes Music Store opened.

Fadell also approached Phillips, which also rebuffed him.

Fadell Comes to Apple

Out of desperation, Fadell turned to Apple, which years before had sworn off consumer electronics after their unsuccessful Pippin and Newton. The executives at Apple were very enthusiastic about implementing Fadell’s plan at Apple – unbeknownst to Fadell, Apple had bought the rights to SoundJam MP months before. He was hired in early 2001 and was given a development team of around 30 people and a deadline of one year to release a successful product.

PortalPlayer

PortalPlayer

Fadell was not confident that Apple would fund (or even complete) the development of custom hardware and software for the player, so he shopped around for an existing player to use as the basis of the Apple player. After briefly looking at Rio and Creative, the team found PortalPlayer, a new company that had not yet released a full product.

PortalPlayer was assisting other companies to develop MP3 players based on common software. Before Apple approached them, their most promising customer was IBM, which was working on a black, flash memory-based player with a Bluetooth headphone system. The executives at PortalPlayer did not like the chances of IBM releasing a consumer MP3 player, so they jumped at Apple’s offer to design their player’s software exclusively.

Several of the prototypes that PortalPlayer had been working on were delivered to Fadell’s group at Apple, and it became clear that the two  had lots of work to do. For example, the players did not support playlists larger than ten songs, did not have equalizers, and had Byzantine interfaces.

Perhaps worst of all, the player’s batteries lasted for less than three hours. According to the liaison between Apple and PortalPlayer, Ben Knauss, “Most of the time building the iPod was spent finishing [PortalPlayer's] product.”

Steve Jobs took a very active role in the project, scheduling frequent meetings with the directors from Fadell’s group and PortalPlayer. During these meetings he would tell them in detail what issues he had with the device, whether it was the interface, sound quality, or the size of the scroll wheel.

This was rare for an Apple project at the time, and it reassured the leaders in the group that the project would not be axed immediately.

In the span of eight months, Fadell’s team and PortalPlayer dedicated all of their energies to finishing the iPod. In three months, Apple had created a preliminary version of the user interface and scroll wheel that would ship with the finished iPod.

original iPod

Apple never allowed anyone outside of the development team in Fadell’s group and select PortalPlayer employees to see a complete iPod. Whenever a device was being tested, it was encased in a shoebox-sized enclosure with the controls on different faces to keep outsiders from knowing the size and layout of the device.

The First iPod

The finished iPods used a 5 GB Toshiba hard drive that was the size of a quarter, ARM processors (the same processors used in the Newton and Acorn), an operating system from Pixo, a large high resolution display, a lithium polymer battery, and the most recognizable aesthetic feature of the device, the scroll wheel.

Unlike most other players, the iPod did not use controls that were better suited to the Sony Walkman in 1979 than a MP3 player with a capacity of thousands of songs. Instead of using skip buttons, users could spin a wheel on the front of the device to scroll through a list of songs to find the song they wanted to play. The same wheel was also used to control the menus of the system. As a result, it was much easier to navigate through the iPod’s playlist than the comparable Nomad or Compaq MP3 players.

Say hello to iPod

In early October, Apple began hyping the iPod’s release (which was still a secret from the press after eight months of development). The hype culminated in an announcement that Apple would make a major announcement on 2001.10.23, and that it was “not Mac”.

Rumors immediately flared up about a revitalized Newton or PVR, but no major site predicted that Apple would release an MP3 player.

The iPod was announced to the world from a rented auditorium near Apple’s corporate campus in Cupertino. The audience – and the rest of the computer industry – was shocked by the product. No one grasped the importance of the device to Apple and the music industry in general until much later. Many reacted to the product with hostility, with criticisms that ranged from its US$399 price to the scroll wheel and its lack of Windows compatibility.

A month later, the iPod was released in Europe to an enthusiastic reception. As more units sold, an entire ecosystem began to form around the device as new accessories and software products were released.

A 10 GB version of the 1G (1st generation) iPod was introduced later.

Going Windows

The most popular iPod accessory was a utility that allowed users to sync an iPod’s playlists with a Windows PC. Apple took note and made the July 2002 version of the iPod – now with as much as 20 GB of storage space – compatible with Windows PC through MusicMatch. Apple also included PIM software on the iPod.

The original spinning scroll wheel was replaced by a solid state scroll wheel similar to a notebook’s touchpad. It continued to be surrounded by a ring of buttons, just like the 1G iPod.

Madonna signature iPod

To the surprise of many, Apple started engraving iPods with text and even graphics. Several bands and companies licensed their logos to Apple, which engraved them on the back of the device. These new “special” iPods were available in time for the 2002 Christmas shopping season.

The 3rd Generation & the iTunes Music Store

3G iPod

Another hardware revision came in April 2003, bringing the iPod into its third generation. In a packed hall, Steve Jobs announced the new revision, which had no mechanical buttons. The function buttons were moved to just below the screen and were solid state, like the scroll wheel.

The new version also sported a new dock connector that supported both FireWire and USB 2.0, making it easier for PC users to connect to their iPods, since few Windows PC had built-in FireWire ports. Capacities ranged from 10 GB up to 40 GB.

With the 3G iPod, Apple moved from the lithium polymer batteries found in 1G and 2G iPods to lithium-ion batteries, which would power all future iPods.

The most important update to the iPod was not actually a hardware or software feature. It was the fulfillment of Tony Fadell’s goal of creating an entire business around the iPod.

The iTunes Music Store (iTMS) was announced in the summer of 2003 and opened days later. Now, the iPod had a fully legal supply of content, making it easier for Apple to rationalize cutting the price of the iPod now that it had another revenues stream.

This also marked the beginning of the end of Apple’s relationship with MusicMatch, which also launched its own music store. Tracks purchased from MusicMatch could not be played on an iPod. To the disappointment of many PC users, iTMS required iTunes, which was only available for Mac OS X until June of 2003. Then Apple released iTunes for the PC, allowing Windows users to access the iTMS. Along with the iTMS, Apple also bumped up the capacity of the iPod, without changing the design.

All was not well for Apple and the iPod, though. Many of the Sony batteries used in the original iPod were beginning to fail by autumn of 2003. A class action suit was brought against the company, and Apple eventually agreed to replace the iPod’s battery, even if it was out of warranty (though those customers had to pay a $99 fee).

Smaller: iPod mini

iPod mini

Rumors of a new version of the iPod flew as Toshiba announced that it had created a hard drive about half the size of the one used in the iPod. It was rumored that such an iPod would cost a little over $70 to make, making it possible to compete with high-end flash players that still dominated the market. During the January 2004 Macworld Expo keynote address, Jobs announced several revisions to the iPod line, all of them price breaks. During the last 15 minutes, he announced that there would be a new member of the iPod family, the iPod mini.

The mini was based on a Hitachi drive the same size as the new Toshiba drive, and it had a capacity of 4 GB. In homage to the iMac, the mini was available in five different colors: blue, green, pink, silver, and gold. Because of its size, the controls of the iPod had to be rearranged to fit on the mini. The function buttons were moved to the scroll wheel. The mini also had a smaller screen. At $249, the mini cost much less than many flash-based players available at the time, and it had a much higher capacity.

Also at the Expo, Apple released a retouched 1984 ad that featured the runner wearing the signature white earbuds of the iPod.

A second generation iPod mini was introduced in February 2005 with a new chipset, much longer battery life (18 hours vs. 8 hours), and a 6 GB version was added. The unpopular gold finish was discontinued.

The 4th Generation iPod

HP, which had sold several flash-based MP3 players under the Compaq brand in the late 1990s, wanted in on the iPod game. The behemoth (then the largest PC manufacturer in the world) did not want to invest in creating its own player or adopt Microsoft’s struggling format (later named Plays4Sure) and reached an agreement with Apple to remarket the iPod under the HP brand and include iTunes on all consumer computers HP sold.

The agreement came to fruition in 2004 with the HP+iPod line. The HP branding got the iPod into many retailers that did not sell Apple products, such as Walmart.

The iPod was a huge hit. Apple had sold millions of devices and was raking in money (although barely making a profit from iTMS). BMW outfitted all of its vehicles with an iPod interface that allows BMW owners to play their music over the BMW’s sound system and control their iPod via steering wheel controls.

In mid-2004, Newsweek featured the iPod and Steve Jobs on the front cover. The article contained a short story on the history of the iPod and Apple’s announcement of the fourth generation iPod, which was slightly smaller than the third generation iPod and had the same clickwheel introduced with the iPod mini. The new version also meant a price drop across the board for all iPods (except the mini). The HP+iPod was also released in July 2004.

RealPlayer with Harmony Technology

Days later, RealNetwork’s Rob Glaser announced that his company had reverse engineered Apple’s FairPlay copy protection scheme and made Real’s Rhapsody music service compatible with the iPod. The new software was called Harmony, and Real made it available for immediate download. Glaser complained that he had requested that Apple make the FairPlay specification available to other companies, but was refused, so he had no other choice.

Apple reacted swiftly, issuing a software patch that prevented iPods from using Rhapsody songs and then threatening Real with legal action. Real backed down, but many in the industry were surprised by Apple’s “bully” approach.

iPod photo

In September 2004, two rumors emerged from Cupertino. The first revolved around Apple stockpiling small, color LCD panels. The entire industry speculated that Apple would release a PDA or video iPod. The second was based on quantity flash memory purchases Apple made in large capacities (the hard drive-based iPod used only 32 MB of flash memory). Both rumors proved somewhat correct – Apple released the color iPod photo in October, and the iPod shuffle followed in January 2005.

The iPod photo was identical to an ordinary iPod, but it had a larger battery and more hard drive capacity in addition to a color display. The device did not play movies, but users could browse photo albums. It also showed album covers for songs while they played.

During 2005, the iPod photo name was dropped as all full-sized iPods gained color screens. These were the last iPods to support FireWire.

iPod U2 Special Edition

U2 iPodAt the same date of the iPod photo launch, Apple released the iPod U2 Special Edition, a black & white iPod with a red clickwheel in a black case with the signatures of the band on the back. To mark the release of the new iPod, U2 did their first product endorsement, though the band was quick to point out that they received no money from the commercial.

Apple continued to offer U2 Special Edition iPods from the black & white iPod era through the color iPod generation and into the video iPod period.

Continued in Part 2: 2005-present

This article was first published 2005.10.14 and since revised.

Further Reading

Bibliography

Some of the sources used in writing this article:

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