October 21, 2011 at 04:00 AM EDT

”Give me a knockout product, and we’ll knock it out of the park.” Looking back, Steve Jobs‘ prescient, if mixed, metaphor — uttered in the first meeting with Apple engineers about what would become the iPod — is one of the great business understatements of all time. Unveiled 10 years ago, on Oct. 23, 2001, the iPod has sold more than 300 million units, and still accounts for nearly 80 percent of the digital audio player market. Since Jobs’ death on Oct. 5, he’s been rightly praised as a visionary. To try to reduce his many culture-shaping achievements to any one device would be folly. Yet surely the iPod stands as the keystone of Apple’s iEmpire. Without the device — which transformed multiple industries and altered the way we consume media — there would be no iTunes Store, no iPhone, and no iPad. (And possibly no Apple either.) But according to those who were instrumental in the iPod’s creation, it was an improbable success.

In 2001, the music industry was in mortal danger. Online music sharing had abruptly gone from being a tech-geek hobby to a mainstream activity. Everyone was pirating music. Adam Curry, ex-MTV VJ and later a creator of podcasting, recalls, ”The MP3 format was a breakthrough…. Then we had the first iterations of always-on broadband, and Napster came into play. It was a perfect storm.”

At Apple, things weren’t much rosier. Following Jobs’ return in 1997, the company had a bona fide hit with the iMac in 1998. But that hadn’t translated into a meaningful increase in market share. ”People still considered the company to be dead in the water,” says Jeremy Horwitz, editor in chief of Apple news source iLounge.com.

That’s when hardware engineer Tony Fadell got a call. After working at Philips and RealNetworks, Fadell had started the company Fuse to create a jukebox-style MP3 player. (At the time, a dozen or so existed, but they were clunky to use or held few songs.) He’d tried to market his idea to several big electronics companies including IBM, but was unable to attract interest. Then Apple contacted him: ”They told me, ‘We want to be able to make an Apple version of an MP3 player — what can you come up with?”’

In March 2001, Fadell and engineer Steve Ng gave a presentation to Jobs and other Apple bigwigs. ”I had made [a model] out of Styrofoam, put fishing weights in it, and had graphic panels on it,” Fadell says. ”Steve [Jobs] picked it up, said ‘Hmmm, feels about right.”’ The team had just seven months to design, build, and test the device in order for it to be out for the holidays.

Following its release in November 2001, the iPod was getting positive if cautious reviews. ”People thought the $400 price was insane,” Horwitz says. ”And it only worked with Macs, so it was a niche product in a niche market.” A few hundred thousand were sold in the first year — a modest success by most standards. But Fadell and others on the iPod team were dreading the anticipated onslaught of copycat competition. Michael Dhuey, an engineer on the first iPod, says, ”Sony had done the Discman and the Walkman, and so [we assumed] a year later they’d come out with their iPod device and we’d drop to 10 percent of the market.”

In July 2002, Apple released a Windows-compatible model. Jobs also announced the launch of the iTunes Music Store in April 2003, which featured 200,000 songs at 99 cents apiece. Within a week, Apple had sold a million songs. By June 2003, it announced it had sold its millionth iPod. Likewise, iTunes sold a staggering 100 million songs in its first 15 months, trouncing the online competition and helping slow the bleeding of the ailing music industry. ”Everybody thought the business was over. Then this thing came along…. You actually felt good about paying for something,” says Glassnote Entertainment Group founder and longtime music-industry vet Daniel Glass. ”People were buying music and loving it.”

From then on, Jobs’ once-insidery product announcements became mainstream fare, with news of the latest models inspiring frenzied speculation: the iPod Photo, Shuffle, Nano, Video — each generation thinner, lighter, and smarter than the last. Fadell, who saw through a stunning 18 generations of iPods in eight years, recalls that even they couldn’t believe that a legit competitor didn’t emerge. ”We would plot it out like generals, considering every angle, which competitor is going to take us out.” And yet a decade later, none has.

That keen awareness of the competition is manifest in the iPod’s offspring. First the iPhone launched in 2007 to incredible fanfare, once again upending an industry (and just this week becoming the best-selling smartphone on the market ever). And then along came the iPad in April 2010: Despite mixed reviews, 15 million were sold by December, and Apple now owns 80 percent of the crowded tablet market.

Apple has since been transformed from a struggling brand into the most valuable public company in the world. Still, with smartphones quickly becoming the default MP3 player and digital music fast moving into the cloud as a streaming service, it’s all but inevitable that the iPod, the little device that changed the world, will eventually be relegated to niche-product status. Just like the critics predicted.

The iPod Decade
From the wheel’s first appearance to the newest iPhone (and every Zune in between!), a handful of the most notable moments

Oct. 23, 2001 The iPod is unveiled, three months after Napster is shut down.

April 28, 2003 The iTunes Music Store launches. Within a week, one million songs are sold.

Sept. 2003 Ad agency TBWA/Chiat/Day debuts the iconic iPod ad campaign.

Oct. 26, 2004 Apple introduces the iPod U2 Special Edition with its distinctive black-and-red color scheme.

Nov. 14, 2006 Microsoft releases the Zune media player, a direct competitor to the iPod.

April 3, 2008 Apple announces that iTunes is now the No. 1 U.S. music retailer. By June, the store will have sold 5 billion songs.

Oct. 3, 2011 Microsoft discontinues the Zune, with many expressing surprise that it still existed.

Oct. 14, 2011 The iPhone 4S debuts to record sales of 4 million, along with a new-generation iPod Touch and Nano.

(Additional reporting by Kyle Anderson)

You May Like