I think the value proposition of Apple's iPod and iTunes is to provide an integrated entertainment experience of music, video, books, and apps to mass market. Unlike other products targeting a narrow market, iPod and iTunes have a very broad target market, a global market no matter where you are or how old you are.
I strongly think that one of the most significant factor of success is Apple's relationship with its customers. As we have seen, Apple has a wonderful after-sale service and advertising always impresses us much. Those purchasing Apple's products have a strong brand loyalty because hardware design and mareketing are quite distinctive so that switching cost should be very high. I believe that Apple is implementing a differentiation competitive strategy since price and cost are not advantages of Apple. Sales channels are very wide from apple stores, apple.com to retail stores but price is completely uniform. I think this kind of pricing helps to reduce inbound competition.
Key partners are music & video producers, publishers, application developers, and hareware OEMs. Apple also keeps a good relationship with them and establishs a win-win situation. Revenues come from large hardware revenues and downloading revenues from Apple store. Employees salaries, manufacturing costs, and marketing & sales compose of Apple's cost structure.
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