Tony Fadell, former employee of General Magic and Phillips, envisioned a brand new MP3 player. Unlike the flash memory-based MP3 players from existing 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), who were 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. Fadell then turned to Apple. 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 thirty people and a deadline of one year to release a successful product.
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...