My Clipping

Monday, Sep. 12, 2005
Stevie's Little Wonder
Honey, he shrunk the iPod. How Jobs and his team of Apple innovators created this season's must-have gadget
By LEV GROSSMAN/SAN FRANCISCO

Kanye West is doing his level best to rock the house, but it's not an easy house to rock. He's onstage at the Moscone Convention Center in San Francisco, it's 11 in the morning, and his audience is largely white and overwhelmingly nerdy. West rips through All Falls Down and Gold Digger, but he barely gets a head bob out of those people. When he raps, "If you aint no punk, holla 'We want prenup!,'" not a single, solitary soul hollas back.

West is there to add some razzle to a press event held by Apple Computer. Minutes earlier, Apple CEO Steve Jobs unveiled the iPod Nano, the absurdly tiny, unbearably sexy successor to the iPod Mini. To be fair to West, it's a tough act to follow.

It's amazing that the Nano even made it to the stage. The story of the Nano started nine months ago, when Jobs and his team took a look at the iPod Mini and decided they could make it better. On the face of it, that wouldn't appear to be a fantastically smart decision. The iPod Mini was and still is the best-selling MP3 player in the world, and Apple had introduced it only 11 months earlier. Jobs was proposing to fix something that decidedly was not broken. "Not very many companies are bold enough to shoot their best-selling product at the peak of its popularity," Gartner analyst Van Baker says. "That's what Apple just did." And it did that while staring right down the barrels of the holiday retail season.

It was a gutsy play, and it came from the gut: unlike almost any other high-tech company, Apple refuses to run its decisions by focus groups. But Jobs is a hardened gambler, and he doesn't scare easily. This is the guy who coolly poured millions of his own dollars into an unknown and direly unprofitable company called Pixar before anybody had even made a full-length computer-animated movie. "The more we started to talk about what this could be," Jobs says, "it wasn't long before I said, 'You know, what if we just bet our future on this? Is that possible?' And everybody immediately looked pretty scared. Including me."

People expect consumer electronics to keep getting smaller, as though it were a natural process like grass growing, but it doesn't happen by itself. The Nano may seem superficially iPod-esque on the outside, but on the inside it has been completely, painstakingly, exhaustively re-engineered. Older iPods (except for the low-capacity iPod Shuffle) have miniature hard drives in them, but the Nano is built around a chunk of solid-state Flash memory. The screen is all new too. Because it's smaller, the Nano's screen has to be sharper to be readable. (It ended up being so sharp, it shows one line of text more than the Mini's screen does. In color too.)

And that's just the obvious stuff. The click wheel on the front had to be reinvented to fit the Nano's ridiculously slim 6.9-mm profile. Ditto the battery and chips. "We use every fraction of a millimeter of space to get things in there," says Apple senior vice president Phil Schiller. "It's like a puzzle to fit all that stuff together. It has the tightest tolerances of anything we've ever made in the history of this company."

Add to that the nightmare of manufacturing a delicate little Fabergé egg like the Nano in the quantities that rapacious appetites will demand this fall, and you get a sense of the degree of difficulty. "It's been an enormous bet," says Jobs, never one to minimize the grandeur of his accomplishments. "This is probably one of the most aggressive volume ramps in the history of consumer electronics."

The result is something that looks less like a music player than like the remote control for a music player. The Nano is thinner than a pencil and lighter than two bucks in quarters. It's one-fifth the size of the original iPod that Apple introduced four years ago. It has 4 GB of memory, enough to hold 1,000 songs, and it displays album art and photographs. And as small as it is, the Nano's got some audio oomph: this mouse can roar.

For a device ostensibly created to be listened to, it is suspiciously good-looking. It's so teensy and glossy and perfect, you want to put it in your mouth like a hard candy. For that, blame Jonathan Ive, 38, the affable Brit who heads Apple's industrial-design department. Ive is about as obsessive-compulsive as you can be without being hospitalized, and his wild enthusiasm for detail is what gives iPods the aura of sleek, otherworldly perfection that has helped make them the quintessential 21st century accessory.

Ive fondles a tiny Nano affectionately, pointing out all the things that nobody will ever notice but that he sacrificed months of his life for--things like the laser etching of the logo on the back or the surface's being slightly rougher on the click wheel than on the rest of the front. "I know you're not going to consciously find these details particularly appealing," he concedes, "but I think it's the fact that we've worried about all of them that makes the product so precious." He begs me to admire the tightness of the reveals--that's industrial-design-speak for the gap where two parts meet--and the finish on the tiny aluminum bottom plate where you plug in the headphones. When I ask him what the finish is--hey, just being polite--he politely declines to tell me. If there's one thing Apple is even more obsessive about than design, it's trade secrets.

"There used to be a saying about Apple," Jobs says, relaxing after the show. "A ship that leaks from the top." That's no longer the case--only a small group at Apple even knew about the Nano before it launched--but if it were, Jobs would surely have some interesting trade secrets to be leaked. The iPod has returned Apple to a role it hasn't played in at least 20 years: the favorite. Only 4.5% of U.S. computer users work on PCs running Apple's operating system software, and the number is even lower worldwide, but Apple has a commanding 74% of the U.S. digital-music-player market--and that's a market likely to grow. A new survey of junior high, high school and college students rates the iPod No. 1 among back-to-school gadgets.

Apple's stock price has almost quintupled over the past two years, revenues have doubled during that time, and Jobs is sitting on a war chest of $8 billion. He has a company with an almost freakishly diverse skill set--computer hardware, operating systems, applications, consumer electronics, Internet services. Will Jobs try to leverage Apple's dominance in the digital-music space to get its PC line back in the running? Or is the iPod the first in a full suite of Apple-flavored, network-enabled media appliances--TV, digital camera, camcorder, digital video recorder, video-game player?

After all, when Jobs unveiled the Nano in San Francisco, it shared the stage with the ROKR, a phone that runs Apple's iTunes software and can hold around 100 songs. "We're working on some stuff," Jobs says, with his best, most irritating Cheshire-cat smile. "We're working on some stuff. We'll see." He looks at his watch--his lunch date, cello virtuoso Yo-Yo Ma, is waiting outside.

For the moment, it's clear Jobs is just happy to be here. To paraphrase Lou Reed, his company was saved by rock 'n' roll. "What's really been great for us is the iPod has been a chance to apply Apple's incredibly innovative engineering in an area where we don't have a 5%-operating-system-market-share glass ceiling," Jobs says. "And look at what's happened. That same innovation, that same engineering, that same talent applied where we don't run up against the fact that Microsoft got this monopoly, and boom! We have 75% market share." That music you hear? Redemption song. --With reporting by Sora Song