In 2001, the company rolled out the iPod and kick-started the market for digital music players. In the end, this turned out to be a natural fit for Apple, despite limited success with earlier consumer electronics. Remember the QuickTake digital camera and the Newton MessagePad PDA? Both were excellent products, but perhaps came to market before their time. On a dollar basis, the iPod now has more than an 80% share of the digital music player market.
Then came the iTunes Music Store. Like the iPod, Apple was not first to develop an online music store, but the company once again kick-started the market, rolling out an easy pay-per-song system with a single price across the board -- a dollar menu for music fans. There was some early doubt -- many observers, including myself, wondered if users would pay for music when LimeWire, Kazaa , and other tools enabled users to easily take the songs they wanted for nothing. However, Apple leveraged its existing iPod dominance and created the only truly successful online music store. Users who wanted everything to "just work" -- a Steve Jobs mantra -- found their lives made easier by the iPod/iTunes Store combo.
As high-quality, full-length digital video became an online possibility thanks to near-universal high-speed internet access, Apple rolled out per-episode pricing for day-and-date plus-one television shows, movie purchases, and, most recently, digital movie rentals. Video hasn't achieved the same sales rates as songs for Apple, mostly because of alternate online services such as Hulu, on-demand services through traditional cable providers and digital video recorders like TiVo. In addition, there hasn't been a killer product for digital video like the iPod was for music -- though the Apple TV and iPod Touch/iPhone are slowly getting there.
Most recently, Apple got into the mobile phone market with the iPhone. The iPhone has been a tremendous success, with Apple selling more than 5 million of the original iPhone and probably millions more of the iPhone 3G.
A constant criticism of Apple, dating back to the hugely profitable 80's and early 90's, has been the perceived or real price premium the company puts on its products. Apple has briefly had sub-US$1,000 computers in the past, and still offers the Mac Mini desktop for $600, but the company has never aggressively competed on price for full-sized desktops and laptops. Instead, users have paid an up-front premium for a better user experience and better design.