Would You Cannibalise the iPod?

It is late 2005. You are a Senior VP of Product at Apple, reporting directly to Steve Jobs.

The iPod is a monster. It accounts for 45% of Apple's total revenue and 50% of its profit. You are essentially a hardware company that sells music players. But Steve is terrified. He sees a trend: cell phone makers (Nokia, Motorola, Sony Ericsson) are starting to put MP3 players inside their phones.

Steve's logic is brutal: "The device that is always with you is the device that wins. If a phone can play music, no one will carry an iPod. We have to build a phone, or we are dead."

But Apple has never built a phone. You don't have the radio technology, you don't have the relationship with carriers (Cingular, Verizon), and most importantly—building a phone will almost certainly kill the iPod business. You are being asked to destroy your most successful product to save the future of the company.

This is a Tier 1 League Match. The decisions are binary and the consequences are terminal.

The principle: If you don't cannibalize yourself, someone else will.