The success of the iPod is a result of information being passed through a network and some point, around the 3rd generation iPod the tipping point occurred and the iPod fad spread like wild fire. Other products with similar features and functionality are finding it difficult to compete with the Apple and the iPod. Today, an enormous range of iPod accessories and iPod compatibility products can be seen across markets beyond audio and media, integrating music into more and more aspects of life. The iPod and Nike collaboration of the iPod nano along with an exercise monitor is a great example. The continued success of the iPod can be in part attributed to the variety of add-ons that are available for the iPod and not other music players, like the iPod and Nike creation.

http://www.cnn.com/2007/TECH/ptech/03/27/apple.tv/index.html

This article discusses the Apple TV, Apple’s newest iPod gadget that allows the user to play whatever is available on his/her iPod on the TV. As a result of the success of the iPod, many other companies make products that are compatible to iPods, which increases the positive externalities when one purchases an iPod.

The iPod exemplifies the effects of direct payoff interdependencies in a network. One of the great selling factors of the iPod is the wide variety of services, compatibility and choice of accessories. When someone purchases an iPod, he or she is not only getting a media player, but also access to iTunes (music, movies, TV shows), perhaps a device that will compliment the iPod connector and holder in their car, something to store an address book and planner and compatibility to new devices that Apple or other companies will come up with. The first person to purchase the iPod did not benefit from these externalities. These externalities arose of a result of the widespread of the iPod. Apple and other companies realized that a profit could be made by selling accessories to the iPod. In turn, these externalities attract more users to buy the iPod. In comparison to the first person who purchased the iPod, a person purchasing their iPod today would have much more to gain from it. This shows the direct payoff interdependency in a network because when one person buys an iPod he or she positively affects other individuals.