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iPod came from Apple's "digital hub" category,[5] when the company began creating software for the growing market of personal digital devices. Digital cameras, camcorders and organizers had well-established mainstream markets, but the company found existing digital music players "big and clunky or small and useless" with user interfaces that were "unbelievably awful,"[5] so Apple decided to develop its own. As ordered by CEO Steve Jobs, Apple's hardware engineering chief Jon Rubinstein assembled a team of engineers to design the iPod line, including hardware engineers Tony Fadell and Michael Dhuey,[6] and design engineer Jonathan Ive.[5] The product was developed in less than one year and unveiled on 23 October 2001. Jobs announced it as a Mac-compatible product with a 5 GB hard drive that put "1,000 songs in your pocket."

Uncharacteristically, Apple did not develop the iPod software entirely in-house, instead using PortalPlayer's reference platform based on 2 ARM cores. The platform had rudimentary software running on a commercial microkernel embedded operating system. PortalPlayer had previously been working on an IBM-branded MP3 player with Bluetooth headphones.[5] Apple contracted another company, Pixo, to help design and implement the user interface under the direct supervision of Steve Jobs.[5] As development progressed, Apple continued to refine the software's look and feel. Starting with the iPod Mini, the Chicago font was replaced with Espy Sans. Later iPods switched fonts again to Podium Sans - a font similar to Apple's corporate font, Myriad. iPods with color displays then adopted some Mac OS X themes like Aqua progress bars, and brushed metal in the lock interface. In 2007, Apple modified the iPod interface again with the introduction of the sixth-generation iPod Classic and third-generation iPod Nano by changing the font to Helvetica and, in most cases, splitting the screen in half by displaying the menus on the left and album artwork, photos, or videos on the right (whichever was appropriate for the selected item).

The name iPod was proposed by Vinnie Chieco, a freelance copywriter, who (with others) was called by Apple to figure out how to introduce the new player to the public. After Chieco saw a prototype, he thought of the movie 2001: A Space Odyssey and the phrase "Open the pod bay door, Hal!", which refers to the white EVA Pods of the Discovery One spaceship.[5] Apple researched the trademark and found that it was already in use. Joseph N. Grasso of New Jersey had originally listed an "iPod" trademark with the U.S. Patent and Trademark Office in July 2000 for Internet kiosks. The first iPod kiosks had been demonstrated to the public in New Jersey in March 1998, and commercial use began in January 2000, but had apparently been discontinued by 2001. The trademark was registered by the USPTO in November 2003, and Grasso assigned it to Apple Computer, Inc. in 2005.[7]

The iPod line can play several audio file formats including MP3, AAC/M4A, Protected AAC, AIFF, WAV, Audible audiobook, and Apple Lossless. The iPod Photo introduced the ability to display JPEG, BMP, GIF, TIFF, and PNG image file formats. Fifth and sixth generation iPod Classics, as well as third generation iPod Nanos, can additionally play MPEG-4 (H.264/MPEG-4 AVC) and QuickTime video formats, with restrictions on video dimensions, encoding techniques and data-rates.[8] Originally, iPod software only worked with Mac OS; iPod software for Microsoft Windows was launched with the second generation model.[9] Unlike most other media players, Apple does not support Microsoft's WMA audio format - but a converter for WMA files without Digital Rights Management (DRM) is provided with the Windows version of iTunes. MIDI files also cannot be played, but can be converted to audio files using the "Advanced" menu in iTunes. Alternative open-source audio formats, such as Ogg Vorbis and FLAC, are not supported without installing custom firmware onto an iPod (e.g. Rockbox).

During installation, an iPod is associated with one host computer. Each time an iPod connects to its host computer, iTunes can synchronize entire music libraries or music playlists either automatically or manually. Song ratings can be set on an iPod and synchronized later to the iTunes library, and vice versa. A user can access, play, and add music on a second computer if an iPod is set to manual and not automatic sync, but anything added or edited will be reversed upon connecting and syncing with the main computer and its library. If a user wishes to automatically sync music with another computer, an iPod's library will be entirely wiped and replaced with the other computer's library.

iPods with color displays use anti-aliased graphics and text, with sliding animations. All iPods (except shuffle and touch) have five buttons and the later generations have the buttons integrated into the click wheel - an innovation that gives an uncluttered, minimalist interface. The buttons perform basic functions such as play, next track, etc. Other operations such as scrolling through menu items and controlling the volume are performed by using the click wheel in a rotational manner. The iPod Shuffle does not have a click wheel and instead has five buttons positioned differently from the larger models. The iPod Touch uses no buttons for any of these functions, instead relying on a multi-touch input style similar to that of the iPhone.

The iTunes Store is an online media store run by Apple and accessed via iTunes. It was introduced on 29 April 2003 and it sells individual songs, with typical prices being US $0.99, AU $1.69 (inc. GST), NZ $1.79 (inc. GST), %u20AC0.99 (inc. VAT), or £0.79 (inc. VAT) per song. Since no other portable player supports the DRM used, only iPods can play protected content from the iTunes Store. The store became the market leader soon after its launch[10] and Apple announced the sale of videos through the store on 12 October 2005. Full-length movies became available on 12 September 2006.[11]

Purchased audio files use the AAC format with added encryption. The encryption is based on the FairPlay DRM system. Up to five authorized computers and an unlimited number of iPods can play the files. Burning the files onto an audio CD, then re-compressing can create music files without the DRM, although this results in reduced quality. The DRM can also be removed using third-party software. However, in a deal with Apple, EMI began selling DRM-free, higher-quality songs on the iTunes Stores, in a category called "iTunes Plus." While individual songs were made available at a cost of US$1.29, 30¢ more than the cost of a regular DRM song, entire albums were available for the same price, US$9.99, as DRM encoded albums. On 17 October 2007, Apple lowered the cost of individual iTunes Plus songs to US$0.99 per song, the same as DRM encoded tracks.

iPods cannot play music files from competing music stores that use rival-DRM technologies like Microsoft's protected WMA or RealNetworks' Helix DRM. Example stores include Napster and MSN Music. RealNetworks claims that Apple is creating problems for itself[12] by using FairPlay to lock users into using the iTunes Store. Steve Jobs has stated that Apple makes little profit from song sales, although Apple uses the store to promote iPod sales.[13] However, iPods can also play music files from online stores that do not use DRM, such as eMusic or Amie Street.

Universal Music Group decided not to renew their contract with the iTunes Music Store on 3 July 2007. Universal will now supply iTunes in an 'at will' capacity.[14]

Apple debuted the iTunes Wi-Fi Music Store on 5 September 2007, in its Media Event entitled "The Beat Goes On..." This service allows users to access the Music Store from either an iPhone or an iPod Touch and download songs directly to the device that can be synced to the user's iTunes Library.

If the sound is enhanced with the iPods software's equalizer (EQ), some EQ settings - like R&B, Rock, Acoustic, and Bass Booster - can cause bass distortion too easily.[17][18] The equalizer amplifies the digital audio level beyond the software's limit, causing distortion (clipping) on songs that have a bass drum or use a bassy instrument, even when the amplifier level is low.[citation needed] One possible workaround is to reduce the volume level of the songs by modifying the audio files.

Originally, a FireWire connection to the host computer was used to update songs or recharge the battery. The battery could also be charged with a power adapter that was included with the first four generations. The third generation began including a dock connector, allowing for FireWire or USB connectivity. This provided better compatibility with PCs, as most of them did not have FireWire ports at the time. The dock connector also brought opportunities to exchange data, sound and power with an iPod, which ultimately created a large market of accessories, manufactured by third parties such as Belkin and Griffin. The second generation iPod Shuffle uses a single 3.5 mm jack which acts as both a headphone jack and a data port for the dock.

Eventually Apple began shipping iPods with USB cables instead of FireWire, although the latter was available separately. As of the first generation iPod Nano and the fifth generation iPod Classic, Apple discontinued using FireWire for data transfer and made a full transition to USB 2.0 in an attempt to reduce cost and form factor. With these changes, FireWire could only be used for recharging.

All iPods except for the iPod Touch can function in "disk mode" as mass storage devices to store data files[15]. If an iPod is formatted on a Mac OS X computer it uses the HFS+ file system format, which allows it to serve as a boot disk for a Mac computer.[16] If it is formatted on Windows, the FAT32 format is used. With the advent of the Windows-compatible iPod, the default file system used on the iPod line switched from HFS+ to FAT32, although it can be reformatted to either filesystem (excluding the iPod shuffle which is strictly FAT32). Generally, if a new iPod (excluding the iPod Shuffle) is initially plugged into a computer running Windows, it will be formatted with FAT32, and if initially plugged into a Mac running Mac OS X it will be formatted with HFS+.

Unlike many other MP3 players, simply copying audio or video files to the drive with a typical file management application will not allow an iPod to properly access them. The user must use software that has been specifically designed to transfer media files to iPods, so that the files are playable and viewable. Aside from iTunes, several alternative third-party applications are available on a number of different platforms.

iTunes 7 and above can transfer purchased media of the iTunes Store from an iPod to a computer, provided that the DRM media is transferred to any of the five computers allowed for authorization with DRM media.

Media files are stored on an iPod in a hidden folder, together with a proprietary database file. The hidden content can be accessed on the host operating system by enabling hidden files to be shown. The audio can then be recovered manually by dragging the files or folders onto the iTunes Library or by using third-party software.

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