Accessories at the core of Apple's plans for the iPod
Posted by: Roy T on 31 January 2005
A short note from the FT covering Apple's plans for the future.
What next?
Accessories at the core of Apple's plans for the iPod
By Scott Morrison
Published: January 31 2005 02:00 | Last updated: January 31 2005 02:00
With its popular iPod chalking up sales of $2.2bn (£1.2bn) last year, Apple Computer is setting out to cement its dominance of the market by inviting third-party innovators to develop an "ecosystem" of accessories for the digital music player.
These other groups make the accessories that cool-conscious iPod buyers cannot seem to get enough of. Whether they are carrying cases, adaptors, microphones or software, these accessories give consumers the edge as they take their iPods on the road, into classrooms and even to Bible study.
Since Apple launched the iPod in 2001, doubters have said it was only a matter of time before Microsoft and its hardware partners developed a cheaper industry-standard music player that would relegate Apple to the fringes of the market.
Few forget how Apple's refusal to license its technology contributed to its demise in the personal computer market and critics say the company appears determined to make the same mistake again.
But more than three years on, the iPod's popularity continues to grow and, while Apple refuses to license iPod technology, it is encouraging other groups to develop hundreds of accessories that can provide the iPod with a crucial advantage over rival music players.
Annabelle Gawer and Michael Cusumano argue in their book Platform Leadership that any technology company trying to establish its product as an industry standard can greatly benefit if third parties build products that complement the core product.
"The more people who use these complements, the more incentives there are for complementary producers to introduce more complementary products, which then stimulate more people to buy or use the core product," they say.
These forces are at work around the iPod, although it is difficult to measure the size of the accessories market because most companies making these products are privately held.
Piper Jaffray estimates that iPod owners spend an average of $15 on accessories, putting the peripheral market at about $123m in 2004. That is expected to grow to $270m this year and to $360m in 2006.
Belkin, one of the bigger iPod accessories makers, is more optimistic. It estimates the entire digital music player accessories market at $250m in 2004, with iPod accessories accounting for about 85 per cent of that. Belkin says the market could reach $750m in 2005.
These accessories are as varied as the people who have fallen for the iPod - from a $20 plastic carrying case to a $300 snowboarding jacket with iPod controls built into the sleeve. There are speaker systems from JBL and Bose, high-end headphones from Shure, a wall-mounted unit from Sonance and an iPod-driven boombox from DLO.
Germany's Goldster Audio has looked to the past to design what appears to be by far the most original - and expensive - iPod accessory: a €3,200 (£2,200) vacuum tube amplifier and matching set of full-range speakers designed to add a rich and warm texture to the iPod's digitised sound.
Apple's strategy so far has been to give away its proprietary connection technology so that groups such as Belkin and Monster Cable can develop cables, cradles and adaptors for the iPod.
Gene Munster, analyst at Piper Jaffray, says: "Apple wants to create a universe of products around the iPod so that the iPod is the easy choice for consumers. They don't want to stymie growth at this point."
Looking to the future, analysts say Apple is keenly focused on establishing the iPod in the automotive market, where it believes it can best solidify its market position by becoming the first - and at this point the only - digital music player that can be plugged into car stereos.
Brian Van Harlingen, senior technology manager at Belkin, says: "Ensuring that cars are iPod-ready is definitely a big piece of the formula. They have spent a lot of resources working to ensure the iPod can be readily integrated into automobiles."
Apple eased into that market last year when it struck a deal with Germany's BMW and the computer maker has stepped up its presence in the past few weeks.
Car-stereo makers Pioneer, Alpine and Clarion have all unveiled adaptors that will allow iPod owners to wire music players directly to their car stereos and to use the stereo controls to play iPod-stored music. Meanwhile, Japan's Nissan and a handful of European luxury carmakers said they would begin selling cars with iPod-compatible stereo systems.
Still notably absent from the iPod club are Japan's Honda and Toyota, as well as the big three US groups, but industry observers say it is only a matter of time before they too announce their plans.
"It's going to be a real challenge for any platform to shake the iPod's dominance in the near future," says Mr Van Harlingen. See Lex
quote:
Germany's Goldster Audio has looked to the past to design what appears to be by far the most original - and expensive - iPod accessory: a €3,200 (£2,200) vacuum tube amplifier and matching set of full-range speakers designed to add a rich and warm texture to the iPod's digitised sound.
What next?
Accessories at the core of Apple's plans for the iPod
By Scott Morrison
Published: January 31 2005 02:00 | Last updated: January 31 2005 02:00
With its popular iPod chalking up sales of $2.2bn (£1.2bn) last year, Apple Computer is setting out to cement its dominance of the market by inviting third-party innovators to develop an "ecosystem" of accessories for the digital music player.
These other groups make the accessories that cool-conscious iPod buyers cannot seem to get enough of. Whether they are carrying cases, adaptors, microphones or software, these accessories give consumers the edge as they take their iPods on the road, into classrooms and even to Bible study.
Since Apple launched the iPod in 2001, doubters have said it was only a matter of time before Microsoft and its hardware partners developed a cheaper industry-standard music player that would relegate Apple to the fringes of the market.
Few forget how Apple's refusal to license its technology contributed to its demise in the personal computer market and critics say the company appears determined to make the same mistake again.
But more than three years on, the iPod's popularity continues to grow and, while Apple refuses to license iPod technology, it is encouraging other groups to develop hundreds of accessories that can provide the iPod with a crucial advantage over rival music players.
Annabelle Gawer and Michael Cusumano argue in their book Platform Leadership that any technology company trying to establish its product as an industry standard can greatly benefit if third parties build products that complement the core product.
"The more people who use these complements, the more incentives there are for complementary producers to introduce more complementary products, which then stimulate more people to buy or use the core product," they say.
These forces are at work around the iPod, although it is difficult to measure the size of the accessories market because most companies making these products are privately held.
Piper Jaffray estimates that iPod owners spend an average of $15 on accessories, putting the peripheral market at about $123m in 2004. That is expected to grow to $270m this year and to $360m in 2006.
Belkin, one of the bigger iPod accessories makers, is more optimistic. It estimates the entire digital music player accessories market at $250m in 2004, with iPod accessories accounting for about 85 per cent of that. Belkin says the market could reach $750m in 2005.
These accessories are as varied as the people who have fallen for the iPod - from a $20 plastic carrying case to a $300 snowboarding jacket with iPod controls built into the sleeve. There are speaker systems from JBL and Bose, high-end headphones from Shure, a wall-mounted unit from Sonance and an iPod-driven boombox from DLO.
Germany's Goldster Audio has looked to the past to design what appears to be by far the most original - and expensive - iPod accessory: a €3,200 (£2,200) vacuum tube amplifier and matching set of full-range speakers designed to add a rich and warm texture to the iPod's digitised sound.
Apple's strategy so far has been to give away its proprietary connection technology so that groups such as Belkin and Monster Cable can develop cables, cradles and adaptors for the iPod.
Gene Munster, analyst at Piper Jaffray, says: "Apple wants to create a universe of products around the iPod so that the iPod is the easy choice for consumers. They don't want to stymie growth at this point."
Looking to the future, analysts say Apple is keenly focused on establishing the iPod in the automotive market, where it believes it can best solidify its market position by becoming the first - and at this point the only - digital music player that can be plugged into car stereos.
Brian Van Harlingen, senior technology manager at Belkin, says: "Ensuring that cars are iPod-ready is definitely a big piece of the formula. They have spent a lot of resources working to ensure the iPod can be readily integrated into automobiles."
Apple eased into that market last year when it struck a deal with Germany's BMW and the computer maker has stepped up its presence in the past few weeks.
Car-stereo makers Pioneer, Alpine and Clarion have all unveiled adaptors that will allow iPod owners to wire music players directly to their car stereos and to use the stereo controls to play iPod-stored music. Meanwhile, Japan's Nissan and a handful of European luxury carmakers said they would begin selling cars with iPod-compatible stereo systems.
Still notably absent from the iPod club are Japan's Honda and Toyota, as well as the big three US groups, but industry observers say it is only a matter of time before they too announce their plans.
"It's going to be a real challenge for any platform to shake the iPod's dominance in the near future," says Mr Van Harlingen. See Lex
