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Accessories No Longer Tethered to Apple

Nick Wingfield and Brian X. Chen
Sunday, 5 May 2013 | 7:07 PM ET
Adam Jeffery | CNBC

For years, Apple's clout in the electronics world could be gauged by how easy it was to bump into devices tailor-made for a connection to an iPhone or iPod.

Hotels outfitted guest rooms with alarm clocks containing a telltale wedge of 30 tiny pins that could play music from Apple's devices and charge their batteries. Retail stores were thick with sound docks and other speaker systems meant to work with Apple gadgets.

But Apple's iron grip on the digital accessories in hotel rooms, store shelves and living rooms is starting to slip—potentially risking the royalties it earns from accessory makers and, more significant, giving Apple customers more freedom to switch to rival products. That could be an issue for a company whose stock has been shaken in recent months as investors worry that the iPhone business is slowing.

Jeremy Horwitz, editor in chief of iLounge, a Web site devoted to Apple accessories, said Apple's aggressive control over accessories for its products drove many makers to more open means of connecting devices, which helped feed the success of mobile devices made by other companies.

"At some point Apple's obsession with having control over everything that is associated with its products may wind up biting it," Mr. Horwitz said.

(Read More: How Apple May'Get Its Mojo Back')

The Bluetooth standard for wireless connections has allowed accessory makers to build products that can work with many kinds of devices because they no longer have to worry about a physical hook. Other phone makers like Samsung and tablet-computing device makers like Amazon have become strong alternatives in the eyes of gadget shoppers. And Apple itself provided an opening for competitors when it changed the way its phones connect to other devices, aggravating both its business partners and consumers.

Now accessory makers are eager, even obliged, to think beyond Apple.

"We've had to adapt to new technology, support more devices and meet the growing demands of consumers looking for accessories that can accommodate multiple devices," said Ezra S. Ashkenazi, chief executive of iHome, one of the biggest makers of iPhone clock radios and other Apple audio accessories. This year, iHome is releasing more products with Bluetooth than ever before, he said.

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Apple says it is fine with the wireless direction in which accessories are headed. "Apple provides users with the best wired and wireless connectivity options to work with the broadest range of accessories," said Tom Neumayr, a spokesman for Apple. "As a result, iOS users have access to the world's largest ecosystem of options and the most seamless integration with our products."

Apple expected some grumbling from customers and partners last fall when it introduced in the iPhone 5 a new way for the mobile phone to connect to other devices. But its executives defended the connector, Lightning, because the new, smaller design allowed for slimmer phones and tablets. While the 30-pin connector can be plugged into an old iPhone in only one way, a Lightning cable works even if it is flipped over.

Apple did not tell accessory makers about the change ahead of time, which is normal for a company known for its secrecy, but it was painful for many of its partners.

"You really don't know where Apple is going to go next, if they're going to change to something else down the road," said Kyle Thompson, director of marketing for Cambridge SoundWorks. "They've made a lot of companies like us really nervous."

That change frustrated partners whose customers had invested in products that used Apple's old 30-pin connector. Those older devices are incompatible with the latest Apple products without an adapter that Apple sells for $29 to connect to the latest Apple products. Also, the new Lightning connectors are more expensive to license and manufacture than the old ones, electronics makers say.


"A lot of us were bitten pretty badly by the connector transition," said Ian Geise, senior vice president for marketing and product development at Voxx Accessories Corporation, which makes audio products under RCA, Acoustic Research and other brand names.

Voxx has stopped making audio products with proprietary Apple connectors in them, though it is making a multiroom speaker system that uses AirPlay, Apple's own technology for wirelessly connecting devices, Mr. Geise said.

Logitech, which used to offer an array of speaker docks with the old 30-pin link, has also stopped using Apple connectors and, like many accessory makers, is creating speaker systems that connect to mobile devices over Bluetooth, the short-range wireless technology that is in practically every new mobile phone, tablet and car stereo.

The prevalence of the old Apple connector in accessories was partly a reflection of Apple's dominance in the MP3 player market with the iPod, a business that is fading as smartphones become more important sources of music.

(Read More: Why Apple's Plunge Has Been Positive for Stocks)

"Even before Apple shifted from the 30-pin connector to Lightning, the market had started shifting," said Rory Dooley, senior vice president for music at Logitech. "Lightning came in and accelerated some of the change. People wanted to get away from these proprietary connectors."

Accessory makers say customers are demanding wireless speaker systems in large part because they want to be able to hold their mobile devices in their hands so they can skip around radio stations and playlists, rather than having to walk over to an iPhone docked in one location.

Geneva Lab, a maker of eye-catching speakers that cost $250 to more than $2,000, is dropping physical Apple connectors in most of its product line mainly for that reason, said Chuck Vath, managing director for the company's United States division.

Apple earns money from accessory makers who must pay royalties, an amount Apple does not disclose, to license Apple's proprietary connectors for their products through a program Apple calls MFi (as in, Made for iPhone).

(Read More: Why Apple's PlungeHas Been Positive for Stock)

Still, it is not clear how much Apple will suffer from accessory makers shunning its connector. Apple's entire family of iOS devices support Bluetooth, too, so they are just as compatible with wireless speaker systems.

There is no question consumers are moving toward wireless connections. Last year, American sales of digital speakers with physical docks fell 16 percent to $505 million, while wireless streaming speakers, most of which used Bluetooth, jumped 175 percent to $383 million, according to NPD Group, a research firm that tracks retail sales.

Fewer people who buy sound systems that work only with Apple devices, in theory, could mean fewer obstacles for those interested in switching to competing phones and tablets in the future. And those competitors are gaining ground.

In recent years, Samsung, for example, has gone from a bit player in the mobile phone business to the top dog. Its share of global smartphone shipments in the first quarter grew to 32.7 percent from 28.8 percent a year earlier, while Apple's fell to 17.3 percent from 23 percent, according to IDC, a market and technology research firm.

Apple, sensing that wireless would replace the physical cables tethering its devices to others, introduced AirPlay several years ago. The technology, which works over Wi-Fi home networks, appears to have gotten the most traction among people who use it to stream music and video into living rooms through Apple TV, a device made by the company that connects to home theater systems.

AirPlay is more common in high-end audio systems, partly because adding the technology contributes significant costs to a product—at least $30 per speaker system or receiver sold, according to one manufacturer.

Among the broader electronics industry though, AirPlay has not taken off. "There's very little support for AirPlay right now," said Stephen Baker, an analyst at NPD. "It's expensive. Bluetooth is very cost-effective."

Mr. Neumayr noted that AirPlay is built into audio products from Denon, Marantz and others and that it "delivers incredible fidelity and provides music fans with great features such as the ability to stream your tunes to more than one room simultaneously."

The bumpy transition to Lightning has also made electronics manufacturers more nervous about supporting Apple-controlled technologies.

"This was a harsh reminder that 30-pin was not a standard," said Matthew Paprocki, the co-founder and creative director of Soundfreaq, a maker of speaker systems that is planning to support the new connector in future products. "It was an Apple monopoly."

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