From companion to competitor

by Christopher Breen, Playlist Magazine

Well, the suspense has ended. After a tantalizing invitation to “Come see some fun new products from Apple,” Steve Jobs unveiled three new Apple items: The $599 and $699 Intel-bearing Mac mini, two $99 leather cases for the 5G iPod and iPod nano, and the $349 iPod Hi-Fi. We’ll save how they perform for another time (another time when we actually have them in hand, for example) and instead focus on what the existence of at least two of them mean.

Third-parties, don’t get too comfortable.

In the past, Apple jumped into the “me too” market when competing products were so flawed that the simple act of doing it right put Apple’s products out front—witness the iPod, the iTunes Music Store, the iSight, Final Cut Pro, the iLife suite, and, some might suggest, Mac OS X.

Two of the products announced today—the Leather Case for iPod and iPod Hi-Fi—don’t fit that mold. The number of sleek iPod cases is exceeded only by California’s dust mite population and you can’t throw a brick in a Big Box Appliance Store without bowling over at least half-a-dozen compact iPod stereo systems.

Today’s offerings are nicely designed, but having handled my share of quality leather iPod cases and cocking a keen ear at the iPod Hi-Fi I can’t say that either is a product destined to blow away the competition. And because they’re not, I believe that Apple has shifted its strategy about when a new Apple product makes sense. Apple no longer needs to own a market. Given a large enough market, Apple can settle for being among the major players.

And by “large enough market” I do mean iPod accessories, the market for which is valued at around $300 million a year (and growing). Given these numbers, Apple’s hardly taking a risk with just about any iPod accessory it releases. Capturing as little as 10 - 15% of portable iPod speaker sales should give Bose, JBL, and Altec-Lansing a minor case of the jim-jams. And in an already over-crowded (and therefore highly confused) iPod case market, Apple could do quite nicely in promoting its $99 leather case as the upscale iPod sleeve to own.

And if Apple is truly willing to compete with other iPod accessory makers, where might it wander next?

Apple’s already addressed the FM-Radio-on-iPod issue with its $49 iPod Radio Remote, but the killer portable FM transmitter—one that crushes interference from other stations—remains missing in action. Wireless headphones? Attempts have been made, but if Apple were willing, there’s another opportunity. And how about portable speaker systems with multi-room playback? Those that exist aren’t cheap. Seems to me that a Rev 2 iPod Hi-Fi that incorporates an AirPort Express would fit the bill nicely.

What will this do to the relationship between Apple and its current partners? As reported by MacCentral’s Jim Dalrymple, iPod accessory makers may be less than thrilled with Apple’s move into their perceived turf, but what can they really do about it? And should consumers really care?

Moving from partner to competitor may not make iPod accessory makers happy, but it’s bound to benefit iPod owners to the tune of more compelling products—either those made by Apple or those from third-parties forced to step it up a notch to stay a jump ahead of possible plans by Steve Jobs and company.

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