Boom of the iPod add-ons

How can you accessorize your iPod? Marketers count the ways--and the cash. Photos: The iPod economy

Less than three weeks ago, XtremeMac President Gary Bart was in San Francisco, sitting in the VIP section as Apple Computer CEO Steve Jobs introduced the iPod Shuffle.

Days later, Bart packed his bags and jetted to China, where he has been working feverishly to produce 14 new accessories for the music player. Such is the life in the lucrative but highly competitive market for iPod add-ons.

Stratospheric iPod sales have created a vast opportunity for other companies to sell companion gear, but the spoils have gone to those able to keep pace with Apple, which has introduced at least a half dozen kinds of iPods since the first model arrived in late 2001.

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What's new:
Meteoric iPod sales have created a lucrative--and highly competitive--worldwide market for companion gear.

Bottom line:
The stakes are high for makers of iPod accessories. As more companies make basic add-ons such as speakers and cases, expect longtime players to get creative and take their iPod tchotchkes to the next level.

More stories on iPod sales

Of the 10 million iPods Apple has sold, more than 75 percent were sold in the past year and 40 percent in the last three months of 2004. Accessory sales have followed a similarly steep path.

"We did in December what we did the entire rest of the year," said Bart of XtremeMac, which began its life with the iPod, offering one of the first cases for the music player. "Normally the difference between that period and the rest of the year isn't that dramatic. We're just seeing a tremendous upward curve."

Putting a dollar figure on the "iPod economy" isn't simple, but it easily stretches into the hundreds of millions. Bart said the rule of thumb in the electronics industry is that with items like cameras or cell phones, people probably spend, on average, about 10 percent of the cost of a device on accessories. Apple has sold more than 10 million iPods, probably at an average price above $300, so the 10 percent rule would easily put the iPod add-on market in the hundreds of millions of dollars.

But many believe the market is even more robust, with casual users buying a case and a spare charger and many enthusiasts spending as much to outfit the iPod as they did on the player itself.

With the growth of the iPod, companies see more profits ahead in 2005. "We believe that the worldwide market for iPod accessories will probably be in the half-billion dollar range," said Brian Van Harlingen, a senior technology manager for Compton, Calif.-based Belkin, whose company shipped its 2 millionth iPod accessory earlier this month.

The market has also become quite competitive. A year ago, Apple estimated there were 200 add-ons for the iPod, not counting all the various carrying cases. Now that number has more than doubled, it said.

"There is an incredible 'iPod economy' out there," Jobs said in his Macworld keynote on Jan. 11. "There are now over 400 accessory products you can get for your iPod. This is unmatched in the industry by a mile."

Among the best-known companies offering iPod accessories are speaker makers such as Bose, JBL and Monster Cable, a company known for its stereo wiring. The rest of the accessory market is spread out among an array of companies, nearly all privately held and most quite small--companies such as Griffin Technologies and XtremeMac, which has 14 full-time staffers and maybe a dozen part-timers.

Though impressive, the array of products can make buying decisions daunting. To help sort things out, Apple has weighed in with a new program that will let accessory makers qualify their products for a "Made for iPod" logo.

Of course, the add-ons Apple would never sanction are as interesting as the products it would. There's a project afoot to create a USB charger out of a 9-volt battery that might juice up an iPod Shuffle, but it's probably not the kind of thing that would earn an Apple nod.

An entire site, iPod Hacks, is devoted to customizing the iPod in unsanctioned ways. A popular recent posting outlines

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