iPod add-ons: 1,000 accessories in your pocket

Still more companies, large and small, are plugging themselves into the booming market for iPod-related gear. Photos: iPod add-ons abound Video: Macworld is iPodworld in 2006

Tech Industry
SAN FRANCISCO--The market for iPod add-ons, already booming, is starting to show signs of maturity.

That's clear from the number of accessory makers here at Macworld. But it's also apparent at the nearest Best Buy or Circuit City store, where a significant amount of shelf space is devoted to all things iPod. And it's not just tech-oriented retail. Gear for the iPod can be found at the convenience store and in some of the world's priciest boutiques.

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Video: Macworld is iPodworld in 2006
At Apple show, accessories abound

It's a far cry from a few years back, when a handful of upstarts had a corner on the market.

"The bar has been raised," said Brian Baucom, director of marketing for Digital Lifestyle Outfitters, a company that makes nothing but iPod gear. At one time, a smattering of companies, such as DLO, Griffin Technology and Belkin had the market largely to themselves. Now, Baucom said, there are more than 200 rivals.

But along with the increased competition has come a continuing surge in the market. Researcher NPD says the market for iPod accessories topped $850 million last year, not counting gear sold over the Internet.

And sales of the player itself have continued to skyrocket, meaning there's no reason the accessory business can't double this year, according to NPD analyst Stephen Baker.

The result is that the tiny companies that became overnight successes with cases and car stereo adapters are now big operations.

Gary Bart got into the accessories market in 2002 when he stitched together his first prototype case. Now his company, XtremeMac, has 60 employees and a huge 1,600-square-foot booth with a snazzy new logo and tagline: "The iPod Xperts." The company plans to double the size of its booth next year, and the only vendor with a booth that size this year is Apple itself.

Many of the bigger name PC accessory makers have also launched iPod gear. Belkin was an early leader, but others such as Kensington, Targus International and Logitech have also added a range of iPod gear. And Baker says the broader players have an advantage.

"They can leverage a whole relationship with the retailer across a range of accessory categories that guys like DLO, Griffin and XtremeMac can't," Baker said. "Those guys have to be more nimble and unique to be able to compete."

More and more, Baker said, the iPod accessory market will become a standard retail business. But retailers from Target to Urban Outfitters love the products, with their 20 percent to 50 percent profit margins. The products are particularly appealing to electronics stores, which make relatively little off the sale of the player itself, Baker said.

To stay ahead of the curve, all the makers are in a constant battle to one-up both their competitors' products and their own offerings. For instance, speaker maker JBL's latest creation is the "JBL On Time," a $299 device that combines an alarm clock, iPod dock and speaker system.

The first iPod alarm clock, the $99 iHome, has been a hit, filling a niche that the speaker makers had somehow missed. JBL is hoping its product, with dual alarm and higher-end speakers will also find a place on the digital nightstand.

Apple itself has been getting in on the act in two ways. The iPod's creator has slowly started to add more accessories of its own, from the in 2004, to the armbands and silicon "tubes" Apple launched with the Nano last year, to the $49 FM radio/remote that Steve Jobs showed off Tuesday.

But Apple is also looking to gain some control over--and profit from--other companies' products. Last year, the company introduced its "Made for iPod" program, which certifies products as compatible with the iPod's electrical connections. In exchange, Apple gets a royalty for each specially labeled accessory.

The program was initially an option for gear makers, but it's since become mandatory for products that hook up to the dock connector port at the bottom of the iPod.

Baker said he thinks Apple is mostly dabbling with its accessory effort, "focusing on just a few products and then taking their pound of flesh for the logo program."

But, he said, Apple needs to be careful since it benefits from the wide range of accessories that exist for its products, something that rivals can't match.

"They aren't likely to want to do every type of product," he said.

All aboard
Despite all the competition, the iPod accessory market continues to attract newcomers.

Catalog seller The Sharper Image is not on the Macworld show floor, but the company has jumped headfirst into the market. The company includes iPod connectors on a wide range of gear, from speakers that light up, to its $700 iJoy massage chair.

Maxell, the Japanese brand known for its recordable tapes and CDs, has also made a big bet on the Apple player, introducing a line of accessories including cases, international travel chargers, docks, speakers and an attachment that lets the iPod Shuffle use accessories built for the standard iPod dock connector.

"We were a little bit late coming to market," said Gordon Tetreault, a director of sales and marketing at Maxell. But, he said, the iPod add-ons now make up 20 percent of Maxell's accessories business. "It's a huge business."

The company, which does have a significant presence at Macworld, is using its well-known brand to land its gear on the shelves of mass market retailers like Tower Records, Walgreens and Rite Aid.

"We're one of the only name brands out there," Tetreault said.

Small Dog Electronics, known for its business of selling discontinued and refurbished Macs, along with new ones, has also gotten into the act. In addition to selling older-model iPods and other companies' accessories, the Vermont-based business has its own line of add-ons, including two new products announced this week.

Small Dog also set up PodJungle, a separate Web site devoted to such add-ons.

"Finding your way through the jungle of iPod accessories, cases and add-ons is difficult even for a techno-geek like me," Small Dog owner Don Mayer said in a statement announcing the new venture.

And plenty of smaller operations are still trying to jump on the Pod wagon.

At both last week's Consumer Electronics Show in Las Vegas and this week's Macworld there were small booths, with start-ups looking to find distributors for their collection of iPod gear.

One of those at Macworld was Case-ari. The Atlanta-based company was founded by a group of engineers who had a background in making cases for Weber grills. But the company saw a niche for affordable leather cases and decided to throw its hat into the ring.

The company started last year by developing a prototype for the iPod Mini. But when Apple introduced the Nano, the group switched gears and came out with a leather Nano case instead.

A few weeks later, when the video iPod was introduced, the Case-ari crew was ready, ordering one immediately. As soon as it arrived, the team sent one of its number on the first plane to China.

"We said we can do this," said Richard Jones, who heads Case-ari's sales effort. "If we can get them (to sell) for $30, we've got a winner."

CNET News.com's Michelle Meyers contributed to this report.

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