Until last night, Apple produced a handful of iPod accessories, from remote controls to socks.
The release of the iPod Hi-Fi speaker system moves the company into the high-end accessory territory marked out by third-party developers. This could wind up backfiring if the company finds itself jostling with those developers for sales, analysts warn.
"I was surprised when I saw that Apple was releasing another major iPod accessory," said Technology Business Research senior analyst Tim Deal, noting the release of the iPod Radio Remote at January's Macworld Expo. "This sends a clear message to iPod developers and I'm sure it will breed some ill will."
Eating the young
EndPoint Technologies President Roger Kay agrees: "Stepping on your partners warns them against future cooperation and you end up fighting the world alone," he said.
During the iPod Hi-Fi's unveiling, Apple CEO Steve Jobs mentioned two competing speaker products - JBL's OnStage and the Bose SoundDock. The competition also includes XtremeMac's Tango speaker system.
"We think those products are going to continue to do well," said Greg Joswiak, Apple's vice president of worldwide iPod marketing. "They have a big market, and they will continue to have a big market, but nobody in this space is bringing sound quality that competes with a home stereo and doing it at an iPod economy price."
Deal contends that products like these have helped fuel the iPod's popularity, and a visit to any online store seems to support his thesis. Searching for iPod accessories turns up a variety of products, from cases to car stereo hook-ups. A more visible push by Apple into this area could have immediate consequences, Deal says.
"If Apple continues to do this, those companies may begin to rally behind a competitor's product," he added. That could prove to be a challenge, as Apple controls 78 per cent of the market for MP3 players, according to figures cited by Jobs Tuesday.
'We really want to focus on the living room' - Apple
And for that reason, Apple executives believe there's plenty of room for their products. "What makes this market so interesting is that it's so broad," Joswiak says. "There are two places people really want to use their iPods: the car and the home. We wanted to focus on the home and give people great sounding audio."
While neither Deal nor Kay suggested that developers would stop making products for the iPod, both analysts expressed concern that Apple would hurt the community that has been built around the device. "Ultimately an ecosystem is a powerful thing," said Kay. "It's one guy's ego against the world and he's had a pretty good run, but he's still human."
Apple enjoys a natural advantage over third-party accessory makers, analysts say. The company knows in advance what changes are coming to the iPod line and can tailor any accessories to take advantage of new features; third-party developers usually find out about new products when the rest of the world does and have to scramble to update their offerings.
Smart move too far
What's more, Apple controls the shelf space for both its brick-and-mortar and online stores. It can give prominent placement to its own products while ignoring competing accessories.
"It's a double-edged sword," Deal said. "Ultimately it benefits the consumers to have more products on the market, but it is very difficult for developers to compete with Apple. If Apple keeps running developers out of the market, it is not going to benefit the iPod or consumers."
While it remains to be seen how consumers will react to Apple's iPod Hi-Fi, EndPoint's Kay believes that Apple is confident its moves won't deter third-party developers. "Apple is betting that it's a bread and butter issue and that the vendors not affected will remain out of self-interest," he said.
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