iPhone Gets Its Gear On

Accessories makers are readying cases and skins in hopes that the smartphone's market could grow as big as iPod's

With Apple (AAPL) set to release the iPhone on June 29, accessories makers are readying new products, anticipating that the smartphone's market could grow as big as the iPod's.

One such company is Marware, which is already producing cases designed to protect the pricey smartphone. Its factory in Asia has gone to full production and will remain so at least until the launch date.

"We believe everyone who is going to spend $500 to $600 for the phone is going to buy a case, and they're going to want to do it at the point of sale," says Sean Savitt, Marware's sales manager. Savitt anticipates 30% sales growth this year, up from under $20 million in sales last year, with about 20% of total sales coming from iPhone products.

Marware, which started as a software company in 1993, has been making accessories for the iPod since it debuted in 2001. Since then, the Hollywood (Fla.) company of about 25 employees has seen an army of competitors spring up. At last count there were at least 400 companies making cases and other accessories for the iPod. And at least 200 are making iPhone accessories, with more to follow, says Jeremy Horwitz, editor-in-chief of independent Apple product information site iLounge.

Timing the Entrance

All told, the iPod accessory market, already valued at over $1 billion, continues to grow, according to industry researcher NPD Group (see BusinessWeek.com, 7/19/06, "iPod Accessories Gone Wild").

Another accessories company, Singapore-based iStyles, a company that makes and sells iPod fashion accessories including colorful covers and silicon skins, is introducing whole lines of products to go with the iPhone. "We can't estimate the success of the device, but if the iPod is any indication, Apple will soon be a dominant player in the mobile phone market by the second or third revision of the iPhone, and we want to be on the bandwagon starting from revision one," says Ming Keong Kuan, director of the eight-employee business.

Not all accessory makers think an early market entrance is the best move. At least for now, some are resisting the urge to enter the iPhone market altogether, preferring to concentrate on their existing business surrounding the iPod. Mark McJunkin, president of TuneBuckle, an Atlanta company that produces a belt buckle product for the iPod, says his company is going to wait and see if the iPhone catches on before developing a product for it.

Keep It Simple

Horwitz says small companies considering getting into the iPhone accessories market would do well not to try to compete with the big electronics companies. "At least in the early going, if it's not at the point of sale, then it needs to be simple," says Horwitz. "Or else it should be something that's adaptable to both the iPod and the iPhone." For its part, Apple does produce a few of its own accessories, but doesn't attempt to monopolize the market.

Experts think that despite the high price of the iPhone and the fact that it will require a switch to AT&T Mobility (T) (formerly Cingular Wireless) and a new contract, the iPhone will take off. "If consumers flock to the product and if Apple releases newer models that are priced lower, or if the subsidization and discounting, which is very widespread in the wireless market, take hold, then it could be really popular," says Ross Rubin, director of industry analysis for NPD (see BusinessWeek.com, 6/7/07, "How Big Will the iPhone Be?").

For a slide show of small companies planning to introduce iPhone accessories, click here