In the weeks leading up to Apple’s Oct. 4 announcement about the new iPhone 4S, Tim Hickman lived and breathed rumors about the device. His company, Hard Candy Cases, makes protective covers for mobile phones, and he was determined to get a jump on production. After three separate manufacturing partners in China sent him detailed 3D models of an iPhone with a widened, pill-shaped “home” button and a slightly tapered back, Hickman decided to roll the dice. He paid $50,000 to make steel moldings to mass-produce cases for the new design and, on the morning of Apple’s announcement, began taking orders on his website. The gamble backfired: Apple’s new iPhone 4S included no major changes to the exterior design. The home button remained circular. Hickman suddenly owned $50,000 worth of paperweights.
As smartphones proliferate—Apple booked more than a million 4S preorders in a single day, compared with 600,000 for the iPhone 4—the business of making shells to protect and decorate them is booming. Consumers spent more than $436 million on mobile-phone cases in the 12 months ending in August, a jump of 33 percent from the same period a year earlier, according to researcher NPD Group. With the secretive Cupertino (Calif.) iPhone maker unwilling to share specifications in advance, case companies rely on rumors, factory leaks, and other guesswork to approximate new designs before they’re revealed. “If you have a good sense that you have the right measurements and plans, then you can ramp up production,” says Karl Jacob, chief executive officer of case maker Coveroo, who says he does not use leaked designs. If a company guesses right, then “while these other guys are waiting in line, you already have 100,000 units on the way from China,” he says. But a wrong guess means “risking millions of dollars to create inventory that could be worthless.”