“Apple is set to slug partners a massive 10% licence fee for access to an iPod port. The move will significantly impact iPod accessory manufacturers with some considering dropping accessories from their portfolio,” David Richards reports for Smart House. “Among the companies set to be hit is Bose who make the highly successful Bose iPod docking station music system. Dominique Water the head of Bose’s Asia Pacific operations said ‘All Apple partners were told of the decision some weeks ago. This is a massive licence fee which will not sit comfortable with many partners. Bose is not happy as the proposed fee is excessive by any standards.'”
Richards reports, “Another Bose executive said ‘What we need is for the MP3 vendors running the Microsoft operating system to get together and deliver a common port accross all MP3 devices. We also need a common docking design so that people like Bose can develop common accesories. Currently Apple is the only one with a common port as a result accessory manufacturers are designing for the iPod Apple platform.'”
Full article here.
Note to Bose and all other makers of accessories utilizing Apple’s iPod port: Apple holds around 80% of the digital music player market. Bose and other designers are not designing iPod accessories because Apple has a common port, they are designing them because iPod massively dominates the market. Dose of reality: you’ll pay the 10% and you’ll do so with a smile. If not, have fun trying to make and sell accessories for also-ran players that are killing each other over Apple’s scraps.
Related articles:
Over 1,000 accessories now available for Apple iPod – September 07, 2005
Apple is looking more like RIAA every day.
I hope this is not true. It would be (IMHO) gouging. The iPod Acc. mfg would no doubt just pass along this to the end consumer.
Shame on you Apple.
You are not Gordon Gecko, and Greed is not good in this instance.
Ron is talking more and more nonsense everyday.
we’d all love to hear you try to make THAT connection in a logical way.
Is it that they are both profit-based?
Or is it that Apple DESIGNED the standard port connector, so it’s theirs to do what they like with?
Apple’s new standard adapter with the nano will probably SAVE more than 10% for these companies.
Well, there goes the moral high ground in the fight with the record labels. Bronfman wants a cut of iPod sales, and now Apple wants a cut of accessory sales. Shit rolls downhill.
I think this is a huge mistake. This is only going to drive companies away from developing for the iPod, and that’s one of the things that makes the iPod so great, is that there is such a huge product universe around it. You can find accessories for just about anything you want to do with it. I really hope they rethink this decision.
If they’re considering dropping their iPod products, they’re bad businessmen. iPod users buy accessories, and lots of ’em. I don’t believe the 2 percent (or whatever) who own the Creative players are buying up tons of accessories.
All that’s going to happen is the price of new accessories will be a little higher to cover the 10 percent cost. Apple is just looking to create new revenue streams. It developed the market, and iPod accessory manufacturers weren’t going to get a free ride forever.
What’s the problem with Apple taking a cut from the iPod accessory makers? Apple did things right and the others didn’t! There’s more than enough to go around. Besides, Bose overcharges SO MUCH for their products.
I hope this reporter got his facts wrong. Apple doesn’t need to make a few extra bucks this way. Sounds too much like the “greedy” people Steve was talking about a while back. It’s bad press.
Apple holds the license to the iPod and folks who profit from their name should pay. Apple pays 70 to 80 cents per track of that 99 cents to the record labels. Apparel companies pay the NFL, NBA, NCAA, NHL, et al huge licensing fees for use of the teams’ names and logos. It is no different here. Actually, 10% seems to be pretty reasonable considering that without the iPod, those businesses would be generating no income. Licensing is big business. It should be no different for Apple.
Not a classy move by Apple. Exploiting its marketshare, not unlike a certain Microsoft.
SJ, just like most people when they age, is moving to the right.
I’m already there.
I don’t like it. The dock connector is apple’s intellectual property and they have the legal right to do what they want with it, but 10% is excessive. I think most accesories will stay but some will leave, which is always bad for the comsumer. Apple is making plenty of ipod related revenue right now, and while any corporation always wants even more more money which they are already making more of than any time in history, I would hope that they won’t do this. It def hurts the consumer and could possibly backfire if enough accessories back out that it decreases that specific reason for buying an ipod.
I hope this rumor is true. I’d love to be giving Apple $8,500 for each new BMW I buy.
While I am not thrilled with this … I am pretty sure that MS charges for the ‘Playsforsure’ designation … if they didn’t … I would be shocked.
JadisOne is right. Everybody with a highly recognizable brand licenses it to others, and get significant fees in exchange. Is 10% excessive? There is no such thing. It’s a value proposition, pure and simple. If you can’t make enough to cover the cost, you make a business decision to raise prices or get out of the business, just like you made a decision to buy, or not buy, your last computer, TV, car etc.
My guess is that iPod accessory makers will do one of two things: pay the fee, or get out of the business.
If the business is profitable, they will pay.
If the business is not profitable, they will get out.
It’s that simple.
The questions that arise from this decision are:
– Is Apple offering an iPod-approved logo to go with the license fee?
– Do they have a patent for the port? Or have they offering non-public specs to developers making accessories for the port?
As far as the pricing goes:
– 7% of profits is normal and reasonable.
– 1-2% of gross is normal and reasonable.
– 10% of profits is high, but not unreasonable, and expected in certain industries.
– 10% of gross is excessive.
I don’t deny Apple’s right to impose these fees. But whatever the charges Apple should have imposed/increased the royalty rate slower so as not to create a huge backlash and bad pub.
Wow, this sounds a bit heavy handed and 10% is way high. I could see Apple charging a smaller amount like 3-5% for manufacturers to put the “Made for iPod” label on it and guarantee that it all works good. I hope that the actuality is different and that the above report was a mistake. I love Apple products and much prefer it when they take the moral high ground.
Manufacturers won’t stop making docking accessories for the iPod.
They’ll just charge more to cover the license fees.
Guess who just got screwed.
WOTD: “example”
This is an example of what happens when there are no competitive balances in a market. In a competetive market this would never happen because the vendor would just turn to an iPod competitior who doesn’t change licensing fees.
It’s a bad augur if the report is accurate. I hope it’s not.
It may be legal and make good business sense. But it just feels wrong. Especially after the ranting about the music industry deserving part of iPod revenue.
If they are charging a licensing fee, then you must be buying something beyond access to the port. (use of the iPod name, logo etc.)
I don’t know how they can charge someone for developing a product that uses a similar plug that does not utilize the iPod name.
Apple should charge a fee for people to make money off the market they created.
NOTE TO MACDAILY:
Talk about talking out of both sides of your mouth. If Microsoft pulled a stunt like that, MacDaily would rant and rave about the big bully with sidebars on greed and evil. Apple does it and you guys turn into henchman wanna-bes: “you’ll pay and you’ll pay it with a smile.”
Oh, please….what an utterly juvenile statement.
This is basically Apple getting greedy and finding ways to kill the goose that lays the golden egg.
If I were Bose or any other company, I’d tell Apple to take a hike.
Isn’t Apple being a little greedy there ?