Apple’s iPod port license fee ensures iPod accessory makers of compatability with future iPods

“Apple Computer is stepping up its push to get iPod accessory makers to pay for the right to connect to the popular music player,” Ina Fried reports for CNET News. “For some months, the company has been seeking royalties from accessory makers that want to display a ‘Made for iPod’ logo on their products. The program, which one analyst has likened to an ‘iPod tax,’ applies to devices that connect electrically to the player and not to cosmetic things like cases.”

Fried reports, “Now Apple has made the program a requirement for manufacturers who want their gadgets to plug into the ‘dock connector’ at the bottom of the music player, Senior Vice President Phil Schiller confirmed to CNET News.com last week. ‘Yes, the electrical connection has specifications around that and licensing around that, and the way you get that assistance and information and licensing is through the ‘Made for iPod’ program,’ Schiller said in an interview. He did not say when Apple made the program mandatory.”

“According to a source familiar with the program, Apple is getting a royalty on the order of 10 percent of a device’s wholesale price… ‘They’re just expanding the ‘iPod tax’,’ said Gene Munster, a financial analyst at Piper Jaffray. ‘Ultimately Apple is tired of watching these people profit off their success.’ Though some device manufacturers may quibble with the royalty Apple has set, there will be some peace of mind for them in knowing that the accessories they make today will work with the iPod of tomorrow,” Fried reports. “As part of the current “Made for iPod” program, Apple will ensure that devices will physically accommodate future models of the player, Schiller said. Accessory makers can build a standard well for an iPod and know that future iPods will fit into the slot. Apple has also pledged to include an adapter with its players that will let them fit into any products built around that universal well. (Apple included such an adapter with the recently introduced iPod Nano.)”

Full article here.

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The only reason this is even a story anywhere is because it involves the names “Apple” and “iPod.”

Related articles:
Report: Apple set to charge iPod accessory manufacturers 10% iPod port license fee – October 11, 2005

25 Comments

  1. From page 2 of Fried’s article:

    “It’s the key to the kingdom,” said Andrew Green, a vice president at Digital Lifestyle Outfitters, which specializes in iPod add-ons and is part of the “Made for iPod” program. “Truly nothing can be done without it. It was one of two options yesterday; it is truly the only option today.”

    Green said his company has focused all of its recent development on products that connect to the bottom of the iPod.

    “Now we’ll see rewards from doing so,” he said.

  2. “Apple has also pledged to include an adapter with its players that will let them fit into any products built around that universal well.”

    Witness the creation of a new standard. Clever.

  3. I would not call it greedy. If companies selling iPod accessories want to complain about form factor changes to a product line (making some of their product unusable with new releases) that is fine, but in order to keep the companies in the loop and to make promises that future products will be compatible Apple needs to have a relationship with the company. The best way to have this relationship is to set up a standards/licensing/support system for working with said companies. Does Apple just spend their own money on this without the other companies spending money on it too? It is mutually beneficial for all parties so they all need to share the costs. 10% of a 29.99 product (which is not really 29.99 since that is the markup for consumers – lets say 19.99 in reality) is not a lot of income. That cost will just be passed to the consumer – thus spread out to everyone.

    This is not a money maker for Apple. It is a cost sharing plan to enable stability in form factor. It is pretty standard stuff. There are license fees on other adapters – USB, Firewire, etc. It’s how business works.

    MDW: distance – companies can not keep their distance from this.

  4. I am not one to judge Apple’s business decisions; it is not my field.

    As an iPod user I will say that the dock is preferable for peripherals like FM transmitters and remote controls. Until the Nano and 5G iPod the dock connector provided a true line out signal so anything that connected to it sounded better than anything connecting to the headphone port. Of course that is all changed now thanks to ‘viariable line out’, which is just another headphone signal.

  5. Funny how thing work.
    If a music label tries to make more money then it’s called greedy.
    If God er Jobs & Co. tries it’s called wise.
    Please do not hold back. Let me know the err in my thinking.

  6. I agree and don’t agree at the same time. One justification is this: If Apple uses this fee to guaratee future compatibility, then this is actually a cost-saver for third parties. For example, if every third-party must by $1.00 per unit sold, but Apple has provided an adapter worth a $1.00, then nobody has lost. That has saved the third-party from having to provide a multitude of adapters.

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