Scosche, a maker of accessories for consumer electronics, has made a mint selling products that complement Apple's (AAPL) iPhone and its iPod music player. Now, Scosche is pinning high hopes on the newest Apple gadget, the iPad, due to be released in the coming weeks.
Family-owned Scosche in April or May will release its first iPad accessory, KickBACK, a stand that lets users position the tablet vertically or horizontally for easy video and photo viewing. The 150-employee company based in Oxnard, Calif., is among myriad companies hoping to benefit from accessories for the iPad, a tablet-style computer designed for consumption of video and other digital entertainment.
Cottage accessory industries grew up around Apple's iPod and iPhone. "We think (the iPad) is going to be another success story for Apple," and for accessory suppliers, says Kas Alves, executive vice-president at the 30-year-old company he runs along with his father and brother. Scosche plans to roll out "at least a dozen" iPad accessories this year, Alves says. They may include a charger, an in-car dashboard mount, and a home audio dock that would double as speakers.
Other iPod and iPhone accessories manufacturers, including Playa Vista (Calif.)-based Belkin and Nashville-based Griffin, have announced iPad accessories such as cases and screen-care kits. Apple also makes many accessories, including chargers, keyboard docks, and carrying cases. "It's going to be an incredibly important portion of our business," says Jamie Elgie, director of product management for mobility at Belkin. "We believe (iPad accessories) could be as big as our businesses for iPod and iPhone." An average cell-phone owner purchases about $60 worth of accessories, according to ABI Research. Consumers spent $8.4 billion on mobile-phone accessories in 2009, according to NPD Group.
iPad Buyers Might Splurge on Accessories
While Apple may not immediately sell as many iPads as iPhones and iPods, it's possible that iPad owners will spend more on accessories, some analysts say. The iPad is larger, more versatile, and generally pricier than the iPod and iPhone. It may also lend itself to longer usage, Elgie says. To make the tablet more useful within the car, home, or office, users will need more accessories, he says. At $499, the lowest-priced iPad costs 1.5 times more than the cheapest iPod Touch, and its buyers may be more affluent and willing to spend more money on protecting and outfitting their device, Scosche's Alves says.
FTN Equity Capital Markets senior analyst Bill Fearnley expects Apple to sell more than 2 million iPads by the end of September. Pacific Crest Securities analyst Andy Hargreaves expects Apple to ship 3.3 million units. By contrast, Apple sold 8.7 million iPhones and 21 million iPods in the quarter that ended Dec. 26 alone.
Even if the iPad accessories market doesn't reach the iPhone's level, it may nevertheless produce profits. Based on initial vendor pricing, iPad accessories will be more expensive than their iPhone and iPod counterparts, says Michael Morgan, an analyst at ABI Research. Scosche's iPad stand is due to sell for $50, while the company's comparable iPhone products sell for $15 to $35. With 70% to 90% margins, "it's a lucrative business to be in," Morgan says.