Zune offers new opportunity for iPod add-on makers

iPod killers have come and gone, but even Apple acknowledges that its popular multimedia player is going to face some stiff competition from Microsoft’s Zune this holiday season. And when the $249 device debuts next month, it figures to draw attention not just from consumers, but from companies that have enjoyed a booming business making accessories and add-ons for the iPod.

“Microsoft partners like no other company, at least in the technology market,” said Joe Wilcox, senior analyst at market-research firm Jupiter Research. “And with Windows and Xbox Microsoft has shown that it can create successful platforms for third-party development.”

Indeed, that figures to happen with the Zune, as at least one of the major suppliers of iPod accessories plans to follow suit with Microsoft’s music player. Digital Lifestyle Outfitters, which offers dozens of cases, connectors, transmitters, and other iPod add-ons confirmed that it is part of the “Designed for Zune” accessory program. DLO is “working directly with Redmond and the Zune team there,” said Andrew Green, the company’s vice president of marketing.

“Obviously the iPod platform is very mature, so more immediate opportunities exist because of DLO’s extensive experience with the technology,” Green added. “However, the Zune offers some immediate and unique options that we already are exploring.”

But not every iPod accessory maker is hopping on the Zune bandwagon. “While many of our competitors are spending valuable engineering resources and hedging their bets making products for competing MP3 players, we remain entirely focused on making the best possible accessories for Apple’s customers,” XtremeMac CEO Gary Bart said.

Griffin Technology President Paul Griffin declined to comment directly on the Zune, but said that “as the leader in the portable media player accessory market we are always evaluating opportunities in this space.”

The market for music player accessories is a healthy one, with the iPod’s popularity providing a tempting target for makers of cases, headphones, adapters, and other paraphernalia. In discussing Apple’s quarterly earnings with analysts this week, Apple Chief Financial Officer Peter Oppenheimer noted that there are more than 3,000 iPod accessories available and that an estimated 70 percent of the 2007 model year cars sold in the U.S. will offer iPod integration. “The iPod ecosystem continues to thrive,” Oppenheimer said.

While the Zune has yet to establish itself, industry analysts note that it could be beneficial for accessory makers to support the new music player out of the gate.

“It’s not surprising some accessory manufacturers would see Zune as an opportunity and take a coveted early supporting position,” Jupiter Research’s Wilcox said. “Microsoft is sure to put lots of marketing muscle behind Zune, some of which will benefit accessory manufacturers supporting the device.”

The Zune’s differing feature set is garnering some attention in the market. Microsoft’s subscription-based pricing for music downloaded from the upcoming Zune Marketplace music download service could attract some consumers, who can’t get a similar deal from Apple’s iTunes Store. The Zune’s built-in FM radio receiver and wireless capabilities, which will allow Zune users to “beam” songs to one another, is also piquing some interest. And these features offer third-party developers new avenues for product development.

Another factor that could affect accessory companies is the different ways Microsoft and Apple deal with their developers. Griffin recognizes that the iPod will continue to garner most of the attention and innovation from developers, but that could change.

“Differences in strategy toward developers by Apple and Microsoft may influence this beyond just the size of the market,” Griffin said. “Microsoft appears to have a very flexible strategy toward Zune developers that may pay off in more innovation on the platform.”

Wilcox agrees with this assessment, saying that Microsoft will most likely work with developers. “It’s a fair bet from past behavior that Microsoft won’t change Zune without working with accessory manufacturers beforehand.”

recommended for you

Missed opportunities

Read more »

Subscribe to the Best of Macworld Newsletter

Comments