Apple has canned its controversial “Made for Apple” iPod accessories licensing program, replacing it with a flat fee program that is easier for Apple to manage.
The initial licensing program was based on Apple taking a percentage of revenue from all products that connected to an Apple 17pin iPod connector. Originally Apple proposed a fee of 1.5% but as the popularity of the iPod increased and sales moved into the tens of millions Apple told organisations like Bose that they had to pay up to 10% of revue back to Apple for being an official partner of the “Made for Apple” program.
Instead, the program has been replaced with a flat US$4.00 per unit fee.
Apple has refused to comment on the fee. The move is set to favour the manufacturers of high end iPod accessories such as Bose, Jamo, Altec Lansing and Hi Fi manufacturers who are selling iPod connector or docking stations. It’s also set to please Bose who late last year was angry with Apple over the move to increase licence fees.
Dominique Water the head of Bose’s Asia Pacific operations said “All Apple partners were told of the decision by Apple to increase licence fees for the Made for Apple program. 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”.
A spokesperson for Altec Lansing said at the time “We were told of the new port fee by Apple. It is ridiculous. It is excessive and will result in many partners re thinking there relationship with Apple. It will also push up the cost of Apple accessories”. They said. What Apple intend to do is take 10% of all revenue from anyone making an iPod accessory that operates by being plugged into an Apple iPod music player. Normally a fee of between 1 & 2% is charged. The move which is seen as being aggressive could net Apple millions in licence fees.
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 across all MP3 devices. We also need a common docking design so that people like Bose can develop common accessories. Currently Apple is the only one with a common port as a result accessory manufacturers are designing for the iPod Apple platform”.
SHN recently reported that authorised manufacturers of iPod accessories such as Belkin and Griffin have been told that Apple is set to take action against several vendors who are not part of an authorised “Made for Apple” program but are selling products into retailers at considerable lower prices than authorised partners.
Currently Apple gets a 17 pin licence fee from vendors participating in authorised programs and with some vendors such as Hi Fi manufacturers who are manufacturing attached sound systems the licence fee is as much as 10% of the retail sell in price.
In recent weeks several global retailers have found themselves left with racks full of iPod accessories that they purchased from non Apple approved organisations with many such as Harvey Norman in Australia now moving back to the likes of Belkin and Griffin. While iPod product sales increased by up to 400% iPod accessories only increased by 30% leaving retailers with a mass of unsold stock.
Currently the 4 top selling iPod accessories are Cases, Card Chargers, FM transmitters, and attached sound systems. Mr Kannyn MacRae Product Marketing Director of Belkin Australia said “The iPod accessories sell through that retailers were expecting over the holiday period did not happen. Every retailer knew that iPods would be big sellers over the Xmas holiday period so they stocked up on both players and accessories. However many retailers purchased stock that has not sold through and they are now coming back to authorised Apple accessory partners. Basically they bought stock from anybody and no it is still on the shelves as consumers want good quality accessories from branded manufacturers like Belkin, Griffin and others who are manufacturing the high quality accessories”.
He added “Apple is getting tough on the non authorised guys and this is good as they intend to enforce the Made for Apple program via the authorised partners”.
A leading iPod accessory manufacturer who is not part of the Made for Apple program but is still selling bucket loads of iPod accessories around the world said. “My legal advice is that one does not need to pay a licence fee to Apple for a 17pin connection device that connects into an Apple iPod. All one is paying for is the official endorsement of Apple’s “Made for Apple” program and 10% was a bit rich. $4.00 is acceptable if one is selling a product over $100 however it will not work for the low cost sub $100 accessory manufacturers”.
