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For Small Accessory Makers, iPhone Mania Means Big Business

The iPhone's brisk sales thus far have been a boon to companies that make cases and adapters.
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With iPhone sales already surpassing expectations, smaller accessory makers  are feeling pretty good about the future.

"This is just the beginning of a long, long party," said Andrew Green, the creative director of Digital Lifestyle Outfitters, or DLO, a Charleston, S.C.-based accessory maker. He said the company's sales after the iPhone's June 29 launch far exceeded those following the iPod's launch -- or anything else he's seen in the industry.  

Despite a few anticipated bugs, opening weekend sales of the $500 and $600 iPod-cell phone hybrids reached an estimated 500,000, with long lines outside Apple and AT&T Wireless stores nationwide. Since then, about 200,000 more have been sold, on pace for Apple's goal of selling 10 million units by 2008.

That's good news for accessory makers, many of whom unveiled carrying cases, arm-band holders, docking stations, and other products weeks before the iPhone itself was available. According to ABI Research, iPhone sales will give a boost to the lucrative cell-phone accessories market, which is already expected to generate $32 billion in revenue this year and $80 billion by 2012. At the same time, iPod accessories have grown into a separate billion-dollar industry, driven by an ongoing trend for consumer technology personalization -- with iPhone accessories makers tapping into both markets.

While Apple offers its own line of iPod and iPhone accessories, the company has largely ceded the market to third-party manufacturers like Belkin, Gomadic, RadTech, and Griffin Technology, among others.

Still, with the exact technical specs under wraps before the launch, many of these companies are only now rolling out products. Others, like Murray, Utah-based ezGear, unveiled cases and docking stations as early as May.

As expected, some of those cases needed to be tweaked once the final specs were revealed. For instance, a few cases inadvertently covered up a proximity sensor that turns the music player off when the phone is being used. In addition, Apple designers opted for a glass screen, rather than plastic, making scratch-resistant screen protectors largely unnecessary.

"There was a lot of pent-up anticipation for this and some companies just jumped the gun," Green said. Unlike other manufacturers, DLO -- a 2006 Inc. 500 company, which was bought by Philips in April -- partnered directly with Apple to build iPhone accessories to spec. DLO's revenue topped $83 million last year.

Green said he believes the anticipation simply got to many manufacturers. "They can put up anything they want on a website, but that doesn't mean it's going to work."

Rod Schecter, a spokesman for Herndon, Va.-based charger and cable manufacturer Gomadic, said its engineers were able to turn out a line of iPhone-ready products in little over a day following the launch.

"We put up a preliminary page on our website and worked out the technical details as soon as they were available," Schecter said. "Our guys are really good. We're a smaller company and can adapt pretty quickly." So far, sales have been strong, he said.

In any case, Schecter added, the accessory market generally lags behind a product launch, while buyers tend to use the in-box accessories for the first few months.

Rather than aiming for a sharp spike over the first weekend, Schecter said he expects sales to climb steadily as the company rolls out more products in the months ahead.




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