WSJ: Is the iPhone 5’s Lightning Connector’ a Pain in the Neck?

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Date: Sept. 132012

Published in: The Wall Street Journal

By Anton Troianovski, Dana Mattioli and Spencer E. Ante

Apple Inc. rolled out a host of new features for the latest iPhone, then threw in one big pain in the neck.

Along with a bigger screen, better camera and faster speeds, the iPhone 5 sports a redesigned plug for cords that connect the device to electrical outlets or home computers.

Apple touted its new Lightning connector” as smaller and more durable than its current connector. Plus, the plug is reversible, eliminating a possible annoyance. But people in the vast ecosystem of hotels, gyms and cars where iPhone connectors have become the de rigueur dangling accessories of sound systems and workout equipment were less upbeat.

Oh God,” groaned Michael Mueller, chief executive of Dallas-based hotel chain NYLO Hotels LLC, after learning of the new iPhone dock connector from a reporter Wednesday afternoon.

Mr. Mueller said he has outfitted just about all of his 600 hotel rooms with clock radios that have iPhone docks at a cost, in his most recent order, of about $115 apiece. Now he says he will have to decide whether or not to replace all those radios and whether to pick the new or the old iPhone dock for the clock radios he plans to order for more than 400 rooms he has under construction.

Another alternative is to stock his rooms with the adapter Apple is selling to connect its new phone to old docks. But those run $29 apiece and could easily replace the bathrobe as the hotel collectible of choice.

It’s going to be a problem,” Mr. Mueller said. We’re going to have to decide if we stock those or if people with iPhones just sort of over time end up throwing one in their briefcase and knowing when they’ll need it.”

Apple didn’t immediately reply to a request for comment.

Apple’s technological marvels get all the attention and carry the big price tags. But they have spawned a constellation of accessories, adapters and other gizmos that bring in plenty of money themselves.

Total aftermarket sales of smartphone accessories come to about $36 billion globally, according to ABI Research. The iPhone accounts for about 20% of that market, or about $7 billion, most of which is spent on protective cases.

While most other smartphone makers rely on standard connector technologies such as micro USB cables that carry no licensing fee, Apple has always developed its own proprietary cables and charges fees to let companies use Made for iPhone” branding on their accessories, said ABI analyst Michael Morgan.

There is a huge opportunity for wireless retailers to really bump up their accessories attachment rate,” Ms. Hamer said of the new plug. Everyone has to re-buy the stuff they’ve gotten accustomed to using.”

Electronics dealers sustain themselves with those sales at a time when many feel squeezed by razor-thin margins on selling devices like the iPhone. Wireless retailers’ profit margins on accessories for Apple devices typically run as high as 80%, said Stacy Hamer, executive account manager for retail software company iQmetrix, which specializes in wireless stores.

There is a huge opportunity for wireless retailers to really bump up their accessories attachment rate,” Ms. Hamer said of the new plug. Everyone has to re-buy the stuff they’ve gotten accustomed to using.”

Companies have also made a market for iPhone connectors as they try to make it easier for people to hook their devices into their products.

Icon Health & Fitness Inc., the parent company of workout equipment brands such as FreeMotion Fitness, Pro-Form and NordicTrack, is still evaluating how it will adapt to the new iPhone’s charging stations.

About 10% of the company’s gym equipment has charging docks that are sized to current iPhone and iPod models, spokeswoman Colleen Logan said. The company is still figuring out how it will outfit future models, she said.

Executives at Life Fitness, a treadmill, elliptical and cardiovascular equipment maker, had been combing technology blogs for months to try to figure out how the new iPhone’s changes could affect its product design, said Dan Wille, vice president of global marketing and product development.

I’d be lying if I didn’t say we were watching very closely,” he said. Now, the company is figuring out when to make new equipment compatible with the new iPhone dock and whether to sell its fitness center clients a kit to update their charging stations to the new configuration.

Mike McCord, the owner of a RadioShack Corp. RSH -1.44% franchise in Logansport, Ind., said Apple might be throwing a bone to his beaten-down industry by changing the dock connector, which could drive new sales of speaker systems and car chargers as well as Apple’s dock accessory itself.

Is it good for the consumer? I don’t think so,” Mr. McCord said. But for dealers of electronics, it will be a good thing.”