Is Apple Helping or Hurting iPhone Partners?


Apple (NAS: AAPL) will ditch the old dock connector when the next iPhone model hits store shelves. The rumor isn't new, but the evidence has piled up to nearly irrefutable levels.

So the iPhone 5, or "new iPhone," or whatever Cupertino might call its next handset will have a much smaller plug at the bottom than previous versions. The current dock has been around since 2003, when it first showed up on the third generation of what's now called the iPod Classic.

In one bold stroke, this seemingly innocuous change makes every accessory obsolete. A cottage industry has grown up around Apple's dock connector, and if you own an iPhone today, chances are that you've already paired it with goodies like a charging station, drop-in docks for the stereo system in your living room or your car, and external storage dongles.

This is probably just the beginning of a bigger move. Apple likes consistency, so the connectors on everything from iPods to iPads will likely follow the iPhone's suit over the next year or so. You'll see adapters that let you pair obsolete accessories with the modernized connector, but come on ... that inelegant kludge is for Android heretics and Palm Luddites!

The dock of no return?
All kidding aside, adapters hardly fit the polished Apple brand -- or the self-image of your average iPhone buyer. These things should just work, with absolutely no assembly required.

The availability of add-on hardware also sets the iPhone apart from other smartphones and the iPod from a sea of competing media players. Yes, you can find stereo docks for the micro-USB connectors common on Android phones today, but Apple is the only name that really matters here.

Cirrus Logic (NAS: CRUS) makes the audio chips inside every iGadget, and CEO Jason Rhode keeps telling analysts that the target market for high-end smartphone audio is really limited. To make a premium audio product, you've got to have a dock connector, and "frankly, there's really only one of those out there that matters, and it happens to be the one we're in."

This from a company that would absolutely love to sell sound processing chips to more than one smartphone maker. If anything, Cirrus has all the incentive in the world to shine a spotlight on Apple's competitors in the quality audio space. But they just don't exist. The iPhone dock really is the only game in town.

If I ran Logitech International (NAS: LOGI) , Audiovox, or -- ironically -- Sony (NYS: SNE) , I'd curse the engineer who pulled the rug out under my popular lines of iPhone accessories.

Or would it?
This is actually a very delicate balancing act. Apple does run the risk of alienating customers with extensive collections of add-on hardware, perhaps writing the beginning of the end of the iPhone saga. But let's face it: That's not the most likely outcome, and the other side of this coin might be golden.

The redesign could inspire mass migrations to the local shopping mall to replace that obviously outdated cache of accessories with fresh, modern ones. The typical Apple consumer is, after all, not the kind who scours couch pillows for every last penny before buying a gallon of milk. And newer is always better, right? So this decision could actually start a windfall of epic proportions for Apple's add-on partners.

And don't forget that Apple has skin in the add-on game by selling plenty of accessories under its own brand, too. This is clearly a calculated risk that Cupertino's lawyers and accountants expect to come up aces. It's a good bet that Logitech and friends will benefit from the gamble as well.

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Fool contributorAnders Bylundholds no position in any of the companies mentioned. Check outAnders' holdings and bio, or follow him onTwitterandGoogle+.The Motley Fool owns shares of Logitech International, Apple, and Cirrus Logic and has sold shares of Sony short.Motley Fool newsletter serviceshave recommended buying shares of Logitech International and Apple and creating a bull call spread position in Apple. We Fools don't all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter servicesfree for 30 days. The Motley Fool has adisclosure policy.

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