The $29 Mistake That Can Destroy Apple


"Thunderbolts and lightning
Very very frightening me."
-- Queen, "Bohemian Rhapsody"

Everyone's been cheering Apple (NAS: AAPL) higher since Wednesday's iPhone 5 unveiling. The differences between the iPhone 5 have been well received. The larger screen. The faster A6 chip. The ability to take better snapshots in low-light conditions.

However, there isn't necessarily a lot of thunderous applause when it comes to Lightning.

I see a little silhouette of a plan
Apple's decision to change the iPhone's connector -- going from the 30-pin accessory that dates back to the iconic smartphone's introduction in 2007 (and even earlier with the iPod) to the new Lightning standard -- is bold.

Future generations of the iPhone, iPod touch, and iPad will adhere to the new connector. In a few years, consumers won't even remember where all of their 30-pin plugs went. However, there's the pesky migration period that will take place between now and then. Apple has a solution, but it comes at a price. Apple is selling a $29 adapter that will allow iPhone 5 and the new iPod Touch media players to work with the countless other docks already on the market.

Let's just call it a tax on Apple users as they bankroll the tech giant's latest innovation.

On Thursday, The Wall Street Journal ran a piece on how hotels that have invested in iPhone and iPod docks in their rooms will react. They can't invest in new docking stations because they're too expensive, and it will be years before there are more post-iPhone 5 owners than pre-iPhone 5 owners of iOS devices. Apple bragged on Wednesday that it has sold 400 million iOS devices through the end of June, and that's your 30-pin-connector audience right there.

Buying the adapters is a cheaper solution, but the hospitality industry's rightful concern is that folks will swipe the small adapters. Further, what will the wear and tear of the adapters do to the docks, as guests hook and unhook their different devices?

Accessory makers react
A new iPhone form factor is sweet news to some third-party accessory makers. ZAGG (NAS: ZAGG) , for one, is now promoting invisibleSHIELD Extreme, its flagship product, for the iPhone 5. The thin film protects the handset from scratches, shock, and breakage. Companies making cases will be giddily busy, as iPhone 4S owners can't simply slip their old cases on to the larger iPhone 5 phones.

But it's not all that fantastic for other companies that have been feasting on the iPhone's success. Logitech (NAS: LOGI) is responding to Lightning by trying to make its music appliances wireless. It was bad enough when accessory makers had to fret over the differences between iOS and the more common micro-USB connections. Now that even different iPhone generations will require different ports, Logitech doesn't have much of a choice but to do something.

Moving on
Early adopters won't care. Initial iPhone 5 pre-orders sold out faster than earlier Apple smartphone incarnations have, and there's no reason to believe Apple won't sell a ton of these iPhone 5 devices.

However, shifting to a new connector may get in the way of how quickly mainstream consumers hop on the iPhone 5 bandwagon after Friday's initial rush subsides. If it becomes the burden of iPhone 5 owners to lug around an adapter when they travel or whether they've just amassed too many 30-pin connectors over the years to abandon the platform, this could be trouble for Apple.

What if folks don't buy the iPhone 5 when they want one? What if they wait until they actually need one? Now that would be something.

Apple jacks
A new premium report on Apple details the opportunities and challenges in store for its shareholders. It's also been updated to include new iPhone 5 details! Check it out now.

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