iPod tax

Posted by Jim on November 18, 2005

So here we go - we have a successful device, and people are trying to leach on, so we make a volunteer program, and not enough people join up, so we make it mandatory. Ths repeats itself all the time, someone tries to play nice in the field for a change, and one bad egg spoils the bunch

For some months, the company has been seeking royalties from accessory makers that want to display a “Made for iPod” logo on their products. The program, which one analyst has likened to an “iPod tax,” applies to devices that connect electrically to the player and not to cosmetic things like cases.

Now Apple has made the program a requirement for manufacturers who want their gadgets to plug into the “dock connector” at the bottom of the music player. 

Apple’s Senior Vice President Phil Schiller did an interview over at CNET News.com, “Yes, the electrical connection has specifications around that and licensing around that, and the way you get that assistance and information and licensing is through the ‘Made for iPod’ program.” They failed to ask when it would be a mandatory program.

Though many manufacturers have signed up for the program so far I have see reports of private complaints. Why no names? Will Apple blackball the whistleblowers and complainers, or these people are not significant in the iPod after market, so better to report them as anonymous? Here is were I would make a bad journalist. Hide my sources because they will not hold in the light of day.

News reports are refering to a royalty of approximately 10% of a device’s wholesale price. “They’re just expanding the ‘iPod tax’,” said Gene Munster, a financial analyst at Piper Jaffray. “Ultimately Apple is tired of watching these people profit off their success.”

And here we really cannot blame them - if you make a headset that fits a lot of stuff, then go for it. If you make a headset or other device that docks with the iPod only, bill it as iPod compatible, but refuse to give anything back to Apple, expect them to get a little peeved. Imposing the tax and compliance and collection are all different matters. How long until we see Apple going after iPod pirate device manufacturers? Apple has a chance to profit further from the iPod empire on the add-on market which is estimated in the hundreds of millions of dollars per year. Who buys this many add-ons? You? Because it certaintly is not me.

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