But it is a market that has changed dramatically over the past couple of years, transformed by the rising cost and greater capabilities of the devices that the accessories serve. “Today’s smartphone probably includes Bluetooth and a camera – nothing new there – but it may also incorporate WiFi, Near Field Communication, GPS, multimedia, speech recognition and more,” said senior analyst Michael Morgan. “All these add value to the device, making it more worth protecting and more able to benefit from high quality, high-priced accessories.”
This is changing the business strategy. Once, handset OEMs could include low quality headphones, a low end media card and a cheap fake-leather case with the phone, and customers would be happy.|
But now the quality of the handset exceeds the quality of the accessories, and users know it. A smartphone capable of CD-quality audio demands better headphones. That opens a space for third party accessory OEMs to draw on the value of the handsets.
But accessory OEMs need high volumes and, added Morgan: “The only way to achieve high volume sales is to craft a more horizontal product line, creating accessories that will fit a wide range of devices.” Every device has a 3.5mm audio jack, for example, and no handset OEM is including high quality headsets. So Bose, Zagg, Monster, and others are successfully filling the gap.
There is a further twist leveraging brand value. As practice director Kevin Burden pointed out: “Handset OEMs thought their brand-power could sell accessories, but there wasn’t actually a lot of brand affinity involved in consumers’ purchases. Accessory OEMs, in contrast, extend their known expertise: Monster has built on its reputation for good cables, for instance, transferring that to its premium headphone offering.”