Leveraging the Apple Ecosystem with Third Party Hardware Products

There are many things that make a successful company: great leadership, exemplary people, a solid culture, and a much targeted market.  Yet, people sometimes overlook the impact of building a successful ecosystem of partners who can help a company with new applications, products, features, and channels to the market. 

So we decided to look at one of the masters of building such an ecosystem: Apple. We all know how successful Apple has been with the iPhone and the iPad and creating new product categories and platforms that leverage mobile computing. Mobile accessory vendors have been quick to leverage Apple's product platform from the very beginning. In building lifetime value of a customer, these accessories can derive large profit margins for everyone in the value chain. Just how big is the market?

Source: http://www.slideshare.net/andreasc/mobile-megatrends-2014-25-may-2014

ABI Research expects global revenues for mobile accessories to be $81.5B in 2015. Future Market Insights believes global mobile accessories market revenue will reach $121.7B in 2025.

For the sake of discussion, we can look at mobile phone accessories as part of larger wearables and mobile accessories market. In fact, if you use mobile phones as controllers, they start to tap into the concept of the Internet of Things (IoT) and other related and adjacent markets in smart homes, entertainment, and security.

Let’s look at mobile phone accessories. Future Market Insights subdivided this market into more than 6 categories as shown below and included their 2014 market share.

Source: http://www.futuremarketinsights.com/reports/global-mobile-phone-accessories-market

While this list is pretty straightforward, strangely, I believe it is missing one important category - hardware enabled input and output devices that take advantage of the iPhone platform as a controlling device. This is a distinct advantage of the iOS market. Unlike Android devices, whose styles, hardware, form factors, buttons, switches vary by competitor, the iPhone platform and ecosystem is standardized to allow a clear path to hardware development of the iPhone mobile computing platform. They offer developer programs like MFi and the External Accessories Framework (EA) to support communication and support of third party hardware device to an iOS device through Apple Lightening, 30-pin connector and wirelessly using Bluetooth.  

In the presentation by VisionMobile, these ecosystems have given birth not only to red and blue oceans, but black oceans, ecosystem driven-markets that are so powerful and strong, you can't beat them, and you can only join them or compete with them with another black ocean ecosystem (e.g. Android vs. iOS).

A simplified input-output model for hardware development looks something like this:

Source: Vince Ferraro

In the imaging, test and measurement, and audio markets, companies are leveraging Apple's ecosystem in some exciting and new ways, often creating new product categories or products that are substitutes to existing products that were created on platforms and devices in the pre-smart, mobile phone world.

Here are some examples of such products.

Imaging

Ollo Clip 4-in-1 Lens System

Zeiss Optics Exolens System

Flir One - a thermal imaging infrared camera attachment. A similar product is offered by Seek.

Sony QX30 Smartphone Attachable Lens with 18MP and 30X optical zoom

Echo Labs Revolve - a San Diego startup that is developing an innovative microscope that use mobile phones and tablets for image viewing, image capture, analysis and printing.

HyperCam - under development, the HyperCam makes use of a technology called hyperspectral imaging, which involves scanning 17 wavelengths of visible and invisible near-infrared light from across the electromagnetic spectrum to capture unseen details.

Scanning

Infinite Peripheral’s LineaPro 6 Accessories Bar Code Scanner - turns your iPhone into a bar code scanner

eora 3D - the world’s first high-precision 3D scanner that is entirely powered by a modern smartphone. It lets you capture everyday physical objects and surfaces and turns them into high-quality 3D models, all on your phone, making it extremely affordable.  

Sensing & Measurement

Lapka for iPhone - a range of environmental sensors that plug into the iPhone

Scanadu SCOUT  - which is developing a  personal medical Tricorder

Range Smart Cooking Thermometer - hardware and  app to receive remote temperature alerts to iOS devices anywhere.  You can also save and share recipe graphs, and set both USDA- and gourmet-recommended presets, so you know your dinner will be done just how you like it.

There are also brainwave measurement using devices like Emotiv's EPOC / EPOC+. Another popular one is by Muse.

A list of other medical-device accessories for the iPhone can be found here.

Audio & Music

Alesis IOMIX 4-Channel Audio Interface/Mixer for iPad - enables four-channel mixing and recording on your iPad. The iO MIX provides all of the necessary connections, as well as compact four-channel mixer for making the most of every performance. With its compact design, iO Mix is the perfect portable studio.

Focusrite iTrack Professional Dock for recording on iPad. iTrack Dock is a comprehensive, studio-quality iPad recording interface that acts as the hub of your iPad recording studio. It features dual legendary Focusrite microphone preamps, along with two line inputs and an instrument DI with plenty of extra headroom, stereo monitor outputs with 105dB dynamic range plus independently controlled headphone outputs, and a USB port for class compliant MIDI instruments and controllers.

DigiTech IPB10 Guitar Floor Multi-Effects Pedal -  a programmable Pedal board which sets a new standard for guitar signal processing. By harnessing the power of the iPad, it combines the simplicity of a pedal board with the flexibility of multi-effects. The iPB-10 unleashes the ability to create and control guitar effects like never before. The iPB-10 allows you to create your ultimate pedal board, all on your iPad. Design a pedal board by simply dragging and dropping up to 10 different pedals, in any order, to each pedal board.

IK Multimedia iRig 2, an interface adapter for iPhone, iPod touch, iPad, Mac and Android. They have an entire line of mics, mixers, effects, and recording attachments for smartphones and tablets.

Where do you go from here?

There are many other examples and opportunities are limited only by the capabilities and functionality of the iOS platform. 

The key point is that a company, such as Apple, looks at their product as a platform upon which others can build and profit from.  In addition, other companies can exploit that ecosystem to build their business.

There are a many hardware opportunities for innovative companies that can do one of two things to leverage the capabilities of Apple platform.

1) Replace existing products by harnessing the power of the Apple ecosystem. Create disruptive products that challenge and change prevailing value propositions and pricing of these products in the market.  Leverage existing value chains to drive market share and expand the market.

2) Create new products and solutions that were too costly or unattainable, until the iPhone ecosystem was developed. Develop the market with new price/performance curves and blue ocean ideas that bring radically new capabilities and functionality that might have been confined to a higher priced niche.

While this blog focuses on Apple, other companies may glean ideas on how they can transform their products and services by leveraging the power of an ecosystem.   Sometimes, it is just a matter of building a stronger business development function.  Other times, it may be reviewing and expanding on the product set which will make the product or platform more robust.  Perhaps setting up a new product or business advisory panel can help with those ideas. 

What are your thoughts on this topic?  Let’s continue the dialog. And if you would like to discuss building an ecosystem, feel free to contact me at vferraro@clevelpartners.net or tweet me @vincelferraro and check out our other insightful blogs and resources.

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