October 23, 2003 10:56 AM PDT

Apple cracks open the iPod, slightly

Apple Computer's iPod is learning how to play well with others.

The iPod, which turned two years old this month, spent its first months focused on doing one thing--playing music. Apple added other features, such as address and calendar information, the ability to store notes and a couple of games. Now, the computer maker is starting to let other companies join the act.

While stopping short of opening up the iPod's operating system or freely offering a developer's kit, the Mac maker has quietly been working with a number of other companies to boost the number of add-ons that attach to the iconic white player.

News.context

What's new:
Apple Computer is quietly working with several companies to boost the number of add-ons that attach to the iPod.

Bottom line:
Expanding the iPod's capabilities is likely to please buyers and help solidify Apple's commanding lead of the portable MP3 market.

For more info:
Apple's iPod.

"There's things that we've done to help other people bring the iPod into other markets and other uses," Apple Senior Vice President Phil Schiller said last week.

Expanding the iPod's capabilities is likely to please buyers and help solidify Apple's commanding lead of the portable MP3 market. The company has sold 1.4 million iPods--nearly half of those in the last 6 months--making the device the leading MP3 player on the market, with 31 percent market share for July and August, according to market studies cited by Apple.

The iPod also has been critical to Apple's bottom line, helping the company beat analysts' expectations for the past two quarters.

Its dominance, however, is not going unchallenged. For years, the iPod has been one of the only players built around a 1.8-inch hard drive, but others are coming into that market, including low-cost leader Dell, as more drive makers offer drives of that size and smaller.

Tim Deal, an analyst with Technology Business Research, said Apple is trying to strike a balance by opening the iPod to some developers but not making it an open platform.

"I think by offering a (developer) kit, they would expand their opportunity for innovation and thus multiply their organic development efforts," Deal said. "However, by being selective, they are maintaining a conservative approach, which will help them avoid becoming entangled in a quagmire of whimsical yet useless ideas."

The most notable add-ons are the voice recorder and media card reader Apple introduced last week along with the Windows version of iTunes. Apple has also worked with speaker maker Altec Lansing on a set of speakers into which the iPod can dock. Ten Technologies contributed the NaviPod infrared remote. In total, Apple says there are now more than 130 add-ons for the iPod, though that figure includes such things as custom cases.

Apple has also posted on its developer Web site some instructions that allow the device to be operated in a "museum mode" in which the iPod's interface can be customized for use as part of an audio tour. For example, a text note about a Van Gogh exhibit could link to audio files that offer a guided tour of the paintings. Apple is also asking developers with other add-on ideas to e-mail the company.

Many of the iPod's new uses stem from the fact that at its heart, the iPod is basically a big hard drive people are carrying lots of places where they don't have a computer. In the current courtroom drama "Runaway Jury," for example, the iPod serves as a hidden storehouse for personal files the protagonist deems too valuable to be left on his computer.

Although Apple has been careful to stick to its mantra that the iPod is first and foremost a music player, the company has made subtle changes to both its software and hardware to make the iPod more adaptable in its current incarnation.

"We thought from the very beginning that we want to be able to connect to great solutions," said Stan Ng, Apple's iPod product manager.

That was part of the reason Apple added the dock connector to the bottom of the latest generation of iPods, which debuted along with the iTunes Music Store in April.

Apple started working with Belkin ahead of that release to develop a series of peripherals. Starting late last year, Belkin began work on a battery pack and car charger, as well as the microphone and card reader that were just introduced.

It was a big opportunity for Compton, Calif.-based Belkin but also a big challenge. Apple didn't let Belkin see the new iPods. Instead, the company got just enough electrical information to understand the connector. When it came time to test the products, they usually gave the products to Apple, which tested them and then gave Belkin feedback.

"We weren't shown the new iPod design until very late," said Oliver Duncan Seil, a senior industrial designer for Belkin and the lead designer of the iPod accessories. "When you work with a company as powerful as Apple, you are dependent on them for a lot of things."

Still, that's a much better position than Belkin has found itself in with Apple in the past. Each time the company, like others, wanted to make add-ons for the early iMacs, it would have to wait until Apple unveiled its latest color scheme and then quickly try to adapt its products before they were rendered obsolete.

"Of course, there has been a lot of frustration over the years," Duncan Seil said. "I guess that is just part of the game."

But Belkin is relishing its new role as Apple insider. Getting close to the Mac maker has already paved the way for the company's deal to provide an iPod holder to Volkswagen, which bundles the iPod along with its Beetle as part of a "Pods Unite" promotion.

"We wouldn't have gotten that if it wasn't for our relationship with Apple," he said.

Belkin has been particularly careful not to spill any of Apple's secrets. As a precautionary measure, it even e-mailed news stories to its employees about an Apple contractor who had leaked details of Apple products and found himself the target of a lawsuit.

The company wants a long and prosperous relationship with Apple, Duncan Seil said. He said it was a thrill to see CEO Steve Jobs showing off a Belkin product. "It was a big moment," he said. "We're hoping for some more of those."

At the same time, he said, Belkin knows it can't base its business on landing deals like the voice recorder and media card reader, for which Apple created the software and Belkin the hardware. "We're sure not to bank everything on those proprietary products," he said. "There are not enough of those."

Duncan Seil also knows that Apple is likely to work with other companies, too.

"Of course, we were able to profit from the fact they singled us out," he said but added that "competition always leads to better products."

 

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