San Jose Mercury News

SAN JOSE, Calif. – Call it the iPod wealth creation machine.

When Apple Chief Executive Steve Jobs opened up this year’s Macworld by announcing an expectations-busting quarter of $5.7 billion in sales and 14 million iPods sold, it wasn’t just investors and company executives who were giving each other high fives – the iPod ecosystem cheered on as well.

The iPod accessory world is now a multibillion-dollar industry, said Richard Doherty of the Envisioneering Group. He estimates $1 billion worth of accessories were sold during the recent holiday quarter alone, on everything from iPod protectors to speakers to car accessories.

“It’s the iPod economy,” Doherty said. “And Steve Jobs is the Alan Greenspan of that iPod economy.”

On Thursday, investors were showing their love for the Cupertino, Calif., company as Apple Computer shares traded around $84.63, an all-time high. In a note to investors, American Technology Research analyst Shaw Wu called Apple a company with “arguably the industry’s most powerful and complete” set of products, including hardware, software and services.

In the Macworld exhibition hall at San Francisco’s Moscone Center, where about 20 percent of the 330 vendors are selling iPod-related products, there was equal delight.

While Jobs used the 22nd Macworld Conference & Expo’s opening Tuesday to turn the spotlight to the company’s line of Macintosh computers – with the introduction of the new Intel-based iMac and MacBook Pro laptop – art deco slipcovers and high-end iPod earphones that sell for more than the music players were not far from the stage.

The company sports a symbiotic relationship with accessory-makers. Apple receives a licensing fee and royalties from companies whose products access the iPod port. And even if the company does not receive direct payments, the more businesses that build creative accessories, the more desirable the iPods become.

At this point, there seems to be no end to the iPod-related business plans. Chrysler just announced that it was providing iPod-friendly gear as an option in most of its 2006 models (At Macworld, there are autos decked out with iPod equipment.) Levi Strauss said it will sell jeans – called Levi’s RedWire DLX Jeans – with a docking cradle for the music device in a pocket.

Gavin Downey, Belkin’s director of product management for mobile devices, said iPod accessories account for a “sizable” slice of sales for the consumer electronics company. The company makes an array of iPod add-ons, including an FM transmitter and its “Kick-Stand” case for the video iPod player that allows people to watch shows without holding the device.

“We go to all the announcements,” Downey said of Apple’s famed product events. “We get as many people at those events as possible.”

The digital music player has, indirectly, provided a business model for individual entrepreneurs, as well.

Gary Bart launched his iPod accessory company, XtremeMac, after reading the first Apple news release announcing the launch of its digital music player. He quit his job at a Florida data storage company, quickly designed an iPod slipcover and set up a tiny booth at Macworld in January 2001.

“We had people lined up four across, 30 deep,” Bart recalled.

He has since expanded his product line from an array of slipcovers, including ones decorated with professional sports logos, to a connection kit that allows people to play their iPod audio and video on home televisions.

XtremeMac also is selling a high-end earphone designed by Marty Garcia, who consults with rock groups such as U2.

Bart, whose products are offered in Apple’s retail stores, expects his growing company to employ 140 people later this year.

A year ago, Joe Davis didn’t even own an iPod.

Then he bought an iPod shuffle. The Santa Clara, Calif., machinist decided to make a durable – yet incredibly lightweight – case for it out of sturdy aluminum. The fact he could drive a car over the cases without causing any damage to them impressed friends and strangers. Now Davis manufactures and sells colorful iPod cases full time, and has even hired a small staff to assist him. He figures he sells about 2,000 a month.

Apple Computer stocks his products at the company’s Cupertino campus store, though most are sold through his Web site (www.a1qp.com). Prices range from $29.95 for an iKeychain iPod shuffle holder to $250 for a gold-plated cover.

Unlike most electronic devices, iPods can become deeply personal as people load them with their favorite music, photos and now video. More than one customer has told him, “I was afraid to leave my home with my nano” for fear of damaging it, he said.

Jason Entner said iPods inspired him to create a line of boom-box purses, beach bags and courier pouches made of vinyl and canvas with built-in speakers. His Brooklyn, N.Y.-based company, Lifepod (www.lifepod.net), is growing quickly, he said.

“There is biotechnology and information technology,” Entner said. “Now there is fashion technology.”

(c) 2006, San Jose Mercury News (San Jose, Calif.).

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