10 Comments

Summary:

Apple has acquired Bluetooth headphone maker Wi-Gear. The purchase could result in new Bluetooth headsets for use with iOS devices and Mac computers, but what’s more interesting is what it says about Apple’s acquisition strategy and the future of accessory makers working in its ecosystem.

mfi_feature

UPDATE (Editor’s Note): According to Tech Trader Daily, Apple has not acquired Wi-Gear:

“The rumor is false,” Wi-Gear CEO Mark Pundsack said via e-mail in response to an inquiry from Tech Trader Daily. “Wi-Gear and its IP are still available for sale.”

We’ve updated the story throughout to reflect this new information.

Apple has acquired Bluetooth headphone maker Wi-Gear, according to a new report. The Such a purchase could result in new Bluetooth headsets for use with iOS devices and Mac computers, but what’s more interesting is what it a purchase says about Apple’s acquisition strategy and the future of accessory makers working in its ecosystem.

Why Wi-Gear

Wi-Gear, which made the iMuffs A2DP stereo headphones for the iPhone, as well as a Bluetooth 2.0 adapter for earlier generation devices which lacked onboard support for the communication technology, was bought by Apple around two months ago, according to 9t05mac. The report is further supported by evidence found on LinkedIn. A former Wi-Gear engineer’s profile says that he joined Apple’s Bluetooth team exactly two months ago, precisely when Apple is supposed to have acquired the accessory-maker. This is the same method used to ferret out Apple’s purchase of semiconductor IP firm Intrinsity.

While initially, Wi-Gear may seem like an unlikely target, a simple search reveals that reviewers consistently give the iMuffs very high marks. It’s It would be a buy that keeps with Apple’s overall strategy of acquiring smaller companies that excel at what they do, but aren’t yet at an advanced state of maturity. Wi-Gear is only five years old, and would brings highly specialized IP into the Apple fold. However, the company is now confirmed to be out of business.

How it Would Fits Apple’s Overall Acquisition Plan

If you look at GigaOM Pro analyst Michaels Wolf’s acquisition rubric governing Apple’s purchases (subscription required), a Wi-Gear buy would makes perfect sense. Apple would gets increased control over call and music quality associated with its devices; it can now would be able to create a high-quality, Apple-branded Bluetooth stereo solution tailored to iPhone that will help further differentiate it from Google’s all-third party hardware strategy; and it can would be able to cash in directly on the wireless headphone accessory market that has sprung up around its products.

A Warning Shot for Accessory Makers

It’s that last point that should have accessory makers worried. The iOS accessory ecosystem is one of the most profitable for third-party device manufacturers. Much like Twitter did in early days with third-party apps, Apple has used that accessories ecosystem to provide value-add incentives to draw customers to its products. Now that Apple’s available cash exceeds $50 billion, the company is keen on making strategic acquisitions, and part of that strategy could involve profiting more directly from the ecosystem third-party companies have helped create and grow.

As Geoffrey Goetz noted, Apple’s past two media events have had potentially devastating consequences for businesses and even entire industries that depend on the Mac-maker in one way or another to make money. Until now, those consequences have been largely the result of component decisions or software releases, but this latest acquisition could signal the beginning of the end for accessory makers closest to Apple’s core business, too.

Related content from GigaOM Pro (sub req’d):

  1. this is good news as bluetooth headphones are cheap, poorly designed and uncomfortable…this should be a message to manufacturers of iphone/ipod accessories to step up their game or apple will come drink their milkshake!

    Share
  2. One reason is that Bluetooth support on Apple’s mobile devices has been rather weak and late to arrive. (I’m still ticked off the iOS 4 didn’t bring Bluetooth keyboard support to my 3G.) Acquiring some expertise would help.

    Another reason is financial. As you note, Apple makes a lot of money on their accessories. They sell a USB to Ethernet converter for the MacBook Air for $30. I just ordered one from Monoprice.com for under $7 including shipping.

    Share
    1. Hamranhansenhansen Wednesday, November 10, 2010

      Apple’s USB/Ethernet adapter and all of their cables and adapters are 100 times the quality of anything you can buy on Monoprice.com. If you want cheap I-T grade cables, you have almost infinite choice. Don’t knock Apple for providing a rare alternative for people who want better than the I-T world offers. I have been using Apple’s USB/Ethernet adapter for 18 months and it has never let me down and still looks brand new. I only needed one of them, not a bulk order, and it had to work and keep working and it was worth every penny. Same with the Apple FireWire cables I’ve been using for about 8 years now.

      Share
  3. The simplest motive is that the bluetooth headphone is just the obvious next evolution of iPod (and even iPhone and iPad). Any accessory maker knows (or should know) that at some point, the accessory they make could become a part of the core of the product that they were accessorizing. But until that time, there is much profit to be made, whether or not there is a buyout.

    Share
  4. By the way, your article points out that the third-party companies helped to create and grow the ecosystem, and that is true. But your article stupidly (or intentionally) leaves out that Apple has been far more important to the ecosystem than any of the third-party companies. If you doubt that, you should find out how much these accessory makers have made supporting the Zune over the last 3 years.

    (Om, I like many others who visit GigaOm, just don’t understand why you have Darrell still writing on your site. The quality of his research, thought, and analysis are consistently poor and lacking; it really reflects poorly on your GigaOm site.)

    Share
    1. I could not agree more with your assessment of this author and your message to the publisher.

      Share
  5. Devastating? No– It’ll be just fine, like always, for companies producing quality goods. Pretty hard for those who don’t. That’s the same situation as always: and it is very proper. This is not meant to be an ecosystem where poor products survive. Only quality will drive people to put their hands in their pockets, then that drives more R and D and if that works out, better products. The essence of quality is feedback, and these days the most favorable feedback a company could receive is to be acquired by Apple!

    The real worry we all have– seldom clearly articulated– is that monopoly and control mean the death of diversity. But this fear is unfounded: it’s not like we’re losing a species of frog, for instance, because of a non-diverse habitat. That’s a tragedy in the natural world. But in technology, it’s a good thing for products — if they’re not great– to disappear. Even with a lot of technology being controlled by a big company, there’s no reason diverse products can’t still be conceived and grow up, often in the smaller companies. You don’t need $50 bn in the bank to have a great idea and make some cool prototypes. Then if it’s good stuff, we’ll buy it. If it’s not, it’ll wither on the vine.

    Share
  6. I’m not an expert but it seems to me that Apple bases its acquisitions more on the underlying technology than any particular product. Bluetooth is not rocket science and Apple didn’t need to acquire anyone to make Bluetooth accessories. Given that, one can’t help but wonder (except the author apparently) what special technology or edge this company had that made it worth Apple’s attention.

    Share
  7. I think everyone is missing the point. Apple skates to where the puck will be. That in this case is Bluetooth 4.0 (which included Bluetooth LE). Bluetooth LE (Low energy) allows devices to “tweet” messages to one another for years operating on just coin (watch) batteries.

    We are talking about making the iPhone the hub of your entire personal life, where every object you deal with in life is tweeting messages to your iPhone (and to one another).

    How many miles have you run in those sneakers? How many times has that shirt been to the cleaners? Smoke alarm detector needs batteries? Microwave has problems? Fridge connection to water not working? Someone left a window open? Printer running out of toner?

    Guess what you could be ordering that toner cartridge or batteries directly from your phone.

    Share
  8. Hamranhansenhansen Wednesday, November 10, 2010

    iPhone/iPod/iPad headphones have wires today. Whether Apple buys Wi-Gear or not, it doesn’t take a genius to understand that one day iPhone/iPod/iPad headphones will be wireless, because Apple continues to improve their products. If your business depends on Apple not improving their products, you deserve to go out of business.

    If you sell “fixes” for Apple products like Bluetooth headphones when the devices ship with wired headphones then that is a temporary business. Your opportunity to make money begins when users are willing to buy the fix and when Apple actually fixes the problem you’re solving. Once Apple ships Bluetooth headphones, then it is up to you to be ready with a better Bluetooth headphone, or a fix for another issue, like a 3G case for iPod touch. Which will inevitably be made obsolete by an iPod touch with built-in 3G. So it’s up to you to be ready with a case with 4G, or some other completely different item.

    Apple doesn’t owe any of these accessory makers a living. Apple shouldn’t slow down to give them time to milk the user base. That leads to Windows XP.

    Share

Comments have been disabled for this post