No iPod Capability Could Mean No Sale

By Amy Gilroy On Jul 17 2006 - 6:00am

It may have been a novelty last year, but now iPod capability is considered a “must-have” feature in mid- to high-end head units, said 12-volt retailers.

Demand for iPod capability spiked so rapidly in the past six months that many suppliers quickly became back-ordered on their iPod adapters.

Kenwood said it was forced to air ship adapters to retailers as demand for the product peaked in the past 60 days.

Pioneer has been in back-order on its iPod adapter, with national accounts VP for mobile electronics Larry Rougas explaining, “We underestimated market conditions and demand. The iPod adapter has been very crucial to CD sales.” The company hopes to offer full availability by the end of July.

Clarion said its iPod cables are in tight supply.

Even Sony, one of the last suppliers to offer an iPod adapter, came out with an adapter in the past 45 days called the XA110IP.

Retailers said demand picked up as the cables switched to high-speed capacity and dropped in price.

Mark Gebeloff, owner of Action Electronics, Newington, Conn., said, “It's becoming a must-have product in a line. Maybe 25 percent of head units are sold with someone either buying the adapter up front or wanting to know if it is available. It's a huge jump from last year. Last year it was maybe 7 or 8 percent.”

He noted that most customers who come in looking to replace a head unit want either satellite radio or iPod integration, and if there is a unit that offers both, they will choose that.

Audio Express, Scottsdale, Ariz., said the emphasis on the category has “gone through the roof now that you have full-speed cable. Add to that a more reasonable price, $50. It's a retail value now,” said purchasing manager Paul Gosswiller. He noted that his sales for the feature are up 300 percent.

Clarion said, “I think it's become a must-have feature,” according to retail sales senior VP Ralf Engelbrecht, noting that consumers want the iPod capability even if they don't yet own an iPod.

Last year, suppliers complained that retailers were slow to jump on the iPod connectivity bandwagon with promotions and in-store demonstrations. Several suppliers said the situation has improved but still 50 percent of independents specialists lack a demo car or demonstration capability.

Panasonic noted that retailers should not only promote iPod integration but should take advantage of the lucrative iPod “ecosystem” by carrying accessories. The market for iPod accessories at retail alone (not including the Internet) is expected to exceed $1 billion this year, according to The NPD Group, Port Washington, N.Y.

“If you're actively promoting the iPod interface, why not accessorize your store with iPod peripherals? These are impulsive buys. You are in the store thinking about buying a navigation system, and you realize, 'Hey, there's a great new cover for my iPod,'” said Panasonic mobile entertainment director Rob Lopez.

He noted, “For what it costs retailers today in advertising and promotion to get consumers in the store, to have them walk out without buying at least something, is a losing proposition,” he added.

iPod accessories are said to have margins of about 40 percent.