ABI: Mobile Phone Accessories More Profitable Than the Phone Itself

Sometimes, accessories for “the thing” generate more revenue than “the thing” itself. Perhaps not with revenue (I don’t have the numbers handy) but certainly with ubiquity, we’ve seen this trend in the explosion during the past few years of iPod accessories. Apple isn’t the only company to realize that, once people have their iPod, the way to keep the money flowing (aside from introducing new iPods every year or two) is through accessories: cases, faceplates, gadgets for connectivity in the car, etc.

 

In the mobile phone market, at least, current projections indicate that accessories are poised to soon drive more revenue than the sale of phones themselves. That’s according to a new report out this week from ABI Research, “Mobile Phone Accessories Market Will Generate More Revenue than the Smartphone Market in 2007.”

 

The title of the report pretty much says it all, but here are some numbers to drive the point home even further: ABI predicts that mobile phone accessories will generate more than $32 billion in revenues this year, whereas smartphones will probably only rake in about $28 billion. The industry analyst firm break things down further into “after-market” accessories (projected to represent 77 percent of accessory revenues) and “in-box” accessories (remaining revenues).

In the report, ABI Research analyst Shailendra Pandey nails it on the head with this well-stated summarization of the situation: “The number of mobile phone accessory products is expanding with new products driven by technology as well as by customer fashion and personalization needs appearing in the market.”

 

Mobile operators, Pandey added, are now realizing that phone accessories can lead to higher annual revenue per unit (ARPU). How does this work? Here’s Pandey again: “Handset vendors now recognize that to increase sales of their high-end mobile phones and smartphones, they need to provide accessories that allow users to fully enjoy and benefit from the features provided in those handsets.”

 

Among the marketing initiatives being undertaken by carriers based on this philosophy is Nokia’s “Mobile Enhancement” product promotion, and Motorola’s campaigns focusing on “Personalization” and “Self-Expression.”

 

Well, it’s official. We want cool gadgets for our cool gadgets. Bluetooth headset, anyone?