How Apple Created A Billion Dollar Market For Dongles?

This silly little adapter is called a Apple Dongle. If you’ve purchased a laptop or a phone in the last five years, I’m sure you know what these are. And many of us can’t do what we need to do without these connectors, which makes them a big business. Belkin as an example, you’re looking at a couple 100 million dollars that I believe that they’re doing in dongles. It’s been a big portion of our business, a very, very high percentage of our business, in the 70% range of our business in the past. These companies and others like them have created a huge market, which is estimated to bring in more than $25 billion by 2027. There are some theories on why it’s called a dongle, but the consensus is that it’s a playful alteration of the word ‘dangle’. Apple is one of the main reasons these adapters have become a huge industry.

Adapters became almost essential after 2016 when company removed the headphone jack from its iPhone lineup and replaced everything but the headphone jack with USB-C ports on its Mac Book lineup. Even though it’s not the only company that nixed the port variety on its products, Apple is the company that has throughout history encouraged the rest of the industry to remove ports. But it’s so much more versatile than that. Each one of the ports can be power, can be Thunderbolt, could be USB, Display Port, video out with VGA. Let’s take a look at how the Mac Book Pro lineup has changed in the last decade or so.

The early 2008 model included FireWire 400 and 800, USB 2 ports, an Express Card slot, a disk drive, an audio in outport, a DVI port and an Ethernet port. The late 2008 model kept everything but the FireWire 400 and swapped the DVI port for Mini DisplayPort. Most of the mid-2019 models swapped the ExpressCard slot for a way more useful SD card slot. Early 2011 models got bumped up to Thunderbolt and SDXC ports. It was the mid 2012 MacBook Pro Retina that started to shake things up. It featured a new Magsafe 2, meaning folks with the old Magsafe connector needed an adapter and swapped the separate audio in and out ports for one headphone port, but it added an HDMI port. And then the 2016 lineup came along and wiped the sides of the MacBook Pro clean and replaced them with the more universal USB-C. This is the form factor we know today only the USB-C ports are faster and rebranded to Thunderbolt 3.

Outside of Apple you’re much more likely to see an HDMI port or a USB-A port on laptops, especially laptops marketed as business laptops from companies like HP and Dell. There are still companies that are selling USB-A accessories like external hard drives and people still use HDMI ports to connect to their TVs. It’s a constantly moving target. And you have devices all in the market that have different types of interfaces like DVI, mini DVI, HDMI. So why do ports keep changing? Well, some people might speculate that it’s to create a new revenue stream. I mean, why does a connector like this have to cost $70? More realistically, one reason is because manufacturers want to make products that are thinner and thinner. Apple includes the sales of adapters along with the testing and licensing from third party manufacturers in its Wearable’s, Home and Accessories category, which brought in over $30 billion in 2020. If I back out, out of other which includes things like watch, and things that that the company doesn’t want to break out, you’re looking at $100, $200 million just in licensing and testing Show up at one of the apple keynotes, and watch the reporters with a go bags and count how many dongles they have and then multiply every dongle by $29.

It’s hundreds of dollars. So absolutely there’s a large part of Apple’s bottom line associated with this. And then there are the environmental impacts. On the one hand, you have these extra products that we need to buy that use metal and plastic and other materials that we wouldn’t need if those ports were included in our phones and our laptops. Their environmental impact is a lot lower than phone or something. Now, some of them do have circuitry and chips in them like a lot of Apple’s like MFI cables. You have to be doing the multiplication times hundreds of millions of these things being sold to really have an environmental impact. But that is happening. Right? On the other hand, dongles make things like laptops more versatile and therefore longer lasting. Think about an SD card. If a new technology comes along that’s better and faster and more reliable than SD cards, I don’t have to get a new laptop, I can just swap out my dongle or my adapter. So when you sell a product you have how adaptable and flexible it is, is related to how long it will last. corresponding benefit though is less metal and less plastic and less battery in the new designs. For its part, Belkin has a sustainability program in place to make sure it’s contributing to solutions.

The pace of technology is not going to slow down, we need to figure out how to adapt to those things in the right way. And we’re committed to doing those things. We feel like we’re making progress, but we have an enormous amount of work to do to really get where you want to go over time. And so in these new iPad pros, we’re moving to USB-C. With the increase of dongles, we’ve also seen the rise of the USB-C port which is incredibly versatile and powerful. Even Apple broke from its proprietary Lightning port on the iPad lineup to include USB-C, and some folks speculated the iPhone lineup would make the swap, too. In the new world of USB-C everything, if you were to say well, we got rid of all ports, but now we’re standardizing and in the future USB-C is going to be the port on everything. Wireless is always the technology that’s going to make the cable go away. And we’ve been talking about that for 30 years. We always find a way to outperform wireless.

The moment that your wireless, you are dependent on wireless technologies that are fickle, right. I’ll give you an example of an area where I gave a manufacturer really hard time. Sonos, they sold all these smart speakers without ports. So they didn’t have an analog audio input. So if you have a smart speaker for your TV, and the software becomes out of date, it’s still a perfectly functional speaker. But because they didn’t give you an analog input to it, it’s not useful anymore. The wired to wireless trend is where the majority of the growth is going to come over time. Are you ready for this transition? We’ve been making investments in those areas for many, many years now. So we’re loving where the technology trends are headed. We’re really excited about our product roadmaps now and the way we’re thinking about the future.  

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