Steve Jobs Leaves Trail of Tech Beneficiaries Who Will Ride iOS for Years

Amid the outpouring of emotion at the passing of Apple co-founder and innovator Steve Jobs Wednesday, at 56, we spoke with industry members to reflect on Jobs’ impact on the CE business since the iPod’s release in 2001. Jason Oxman, senior vice president-industry relations at CEA, told us “the CE industry has greatly benefited from the popularity of the iPod, including a robust accessories marketplace.” Although Jobs’ Macworld convention in San Francisco frequently collided with CES on the January calendar, Oxman called Apple a “valued member of CEA” and said the iLounge pavilion at the 2012 International CES will feature more than 75,000 net square feet of iOS accessories products, up from 4,000 square feet when the pavilion launched 2 years ago. Regarding Apple’s future without Jobs, Oxman said “the executive bench at Apple is deep, and Tim Cook will lead Apple in the model of innovation that is the hallmark of this great American company."

Brian Dunn, CEO of Best Buy, said the mark Jobs left on the connected world, “making technology smart, simple and empowering,” will leave a lasting legacy that will continue to influence technology well into the future."

When Jobs launched the iTunes store in 2003, it brought a DRM model to the digital music world that was reeling from music swapping. Two years before, the RIAA reported a 10 percent drop in packaged music shipments, which it attributed largely to online piracy and CD-burning. RIAA’s official statement on Jobs’ death said he “forever transformed how fans access and enjoy music.” The introduction of iTunes software and other platforms made it “once again easy and accepted to pay for music,” it said. RIAA said in 2004, when it first began to issue statistics for music downloads, 767 million CDs were shipped, compared with 225.8 million in 2010. Single music downloads in 2004 (iTunes included) were 139.4 million, along with 4.6 million albums, compared with 2010 downloads of 1.16 billion singles and 83 million albums, RIAA said.

The specialty audio market had a love/hate relationship with Jobs’ iPod, as it changed the audio experience. Most of the dealers and manufacturers who have thrived over the years have embraced Jobs’ innovations in one way or another and found a way to profit from them, while not necessarily selling them. Jim Spainhour, president of Signal Path International, an audio company based in Raleigh-Durham, N.C., was with analog audiophile company Music Fidelity 5 years ago when “he couldn’t help but get caught in the vortex” of the iPod phenomenon. He recalls David Solomon, now vice president of sales for Peachtree, examining the iPod, its sales numbers, the number of people with iTunes on their computers -- along with years of regressive RIAA stats -- and concluding: “We're not losing the battle; we've already lost it.”

What Apple achieved in digital-to-analog conversion in such a small device “is pretty amazing,” Spainhour said, but the company saw an opportunity to extract “studio-quality” sound from an iPod using an outboard D-A converter, he said. So they rigged a prototype black box housing a DAC, an amp, and a USB port, and Solomon traveled around the country “showing dealers the future of hi-fi and getting people interested,” Spainhour said. “Did Jobs and iTunes have an effect on us?” he asked rhetorically. “You bet. He led us down this path.” Today, three of Peachtree’s 10 products are iPod-dedicated components with iPod docks built in.

Peachtree will remain committed to Jobs’ inventions for the foreseeable future. “We'll continue to follow their mode,” Spainhour said, saying the company has a product with AirPlay wireless technology in the works now. AirPlay, while “very exciting,” was “probably released before it should have been,” he said. “It required a lot of expertise,” he said, and companies that planned to have AirPlay-enabled products in the market early on “still don’t have product out. We don’t feel we're that far behind,” he said.

Jobs’ innovations dealt a blow to audio dealers relying on CD player sales when the iPod came out, but products like the Peachtree DACs, and those from B&W, Wadia Digital, Denon, Onkyo and Yamaha have thrived as music fans have sought to upgrade the sound from their portable devices. David Young, president of The Sound Room, an AV dealer and custom installer based in Chesterfield, Mo., remembers looking at the portable iPod when it launched 10 years ago and thinking, “We don’t do portable audio so who cares?” Ten years later, “we're 100 percent about integrating the iPod, iPhone and iPad into your system and controlling your music,” Young said.

Dealers like The Sound Room don’t sell the iPod because there’s no margin in it, so they're left to make money around the devices with multi-room audio products such as Sonos’ multi-room system, which they demo with iPhones in stores, said Gary Macchi, store manager. When apps began appearing for the iPod Touch, iPhone and iPad, Jobs’ products entered the home control market, too. The coattail iOS business “exceeded what we ever did with CD players, because we're able to bridge the gap between all the music stored in a home, on portable devices and from Internet music,” Macchi said. Now when a customer comes in, Macchi brings out the iPad and uses it to demo other systems in the store. The apps business hasn’t been all positive, though. Integration is a large part of The Sound Room’s business, and “Apple makes it easy in some respects but can make it less profitable in others,” he said, citing 800 downloads a month for the Crestron iPad app, which are “800 touchscreen controllers that don’t get sold,” he said.

The Information Technology and Innovation Foundation (ITIF) said of Jobs: “No one else had his ability to recognize systems at the leading edge of computer and communications research that were ready to be packaged and offered to ordinary people. He humanized technology and made it work in wondrous ways that genuinely improved our lives."

For TechAmerica, and the industry as a whole, “we've lost an icon who drove all of us to strive for the next ‘big thing’ but who also made us believe in the investments that must be made to ensure that the next great inventor has the tools and opportunity to succeed.”