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The Actual Reason behind Apple's new "Lightning" Connector is Profit

posted Sep 22, 2012, 1:09 PM by Nicolay Doytchev   [ updated Sep 22, 2012, 1:17 PM ]
According to an article on AppleInsider the new iPhone 5 cable using the "Lightning" connector contains an authentication chip.

I think this chip reveals the real reason why Apple made a new connector in the first place. It's simple - profit.

Many have pondered reasons for the introduction of the new connector. Speed was mentioned, durability as well. It isn't the first as it still uses USB2.0, hence it's exactly as fast as the old one. Durability is more plausible, even though the old one seems to hold up pretty well.

Here is a better suggestion. It was introduced to put the pictured authentication chip in.

Let me translate - this chip will allow iDevices to refuse to operate with anything not made by Apple or a manufacturer that pays Apple for a license. Whenever an accessory is plugged in the iDevice, the latter will ask for authentication. It will expect keys from the chip, that only Apple and licensees know. If the accessory gives the wrong keys - the iDevice will refuse to work with it. Hence any trivial to make USB cable from a garage in China will be rejected by the iDevice.

Now how does that translate into profit? Using the aforementioned technique, Apple will eliminate any unlicensed competition. Especially competition from noname Chinese manufacturers. Thus Apple and licensees will not be undercut from small manufacturers and will be able to keep higher prices for everything they make.

As a result Apple users should expect a handsome price bump for all new accessories. Not because the chip costs a lot, but because Apple has restricted the market to themselves and their licensees.

So there you have it. New connector, less competition, higher profit margins!