Apple has shrunken down the headphone connector, deviating from the standard 3.5mm headphone plug most smartphone users know and love.

Before I go any further, let me start out by giving a small disclaimer (as a lawyer, I am trained to give disclaimers a lot). I am writing this on my Apple MacBook Air, after finding out about this on my beautiful Apple iPhone. In short, I am trying to say that I love Apple. From the time I bought my very first Apple product, I never looked back. I loved everything. However, today I am a bit confused. I am confused because Apple is about to change everything… again.

In the smartphone world, there is a race to build the thinnest possible smartphone. Apple, along with all of the other smartphone companies, are limited to the size of the inner components that make up the phone. One of these components, is the headphone connector. Having a headphone plug has become a standard in modern smartphones. And while the 3.5mm headphone plug has been the standard, it is clear that Apple now views this as an inconvenience – hindering their ability to create a thinner smartphone. Should Apple decide to use this new headphone plug on their future releases, Apple could drastically affect millions of companies and consumers.

Why is this change so big?

To understand why, it helps to understand a little bit of patent law (i’m sorry… I don’t like patent law either). Under US intellectual property law, a patent is a right granted to the inventor of a process, machine, article of manufacture, or composition of matter. When an inventor holds a patent, the patent owner can exclude anyone else from, among many other things, making or selling the invention. Patents are designed to encourage inventors to continue inventing technology that would benefit the world by giving the owner an incentive to keep creating and sharing. This incentive is a monopoly. The earliest a patent monopoly can last in the US is 20 years from the date of application, however, this date can be extended.

So, in short, no one else can make this new headphone plug for a very long time.

NO Seriously, this Is a big deal

In Apple’s last quarter, it shipped 47.5 million smartphone units, occupying 14.1% of the smart phone market share. In recent trends, this number has been steadily increasing. If Apple implements this new headphone plug, at least 47.5 million smartphones will eventually ship, unable to use the standard headphone plug.

Audio companies selling headphones are thus left with a few options when the new headphone plug comes out: ignore, license, or buy.

Ignoring the Change

Audio companies cannot ignore the change. Well, at least the major ones can’t. Apple will likely create an adapter that will assist in the transition of this new headphone plug. The problem with this is that the plug will likely cost money (not to mention that it will be big and bulky compared to the phone). Smaller headphone companies, unable to handle any of the other options (as discussed below) without having their profit share crippled, will be forced to depend on users to get the headphone connector. However, from a practical standpoint, this doesn’t work. The people likely to shell out money for these headphone connectors are people who are particular about the headphones they use. These same people are thus, likely to purchase headphones from some of the bigger audio companies. So what happens to the people who are using these smaller headphone companies? Well, I can’t say for sure, but my best guess is that these people will likely just use the standard Apple headphones that will be released to go with the phone.

Licensing and Buying

An audio company that is well known and recognized for the quality of their products will likely not ignore this change in headphone plugs. Several of these companies have benefited over the large number of smartphones sold because of the double function these smartphones serve as a music player. This makes the iPhone market share too large to ignore. Thus, these companies will be left with two options. License or buy.

Apple will likely license the ability for companies to make their new headphone plug, should they decide to make it the iPhone standard. Companies would then be able to make their own version of the redesigned headphone plug to incorporate them in their products. This will likely be at a heavy cost to these companies.

Another option these companies could explore would be buying pre-made headphone plugs from Apple (or similar companies that licensed the ability to make them). The audio companies would then incorporate these purchased headphone plugs into their products. We know Apple will likely do this because they did just that when Apple rolled out the lightening plug over their old iPhone charging/sync connector. Remember that big annoying plug? Me either. (Just kidding I still have like 50 of them around my house somewhere).

Conclusion

Whether a company licenses or buys these new headphone plugs to use with their products, due to small margins, the cost is likely to be passed onto the consumer.

However, there is no need to panic yet. Apple has a lot of patents. Many of which, are never going to be used and were merely designed in anticipation of possible directions Apple could take. It is possible Apple will not implement this change on their iPhones. Only time is going to tell what route Apple will take.

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Julian Cordero is an Attorney, Music Producer, and Entrepreneur. Oh and he blogs too! Julian is licensed to practice law in New York and is the Managing Member of Cordero Law LLC, a New York City based law firm focusing on Business Law, Entertainment Law, and Intellectual Property.