How Case Makers Got Fooled Out Of Hundreds of Thousands By The iPhone 5

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Psst. Wanna buy Apple’s design for the iPhone 5? In the shadowy world of case manufacturing, leaks and rumors fuel a market worth more than $436 million annually. After one company lost a bet worth thousands of dollars on a supposed iPhone 4S design, competitors say guessing Apple’s next move can be an expensive gamble.

Hard Candy Cases lost $50,000 after ordering moldings for the iPhone 4S based on models from manufacturers in China, according to a Bloomberg Businessweek follow-up on our exclusive report earlier in October. Unlike the leaked designs, the iPhone 4S included no major changes.

However, sometimes leaked designs pay off for the company, which will top $50 million in revenue by 2013. A design from a manufacturer matched a new iPod touch Apple released in September 2010, allowing Hard Candy to sell cases for the device just a week after the announcement. The cases have up to 65 percent gross margin, making it little wonder research firm NPD Group estimates the mobile phone case market worth $436 million for the year ended in August. That’s a 33 percent increase over last year.

Hard Candy CEO Tim Hickman previously worked at Speck, which denies using leaks to predict Apple’s designs. “We listen to the rumors like everyone else does and make intelligent guesses,” CEO Irene Baran told the publication.

Luckily for the case makers, the iPhone 4S’ close resemblance to the iPhone 4 allows the companies to make minor modifications and quickly get new designs out the door. However, there is always the next rumor, such as the iPhone 5. That iPhone 4S design Hickman bought? It could pay off after all. “That data we got came from somewhere,” muses the Hard Candy CEO.