Cellpig creates iPhone case that's sleek, has insurance option
May 27, 2012 4:50 PM
From left, Dave Artuso, Michael Kane and Bryan McHenry hope their Greensburg-based company, cellpig.com, will take off with its new product, cellhelmet, a rugged case for Apple's iPhone.
By Deborah M. Todd Pittsburgh Post-Gazette
From the moment the first iPhones rolled off assembly lines in June 2007, forward-thinking entrepreneurs and inventors were devising plans to cash in on the birth of Apple's smartphone.
Nearly five years later, an after-market industry built on pens that mimic a finger's touch and anti-glare screen protectors is generating hundreds of millions of dollars per year and making magnates of small business owners with the hottest new products.
For the creators of Greensburg-based cellhelmet, an iPhone case so durable it offers buyers a fix-or-replace guarantee for their phones, making a fortune would be nice -- but so would just making a living off a product conceived, created and soon to be sold in Western Pennsylvania.
Their polyurethane rubber and plastic case is being made at a factory in Latrobe, close enough that they can easily check to make sure it's being manufactured to the necessary standards to back up their repair-or-replace guarantee. There are stacks of the cases piled around the startup company's Greensburg offices, ready to ship to online customers or deliver to a local retail store.
"Even though I'm from Greensburg, I'm a die-hard Pittsburgher. I bleed black and gold," said Bryan McHenry, co-creator of cellhelmet and co-founder of cellpig. "It was important that if we had a product come out and there was any chance at all to keep it local, I'd be proud to be part of the team that accomplishes that goal."
Taking the plunge into the saturated smartphone accessories market was a natural move for Mr. McHenry and partners Michael Kane and Dave Artuso.
The Greensburg natives and longtime friends had already transformed their 18-month-old cell phone accessories company from a $700 investment into one of the top-selling phone accessories companies on eBay, selling about 300 products per day at its peak. However, they weren't sure how to translate that experience into something that would help them create a product that hadn't already been done.
And, boy, had the fledgling iPhone protection market been done to death.
What was once a basic marketplace offering solid rubber or plastic cases had transformed to selections of wireless speakers, camera phone zoom lenses and designer cases by fashion powerhouses such as Marc Jacobs and Kate Spade.
By the time cellpig entered the market in 2010, German company GnG had already released the most expensive iPhone case ever, a solid gold diamond embossed number retailing around $100,000. And Nashville, Tenn.-based Griffin Technology claimed ownership of the "indestructible" iPhone case with a thick rubber and plastic cover and screen protector durable enough to survive falls down concrete steps and snow-covered hills.
Still, there was never any question cellpig wanted to focus on Apple products. Beyond the sales potential associated with the world's top-selling smartphone, Mr. Kane said Apple was an obvious choice due to the consistency of the phone's design and customers.
"Apple comes out with a new phone, everyone buys it and it's going to be out for the next two years. If we were coming out with a completely new concept, we didn't want to take the risk on a device that might not last," he said.
That decision proved savvy, considering that 48 percent of iPhone users buy cases and 58 percent spend more than $50 on accessories, according to research by Ontario, Canada-based consumer advice website geekaphone.com.
Although dozens of companies with so-called indestructible iPhone cases beat them to the punch, all of those cases were similar in the sense that they were thick and heavy enough to prevent the average person from slipping the protected phone into a pocket.
Mr. Kane said the team saw an opportunity for not only a more portable case, but one that eliminates anxieties associated with carrying an uninsured $200 computer in one's pocket.
"We didn't want to make a big brick of an iPhone case, so we figured, why don't we make a case that is slim and sleek and put a backing behind it?" he said.
With that idea in mind, the trio officially created plans for cellhelmet. The creators are so confident their design will do the job of protecting iPhones that it is backed by a repair-or-replace guarantee. That was one concept they hadn't seen among the hundreds of accessories online.
"There are very little [insurance] options out there to cover used iPhones. We don't care if it's new, used, unlocked, jail broken -- that phone is covered the minute it's in a case," Mr. Kane said.
Starting with an initial $10,000 investment from Mr. Artuso, the group swiftly surpassed a $10,000 fundraising goal on online funding platform Kickstarter.com, nearly doubling it to $19,080 with help from 344 backers in March.
The company officially launched cellpig.com March 2011 and used the Kickstarter funds to begin manufacturing the first batch of cellhelmets out of Latrobe's SunStar Inc. this month.
Mr. Artuso said he was sold on the idea shortly after realizing the group had actually found a unique angle into the market. "It seems like everyone has an iPhone, so it's a great opportunity, especially since nothing has been done like this before," he said.
Noting the guarantee doesn't qualify as actual "insurance," Mr. Kane pointed out that it is still a more favorable deal than what is generally found through carriers or Apple. The iPhones come with a one-year limited warranty that does not cover damage caused by accidents, although Apple stores will repair and sometimes replace damaged units on a case-by-case basis.
Apple's new $99 AppleCare+ for iPhone offers two years of coverage from the phone's purchase date and two incidents of accidental damage coverage, each of which are subject to a $49 fee.
In July, AT&T will begin offering insurance plans for $5 per month that allow two accidental damage claims per year with either a $50 or a $125 deductible, depending on the situation. Verizon's plan offers two accidental damage claims per year with a $99 deductible for $9.99 per month. Sprint currently does not offer iPhone insurance.
Cellhelmet, by comparison, offers unlimited accidental damage claims for one year for anyone who buys the company's product, priced at about $45. The company has arranged to send phones to a third-party specialist for repairs and phones that can't be fixed will be replaced with refurbished models. It is currently using a New York-based company for repairs.
Anyone who wants more protection can simply buy another cellhelmet once the year is up. In addition to being offered online, the product will be sold in Pittsburgh-area MacOutfitters stores starting this week.
As the team preps to ship the first 1,000 units from Mr. Kane's Greensburg office, they'll join the hundreds of small business owners who send out products made in Pennsylvania factories.
David N. Taylor, executive director of the Pennsylvania Manufacturers' Association, called small businesses "vital" to the state's manufacturing industry. Mr. Taylor said only 28 businesses manufacturing in Pennsylvania have more than 1,000 employees.
Mr. Kane said the group was pleasantly surprised by the ranges of price and skill options they found in the state.
"We're manufacturing out of a factory in Latrobe that's about 12 minutes away from our office. That's probably the best quality control you can have. It was a no-brainer," Mr. Kane said.
Mr. Taylor said the state's manufacturers need to make it known to small businesses that they're available.
"One big challenge we face as a sector is addressing public impressions of what the manufacturing sector is and what it does," he said.
As for small businesses with a handful or less of employees, Mr. Kane says the biggest obstacle is realizing what's possible with a little ingenuity and assistance from skilled laborers in their own backyards.
"It's amazing, really. We're a small company of three people. It's pretty crazy we're bringing out a product that could change the entire industry," he said.