BY DOUG MCCLELLAN
FLETCHER, NC—To the U.S. Patent Office, it is known as a “steering bearing assembly for wheeled vehicles.” The bicycle industry knows it simply as the threadless headset.
Invented more than 20 years ago and patented by John Rader, the threadless headset has been one of the most durable and significant patents in the industry. It’s been lucrative for Rader and for Cane Creek Cycling Components, which owns the rights to the headset and has been licensing it to manufacturers.
All of that will change on Sept. 29, the date Rader’s patent, No. 5,095,770, expires. The expiration is expected to touch off a land rush as dozens of companies jump into the market. Several headset manufacturers expect the impact to be felt most strongly in the Asian OE market, while mid- to high-end aftermarket sales should be less affected.
“There could be 50, 60 people that are on the sidelines now that could be in this business,” said John Frechette, chief operating officer of Ritchey Design, the parent company of Ritchey and Syncros and a longtime licensee of the Cane Creek headset. “They will probably produce some models and test the waters and see if they can find some traction.”
In comparison, Cane Creek currently licenses the headset to only 15 companies, said Peter Gilbert, the company’s vice president of sales. Those are all of the best-known names in headsets, such as Crankbrothers, DT Swiss, Eastern, FSA, Hope, King Cycle Group, Race Face and Stronglight.
Frechette said Ritchey’s headset business is almost entirely focused on OE production in Asia, which means it will be in the heat of the battle.
“The cost of headsets will go down because there’s an 8 percent royalty, generally, and that will go away. But we’ll also see many more players compete for that business. It will be a highly competitive situation,” Frechette said.
FSA’s Matt VanEnkevort said the OE headset business is tougher than newcomers may expect. FSA’s parent company, Tien Hsin of Taichung, Taiwan, is a major headset maker, producing more than two million a year.
“It’s a surprisingly technical component in terms of design,” he said. “There’s more going on there than I think most people realize. I think that the range of sizes it takes to be a player in this business is a little daunting. If you’re not intimate with what’s going on at the framemaker and the OE level, chances are that you’re not going to have an understanding of the market.”
For a typical U.S. specialty retailer selling headsets as an aftermarket item, the patent expiration may have little effect, officials said.
“I don’t think you’re going to see any dramatic change in pricing,” Cane Creek’s Gilbert said. “It’s not like we’re getting $10 a unit.”
Gilbert declined to discuss specifics of royalty agreements with licensees, except to say that it is not a flat amount but changes depending on the price of the headset.
At a typical bike shop, the discussion will still revolve around brand names, and the current headset leaders should maintain their market positions, officials said.
The change “should have exactly zero effect on Cane Creek, Chris King, Ritchey and other high-quality manufacturers,” said Andrew Herrick of Crankbrothers, another player in the high-end aftermarket segment. “Those brands all make fantastic product, and that’s the barrier to entry—making a great product.”
The discussion about what happens after Sept. 29 should not obscure the remarkable longevity of John Rader’s invention. Why hasn’t anyone designed a better headset after 20 years?
“It’s a very simple solution that achieves the objective admirably. We’ve looked at various other solutions to achieve the same result and have never come up with anything that does the job as effectively or as simply,” VanEnkevort said.
“Simple is good,” Gilbert said. He first saw Rader’s prototype at the 1990 Mountain Bike World Championships in Durango, Colorado.
“We were able to make the assembly and adjustment and maintenance on the front end of the bike considerably easier than it was before,” he added. “It just boiled down to being the simplest state that effectively does the job.”
Meanwhile, Cane Creek is planning to commemorate the threadless headset around the Sept. 29 expiration. “The patent is a big deal. It’s been a very good thing for John Rader, Cane Creek and our licensees,” Gilbert said. “It’s provided the opportunity for a good hunk of the industry to grow their business by selling threadless headsets.”