Apple Computer Inc. is missing a beat by outsourcing production of its first mobile phone able to parley with iTunes, the ubiquitous software that powers 21 million iPods and dominates the market for legitimate music downloading.
The world doesn't want an iPhone made by Motorola Inc., any more than it wanted an iPod sporting Hewlett-Packard Co.'s logo. The world wants Apple Chief Executive Steve Jobs to don his black turtleneck and prance around a stage in California waving a bona fide Apple iPhone encased in white plastic, preferably featuring the intuitive software and click-wheel hardware interfaces that helped make the iPod such a hit.
Millions are happy to plug Apple's distinctive white earbuds into their heads, even though police authorities have suggested it's the visual equivalent of slapping a ``mug me for my iPod'' sticker on your forehead. White headphones are a not-so-subliminal signal that you're a real music fan, hip to downloading and podcasting and with a desperate need to carry as many as 15,000 of your favorite tunes with you wherever you go.
Instead, Jobs is trying to cozen Apple enthusiasts with Motorola's ROKR handset, which he unveiled last week. The name alone (``Rocker'' -- geddit?) is likely to deter any genuine music fan from going within 10 decibels of the device. It's ugly, chunky and boring. More to the point, it's completely anonymous. It looks like, well, any another phone. IPodders aren't into incognito.
Goodbye, Moto
``We were disappointed with the specs of Motorola's long- awaited music phone,'' wrote analysts at Merrill Lynch & Co. in New York in a note to clients last week. ``We suspect Motorola was struggling between its desire to provide a complete hardware and service solution to carriers, and Apple's concerns of cannibalizing its own product portfolio.''
The phone has an ``outdated look and feel,'' while the storage capacity of 100 songs is ``low,'' the analysts wrote. Moreover, the only way to get music into the phone is by plugging it into a computer, rather than by downloading through the ether. Music phones from Nokia Oyj and the joint venture between Sony Corp. and Ericsson AB are ``much superior offerings,'' the Merrill analysts wrote.
Speaking of Sony, who's the genius there who decided to unveil eight new digital Walkmans on Sept. 8 just hours after Apple stole the front pages with its new iPod Nano? Apple already has more than 37 percent of the Japanese market for digital audio players, twice the market share of Sony, according to research company BCN Inc. Sony, which dressed its salesmen in specially made shirts with oversized breast pockets when creating the market for portable music in the 1980s, has clearly lost the plot.
Sound Prospects
Apple sells 1.8 million songs every day through its online iTunes store. The 10 million subscribers to iTunes have bought an average of 60 songs each, and Apple has sold more than 500 million songs in total.
And that's with just 21 million iPods. Compare that with the 779 million phone handsets that will be sold this year, up from 674 million in 2004, according to Stamford, Connecticut-based research company Gartner Inc., and the potential for Apple's white headphones to be dangling from a lot more ears is clear.
``We question Apple's motive to partner with Motorola,'' wrote Mike Walkley, the senior wireless technologies analyst at Piper Jaffray & Co. in Minneapolis, in a note to clients last month. ``If the long-term threat to iPods is a cell phone/MP3 player combo, Apple should make its own iPhone, turning the threat into an opportunity.''
Stagnant Spending
The mobile-phone network operators would love to grab a slice of Apple's music download business to boost the amount their customers spend every month. Average revenue per user has stagnated; the monthly bill for German customers of Vodafone Group Plc, the world's biggest mobile phone operator, was 24.50 euros ($30.13) in January, down from an average of 25.16 euros in the preceding 12 months. Italian users paid 29.60 euros, compared with a 12-month average of 29.96 euros.
Mobile-phone users are a fickle lot. Nokia, the world leader with about a third of the market, fell out of favor after failing to offer so-called clamshell phones that flip open. Sony, the world's second-biggest producer of consumer electronics, joined forces with Ericsson after struggling alone to crack the handset market.
Still, Apple has proved with successive iterations of the iPod that it has a good grip on what consumers want in their pockets. The newest version of the iPod, the nano, is 80 percent smaller than the original model introduced four years ago, with a battery life of 14 hours and a color screen. Apple should find a way of transferring that technology into a full-blooded iPhone -- preferably in time for Christmas.
Oh, and an iPod that plays videos would also be nice, Santa Jobs.
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