Switched On: Motorola will play shuffle-bored on deck
posted January 26th 2005 2:48PM
Each week Ross Rubin contributes Switched On, a weekly column about the future of technology, multimedia, and digital entertainment:With so much of the excitement around the company in the digital music space, Apple is savoring the big slice of the sweet market share pie with which it's been tormented for so long. Enter the iPod shuffle. While the iPod mini stunted the growth of the flash market in 2004, that market may yet spring back as average flash player capacities increase. In any case, the iPod shuffle has proved the product's vaunted "halo effect" in that, when Apple introduced its new iPod in January, everybody stopped talking about how many copies of Halo 2 Microsoft shipped during December.
However, there's another flash-based player that Apple briefly mentioned at Macworld Expo that stands to become more strategically important to the computer maker down the road than the iPod shuffle. It's neither designed nor produced by Apple and probably won't even be sold in its stores. Rather, it's the first Motorola cellphone that will be bundled with a version of iTunes.
Think of iTunes-capable cell phones as �clones� of the iPod shuffle. Like PC clones in the early days, they will offer true differentiation, in this case, wireless connections. And they will be offered in channels where Apple has no presence today, such as the storefronts of Verizon Wireless, Cingular, and other carriers, which could expand the market. Over time, however, like PC clones in a mature market, they have the potential to cannibalize the originator�s product.
Most of the discussion around cell phone cannibalization focuses on PDAs or digital cameras, but flash-based MP3 players are lower-hanging fruit. In contrast to the challenges of competing with a PDA, there�s no input bugaboo to address; a nine-button keypad is more than accommodating for music playback. And unlike competing with digital cameras, creating an MP3 player is relatively simple and cheap. There�s no need to worry about lenses, sensors, flashes, and other extras far removed from a phone�s core functionality that make a significant difference in picture quality beyond the megapixel count.
Consumers have collectively accepted poor quality pictures from camera phones, but let�s address demand. On one hand, consumers may not want to spend their talk time listening to their downloaded songs. On the other hand, though, the incredible distribution power of carriers and the benefits of integration forgive many design compromises. The flash MP3 market is more vulnerable than digital cameras or even PDAs because, despite all of the media attention around the iPod, the market is less mature.
At Macworld Expo, Steve Jobs showed the crowd the ten millionth iPod that he kept for himself (like he really needs the money from eBay), but it is oft-repeated that more than 600 million cell phones are sold every year. Given that Karl Lagerfeld buys only, at most, three or four million iPods per year, there�s a major threat for digital music players at the low-end of the market from cell phones. A parent leaving a child with a babysitter escapes to the gym. Is she more likely to bring the cell phone that plays MP3s that she got for $50 with her new contract or buy an iPod shuffle?
Motorola is but the first cell phone manufacturers to include iTunes playback software. Observing Apple�s approach with car and aftermarket car stereo manufacturers, we can assume that it is pursuing other handset makers; Nokia for one is probably in no rush to adopt WMA. Apple might even launch a wireless version of the iTunes Music Store that delivered songs over-the-air.
Yet, bundling iTunes with cell phones could cause a backlash. Carriers, which generally dislike being cut out of the revenue loop as much as the local organized crime protection enforcer, may cry foul and pressure handset manufacturers to remove iTunes or insist that it won�t be supported. At this point, though, it appears that even the U.S. carrier most tightly aligned with Microsoft is keeping an open mind.
In another era, after Apple finally experimented with Mac clones from the likes of Power Computing, it quickly reversed course as it recognized that companies with lower costs could eat its lunch in the marketplace. With cell phone manufacturers such as Samsung showing cell phones with miniature hard drives that rival the iPod mini�s capacity, Apple will eventually be tested in its willingness to expand the market for the iTunes Music Store. Cannibalization can quickly make a company sing a different iTune.
Ross Rubin is director of industry analysis at NPD Techworld, a division of market research and analysis provider The NPD Group. Views expressed in Switched On, however, are his own. Feedback is welcome at fliptheswitch@gmail.com.
Nice article. C'mon T-Mo. Get smarter about your phone offerings and get SE to build one of these.
I think that an Apple designed product would be better... (not just incorporating the iTunes software into a Moto designed product.... But...it's a start.
"Given that Karl Lagerfeld buys only, at most, three or four million iPods per year, theres a major threat for digital music players at the low-end of the market from cell phones."
Buahah. Hilarious.
I think it's an excellent Idea for the so called "clone phones". It may be the saving grace for Apple once the iPod eventually loses steam. Think about it. If everyone's phones are compatible with iTunes they will still be pushing songs through the iTMS. If they stick to the same old Apple only making the products formula we could see the same thing with that happened with the operating systems market. And I would much prefer iTMS as the monopoly over Napter2.0 or wallmart.
I agree. I think an iTMS client or something similar is the next logical step for mobile integration. Although being a former owner of a StarMax Mac Clone made by Motorola, it still makes me shiver just to think of it. I think dipping profit margins were only a part of the reason Apple ended the clone licensing. They were not very good products either. Oh well, onward and upward.
I wouldn't go so far as to say inferior products... some of the clones were cheap, yes, but I don't think that's why Apple bought them out.
Power Computing demoed, at their last real MacWorld presence, a Power PC processor with a fast backside cache that literally smoked Apple's fastest computer at the time. They were developing a different chipset and when Power Computing was showing graphs of their computers BEATING apple at a lower cost, they were bought out within months of this.
Shortly after buying them, Apple then began making computers with fatty backside caches like Power Computing was.
I still have plenty of Power Computing propoganda from that macworld... they were pretty anti-apple... they had shirts and a whole campaign of "BEAT THE MACHINE" in a kind of nirvana/grunge styling.
How about a Motorola phone with a USB port so you can plug in the ipod shuffle to transfer songs you just bought through your phone on Apples iTunes Music Store WAP site, or better yet, an integrated java application on the phone, iTunes music store for your phone. The phone becomming more and more of a multi-functional communication device than just a phone.
An in-built flash mp3(/wma/etc) player is a much more useful and obvious cellphone add-on than a camera and I have no doubts that this will soon become a standard part of feature sets. Given the penetration of cellphones vs. iPods - especially outside the US - the added value of bundled iTunes software is questionable. Do the other 590 million consumers who aren't already locked in to an online music store or a software package really care that much whether they end up with a phone that is co-branded with iTunes vs. another brand (or even vs. a private label)? There is a real possibility that the product life cycle of standalone flash mp3 players could be a short one, which would render the domination of the market by iPods (and iTunes, for that matter) a little bittersweet for Apple.
my motorola v3 already has a usb port as well as bluetooth. only found a java mp3 player that works on it so far, but really, i use my ipod for music and my phone as a phone. i'd play with itunes software for my phone if it was available tho...
Any word on how much it will be going for?
i want one of these phones as soon as it comes out. i play ogg files on my 3650 but the sound is not the best. and there's no way i'm going to carry a music player and a phone all at once--i don't care how small the shuffle is. it's just one more things to worry about.
hopefully the phone will have all the other stuff i've come to expect with the nokia, but i have a feeling it's not going to.
you know, the real breakthrough here would be for apple to release "itunes for symbian 6." now THAT would really open up some market share and perhaps it would also get the phone manufacturers (hi nokia!) to put in better sound components, include earbuds (i'm thinking a bright red set could mark you as a cool "celltunes" user) and otherwise push phones as media devices (i watch the simpsons on my phone as well, but it'd be nice if nokia made the process easier).
and finally, the most important thing for this phone to have...
"fatty backside cache!"
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