Does Apple need a mobile phone of its own design?

“Apple Computer Inc. Chief Executive Steve Jobs did his best on Wednesday to downplay his company’s first foray into the mobile phone market,” John Shinal writes for MarketWatch. “Jobs’ revelation that Apple will replace its most popular iPod with a newer, sleeker model essentially upstaged his expected news about the new iPod-equipped phone from Motorola Inc.

Shinal writes, “Yet the question of whether Apple should partner with handset makers, as it did with Motorola on the ROKR phone, or build its own product isn’t about to go away. Whether Apple’s strategy to just put software on someone else’s phone — rather than build its own — will be enough to defend its market-leading position is the subject of fierce debate among analysts. ‘If Apple pursues more relationships like the Motorola one, it will have missed an opportunity,’ said Gene Munster, a Piper Jaffray analyst and long-time Apple bull who rates the company’s shares ‘outperform.’ Munster concedes that Apple will get massive exposure from the arrangement, with Motorola and cellular provider Cingular Wireless both launching massive advertising campaigns. That alone could be worth hundreds of millions of dollars in saved marketing expenses for Apple. Yet it appears that Apple is not getting paid a royalty for each phone sold, according to Munster, although the financial details weren’t disclosed and Apple, Motorola and Cingular have refused to comment on them. ‘From a revenue standpoint, the phone is a non-event for Apple,’ Munster said.”

“Does Apple really want to become a phone maker in competition with Nokia and others? Probably not,” Shinal writes. “Much more likely, Jobs has learned from history and has decided to play with the handset giants, rather than against them. Now, if he could only find a way to get paid for doing it.”

Full article with much more, highly recommended, here.

Related articles:
USA Today: Motorola ROKR iTunes mobile phone provides ‘snazzy’ first impression – September 08, 2005
NYT’s Pogue: Motorola ROKR iTunes phone ‘great-sounding, reasonably priced and a lot of fun’ – September 08, 2005
Apple’s iPod nano will make competitors whimper, Motorola’s ROKR inexplicably bland – September 07, 2005
Tech pundit Enderle: ‘iPod Nano is a hit,’ Motorola ROKR ‘simply doesn’t have enough Apple in it’ – September 07, 2005
Apple announces Motorola ROKR iTunes phone, Cingular partnership, iTunes 5 – September 07, 2005
Apple, Motorola & Cingular debut world’s first iTunes mobile phone – September 07, 2005
Motorola ROKR Apple iTunes mobile phone availability dates for Europe, North America, and Asia – September 07, 2005

31 Comments

  1. Nope… we have enough phone manufacturers. Maybe some of them should approach Apple’s design team and ask for some consulting etc. Apple would be a great enabler for all the manufacturers, they shouldn’t side with any particular one.

  2. Slap 1 GB flash memory in a RAZR with a white case, and the entire world buys one. Heck, I bought an unlocked RAZR six months ago and I’d buy another one tomorrow with the memory card.

    Now, convincing Motorola and Cingular that this is a good idea is another thing…

    MW: “maybe”…as in maybe Apple has a “real” PodPhone in the works?

  3. A newton with Wi-Fi, bluetooth, Airport and iChat built in. As long as there is a hotspot, you’ve got the ability to voice, text or video chat with other iChat/AIM users. Put Skype on the Newton and the possibilities are even more appealing!

    To hell with the cellular mafia, bypass them altogether.

    I know Steve has to be dying to release a PDA with OS X on it!! That would show the Palm and PocketPC world what power truly means!

  4. This is about maintaining the dominance of the iTunes/iTunes Music Store platform.

    If cell phones turn out to be a popular way to buy and listen to music, Apple wants those songs to be from iTunes–not only for the immediate revenue, but also so that the songs that are bought are FairPlay AACs.

    Once cell phone users are locked into iTunes and iTunes Music Store, they’ll be more likely to buy iPods than any other music player, because they already have a library of songs that will only play on the iPod.

    So the important thing is not whether Apple makes money off the phones, or even whether Apple makes money off cell phone users’ iTunes purchases. The important things is beating the competition to a new market, extending the platform into a new space, and setting thes stage for long-term iPod dominance and profitability.

  5. Phones are not Apple’s core competency. That market is very penetrated by cell phone companies/carriershave with a lot of cash to burn. Not sure it is in Apple’s best interest to try to compete there. Let the cell companies get the money on the phone and Apple reap the rewards from its designs. The exposure of the Apple brand is worth it + there would be more i-Tunes songs that would protect Apple’s lead.

    As far as PDA goes is the same thing. Way too many companies are already there and the Newton almost sent Apple into bankrupcy. While I have no doubt that Apple could build a great product it probably missed the boat on the PDA space and I”m certain that Jobs doesn’t want to repeat past mistakes. Instead of pouring millions into a PDA I’d prefer to see Apple acquire a games company (people on this site constantly complaint about the lack of games on the Mac) or donate money to software developers to increase the availability of software for the Mac.

    My 2 cents.

  6. It looks to me like this is the start of Apple licensing Fair Play. That’s actually pretty huge. Moto can now play iTunes songs and I’m sure the list will grow. I think Moto got in there first because of their history with Apple. I don’t see why Apple would care too much about the product itself, only that it is a conduit to the iTMS. It looks from the outside that Apple has no interest in making a phone. I can’t say I blame them. Their focus is what makes their products so brilliant. If they start getting into too many market segments I think their coolness could dilute.
    I can only hope that they will continue to devote their energies to OS X and the computer market. iPod is a great division and I hope they continue to rock the market, but the potential for Apple’s server products and workstations is about to come into play soon.

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