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Apple, the Microsoft of Music?

By Blane Warrene MacNewsWorld ECT News Network
Jul 28, 2004 2:47 PM PT

Motorola has announced plans to partner with Apple and distribute a new line of phones starting in early 2005 that can accept downloads of iTunes files.

Apple, the Microsoft of Music?

The first iteration of the service will enable Motorola phone owners to purchase music from the iTunes Music Store (iTMS) and transfer it via Bluetooth or USB from their Macintosh or Windows computer to their mobile phone.

This announcement Monday came on the heels of Real Networks' Harmony Technology, which will enable music buyers using online stores other than the iTMS to store music on iPods.

It is also Apple's first foray into licensing of its digital rights management technology, FairPlay, on a device other than the iPod. Apple recently thwarted Real's request to license FairPlay for the Real Player Music Store.

Representatives from both companies were unavailable for comment. However, Yankee Group senior analyst Michael Goodman said he believes that may be because the development is not yet big news.

Apple Domination?

"I read an analyst saying Apple could be the Microsoft of music. That may be putting the cart before the horse," Goodman said.

Goodman said Apple's success in leading the digital music sector deserves kudos, but that until the major players who could disrupt Apple's market position get in the game, it is too early to speculate on any dominance by Apple.

"Microsoft alone, with their hoard of cash, has not even entered this market yet. When they do, then we will see how market position plays out," Goodman added. "However, Apple will make some money off this, and will increase their position with record labels -- but the money maker is the iPod, and surely they hope to drive cell phone users into buying that device," he said.

iTunes Supplier Perspective

Kevin Arnold, founder and CEO of Independent Online Distributor Alliance (IODA), told MacNewsWorld that at the basic level this is good news for suppliers of iTunes digital music.

"This is especially good news for independent artists, as it expands the coverage they receive beyond iTunes and iPod users to the vast mobile phone market," Arnold said. "Anything that promotes our catalog and digital music in general is a good thing," he said.

Arnold is particularly interested in how the service will be implemented on the mobile phones and how it evolves.

"If it drives an increase in iPod sales, then it will surely increase music sales, and we would see an impact," Arnold added.

The Consumer View

Felix Henke, who gained notoriety as lixlpixel earlier this year when he discovered a serious OS X vulnerability, said he believes that even with cell phone saturation in Europe, his peers in Germany would rather have an iPod than a cell phone that can hold an hour of songs.

"We have been able to play MP3s on some cell phones for some time, but many don't use the feature because of limited storage," Henke, an independent researcher and programmer analyst, said.

Henke said he believes two things could drive adoption in Europe: broadband WiFi on the phones or an iPod phone.

"I know Apple said they will not do it, but an iPod phone would be great, or the ability to buy the songs from iTunes on the phone," Henke added. "Motorola is consequently pushing phones that are able to connect to the Internet over WiFi or WLAN and is going to sell a phone in late 2005."

IODA's Arnold, donning a consumer hat, suggested similar hopes. "Why not put the iPod drive in a phone or a phone connecting to an iPod," he asked.

The Next Step

Goodman suggested he is waiting for the other foot to drop -- namely expanded licensing of this in the mobile phone market.

"The key to this in really grabbing market position is to license to the Verizon, Sprint and other cellular providers and have them build it into their portals." Goodman said.

"I asked Apple about this and have not received word on if something is in the works along these lines." he said.

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