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ATPM 11.01
January 2005



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Segments: Slices from the Macintosh Life

by Eric Blair,

Apple, Motorola, and Cell Phones

Back in July, Apple and Motorola announced a deal to allow Motorola’s next generation of cell phones to transfer music from iTunes. Based on a recent article in Forbes, it looks like that deal is coming closer to fruition. The project appears to be far enough along to warrant a quote from somebody at Apple—Eddie Cue, Vice President of Applications—so perhaps we’ll be getting more information at Macworld San Francisco in January.

The aforementioned Forbes articles was fairly light on details, so there are plenty of unaddressed issues to tide us over until one or both of the companies make an official product announcement.

Cell Phone Carriers and Networks

A little more than a year ago, cell phone users in the US gained the ability to keep their existing cell phone numbers when changing carriers. When people attempted to switch carriers, some were surprised to learn that they would need to replace their existing cell phones—in many cases, their older phones were incompatible with the network used by their new carrier.

The original press release announcing the Apple-Motorola partnership made it sound as though Apple would simply develop a version of iTunes that ran on Motorola’s line of next-generation cell phones. In that case, I’d expect models that support all of the major carriers.

However, this quote from the Forbes article makes me wonder if the nature of the partnership has changed:

“What we’ve talked about is a something that is valuable for the mass market,” Cue says. “It has to be a phone in the middle-tier of the market, not a $500-tier phone. It has to be very seamless to use. And we’re very happy with the results.”

This makes me believe the partnership has evolved to a point where Motorola and Apple are collaborating at some deeper level. Is Apple still producing a version of iTunes that will run on the general Motorola platform, or is this going to be limited to a single model of phone? If the partnership is only going to produce a single model of phone (which, for the sake of simplicity, we’ll call iMoto), what networks and carriers will be supported?

Off the top of my head, the only phones capable of being used with all four of the major carriers (Verizon, T-Mobile, Cingular, and Sprint) are from the Treo line (though there are different versions of the Treo models for the different networks). Developing a CDMA phone would allow the phone to work on (I believe) the number two and three carriers in the US. Developing a GSM phone would allow the phone to work on the number one and four carriers in the states, along with most of the European carriers, though Cingular uses a slightly different flavor of GSM than the rest of the world.

Macintosh Integration

I’ve wanted an iSync-compatible phone for a while. I’ve gone so far as to test out a Sony Ericsson T610, only to give up on it because of the phone’s poor reception in my office.

According to the compatibility chart on the iSync Devices page, Motorola phones support the fewest features of iSync out of all the major cell phone manufacturers. If Apple is simply providing music playback software that runs on the Motorola platform, then I wouldn’t expect to see a major change in the level of iSync support. If Apple and Motorola are corroborating at a deeper level, though, perhaps the resulting device(s) will feature a greater degree of integration.

Pricing and Availability

According to Mr. Cue, the iTunes phone will be a priced as a “middle-tier” phone. With carrier subsidies, $500-550 looks to be the high end of the price range and $0 (i.e., “free”) looks to be the low end. That says to me that “middle-tier” means about $150-200, give or take. That seems to get you a color screen, Bluetooth, a camera, MMS support, and, in some cases, an FM radio or MP3 player.

As I said, these prices are after carrier subsidies. In order to get carrier subsidies, manufacturers need to find carriers willing to subsidize the product.

Based on the publicly available information, Apple views your computer as your music acquisition platform and your handheld device, be it an iPod or a cell phone, as a playback platform. This stance could cause Motorola and Apple some trouble finding carriers willing to subsidize their phone. Most carriers are pushing their own for-pay services to supply things like ringtones and images—for instance, Verizon has Get-It-Now and T-Mobile has t-zones; selling and sending music directly to your cell phone seems like a natural extension to this business model as network speeds increase (in fact, it was recently revealed that Sprint will be partnering with Music Choice to stream music to selected phones models for $6 a month). If the idea of the computer as acquisition platform and the cell phone as playback platform takes off, though, it could undermine the plans of the carriers.

Cingular and T-Mobile seem to have been the least restrictive about letting people load their own content onto phones, via Bluetooth. I don’t know much about Sprint’s policies today, but I remember they originally put some restrictions on the first Bluetooth phone they shipped. Verizon has easily been the most restrictive in this regard—they sell only a single Bluetooth-enabled phone, the Motorola v710, and that phone’s support for Bluetooth devices is limited to hands-free kits and headsets—no data transfer is allowed.

Would Motorola and Apple be willing to market a cell phone without dealer subsidies? While this would free up Motorola and Apple to build whatever functionality they would like into iMoto, I don’t think it’s likely to happen. For starters, this would probably create a great deal of friction between the carriers and the Apple/Motorola team. This might not bother Apple, but Motorola would still have to do business with these carriers.

Another item standing in the way of Motorola and Apple teaming up on a subsidy-less phone is, simply enough, the matter of cost. If iMoto costs $200, it had better provide similar functionality to what you would get from a $200 phone purchased from a carrier as opposed to the $50 camera phone they use to get people into the store. The iPod showed that people are willing to pay a premium for something that’s well designed, if not chocked full of features. The iPod mini drove home that point. What I don’t know is how much more people are willing to spend.

Then again, the success of the iPod and the iPod mini could be enough to convince Apple and Motorola that they can successfully market a cell phone in the US without the help of the carriers. The Apple iPod from HP brought the iPod to RadioShack. Could the Motorola iMoto from Apple bring the cell phone to the Apple Store? I have my doubts, but it’s fun to consider the possibilities.

The (Not So) Long Wait?

I started writing this article as the last few days of 2004 were being crossed off the calendar. Some people use this time to reflect on the past year and consider what they want to do with their lives in the upcoming year. I, however, ponder the plight of unannounced cell phones. I’m not really sure what that says about me.

However, by the time you are reading this, it will already be 2005. It’s likely that Steve Jobs will be taking the stage at the Moscone Center in a few days to present the keynote address at Macworld San Francisco. Perhaps he will use the opportunity to unveil what Motorola and Apple have been working on over the last few months.

Maybe we’ll see something completely amazing, something that will dominate the world of cell phones the way the iPod has dominated the music player market.

Maybe we’ll see multiple cell phone models that simply connect to iTunes.

Maybe we won’t see anything at all.

Who knows. I guess we’ll just have to wait and see.

Also in This Series

Reader Comments (11)

Victor L. Guess · January 1, 2005 - 11:27 EST #1
As I consider replacing my aging Motorola Startac phone there is really only one feature i want to consider and that is the ability to transfer selected phone numbers into it from either Address Book or Now Contact. Whether I use a data cable or Bluetooth, iSync or third party software is of little consequence - I just want it to work hassle-free.

Playing music through my phone is (to me) a square peg in a round hole - not a good fit. I have my iPod for that. It was designed for playying music and it does a very good job of that. Also, I rip my CDs in 224 kbps AAC which is not a format that any phone supports.
Robert Boylin · January 1, 2005 - 12:27 EST #2
You might want to check out the article in the following url:

It is the 6th in a series that involves the developments in the deployment of multimedia that includes G3 and Apple's involvement. It appears that the Moto involvment could be part of this initiative that spreads across many forms of distributed entertainment content and communications.
Yoncarzy · January 1, 2005 - 12:31 EST #3
Message to Steve Jobs: I will pay anything for an Apple phone, seriously.
James · January 1, 2005 - 12:36 EST #4
My bet: It's not just a phone, it's a phone system. Apple doesn't need to sell the phone in conjunction with or through a current carrier. ATT is looking at wholesaling Sprint, their customers won't interact with Sprint. Virgin is prepaid but their users don't interact at all with the underlying carrier. Both are buying coverage/bandwidth wholesale and reselling under their brand. Apple could do the same.
So, it could be a system/platform just like Apple has for music.
1) iPhone (iPod), the device.
2) iMessage (iTunes), desktop app to tie phone with addresses and also to enable VoIP and into the landline through the modem, etc.
3) iMessageCenter (iTunesMusicStore), Manage your account, buy ringtones and other services.
Sounds to me more like something Jobs would be interested in. Big think vs. small.
Brian · January 1, 2005 - 14:30 EST #5
I whole-heartedly agree with James. I have always believed this was the way to go for Apple. Number portability makes this a totally feasable prospect. Don't forget .mac integration (for messaging, file sync, and of course video-conferencing).

I wouldn't expect VoIP to be in an early release, besides raising the cost of the phone, it would decrease profit by lowering airtime.
Lee Bennett (ATPM Staff) · January 1, 2005 - 16:24 EST #6
Victor - just wanted to make sure you realize you can easily do that now. There is a list of supported phones that will play nice with iSync, including a great many of the Sony Ericssons. I had a T68i for a while and am currently using a T616. Both of them transfer data in and out Address Book via Bluetooth perfectly.
Victor L. Guess · January 1, 2005 - 19:43 EST #7
Lee - Yes, I have seen the list on Apple's iSync page but my carrier (Verizon) doesn't seem to support any of the Ericsson phones.
Lee Bennett (ATPM Staff) · January 1, 2005 - 19:46 EST #8
Victor - you're right, but there are some matching Motorolas that are supported. Only problem is you'd have to use a USB cable and that would undoubtedly be a separate purchase. Though you indicated in your first comment that using a cable would not bother you.
Victor L. Guess · January 3, 2005 - 23:46 EST #9
Lee - Yes, and thanks. You are correct. I did find 2 Motorola phones that are on both lists, the v60p & the v710. The v710 is a bit pricey but I'll look into the v60p. There is always the possibility that Apple may add more phones to the iSync list and there is also a rumor of a phone related announcement at MacWorld. As for Bluetooth vs data cable sync, both would be a bit more added cost since I would either need to buy a Bluetooth module or a data cable.
Dean Flory · January 6, 2005 - 13:47 EST #10
Did ya ever think that maybe the generically named "iPod" isn't just for music in future models? (ahem, example 1, iPod Photo)

I've always thought Apple's plan was to eventually make the iPod a handheld computer with all sorts of functionality, the music part was just their backdoor entrance.

iPod photo is their test model to feel out the market.

I expect the iPod to adopt telephony sooner than most people think, not Motorola adding iTunes, no realy profit for Apple without the hardware sale. Motorola is probably just helping with the phone's/iPod's technical bs that Apple doesn't yet want to involve themselves in until profits are assured.

You'll see. I've been saying this ever since Apple first introduced the iPod.
Holddigga · March 30, 2005 - 09:04 EST #11
I would have to agree with you Dean, there is only one market that has still not been tapped into and that is handheld computers. I cannot wait until they come out with a linux distro for my iPod photo. I would like to see if there is a way to connect my photo to my phone in order to get internet service on my ipod. While this seems highly unlikely, you never know what you can do until it has been tried.

Ultimately I feel that Apple will come out with an iPod that has a touchpad like a laptop and maybe voice recognition in order to type things into the iPod. This will help to keep their sleek design. They have already figured out antenna-free phones, so why not the iPod too. I can't wait to see what they come out with next.

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