Apple Can't Crack Cellular Carriers

Newsweek ran a story titled Major Hangups over the iPod Phone. There's nothing fundamentally wrong with the phone-pod concept other than the greed of the carriers. Everyone seems so surprised that the carriers won't support a phone when they don't get a cut of the revenue. I could see it coming.

Apple is in a dangerous position. A carrier like Sprint will make a music-playing phone with download capability around a Samsung with Windows Media Player and a partnership with Wal-Mart music store. They can inflate the $0.88/song retail price to match iTune's $0.99 cost and pocket $0.11.

They could also partner with Napster (which seems more likely) and provide a subscription service. There would be a monthly fee (like $15) and a download OTA fee (like $0.10) and you'd get all-you-can-eat music for as long as you remain a subscriber.

Apple's primary advantages are style, UI, and user experience. All those advantages go away in the mobile market. The style will be dictated by the primary purpose of the device which is no longer a music player but a phone. It will have a traditional keypad and display. The UI will also be dominated by the phone features. It won't be the simple, easy-to-use interface of the iPod. Finally, the user experience must be completely re-invented. The music store will need a mobile version that you can browse from your phone with a tiny display. It won't look anything like Apple's slick iTunes site.

Why partner with Apple? You can't capitalize on their style, UI, or user experience. They are the most expensive device. They are the most expensive per song. They sell music rather than rent it. That leaves only one reason, brand name. Apple has a killer brand name and somebody might leverage it but the big carriers can live without Apple.

The whole thing reminds me of TiVo vs. the cable companies. TiVo had the brand, UI, and features. The cable companies didn't care. They made a cheap no-name knock-off, put their own brand on it, and forced it on subscribers who effectively had no choice. Now TiVo is gasping for breath. Nobody wants them as a partner.