Apple Breaks into Wireless

Everyone's becoming a wireless company these days, particularly the computing companies. First there was Microsoft with the smartphone and wireless PDA platforms. Then there was Intel with Centrino. The latest entry in the field? Apple, but the Cuppertino, Calif., computer maker isn't introducing its “PocketMac” — they already tried that last decade with the Newton. This time, Apple is going far more mainstream with the development of its popular iTunes software for mobile phones.

Granted Apple's wireless credentials will be tenuous at best. The company is basically designing a version of its PC music-sharing and management service for Motorola's new line of multimedia phones. While the software may be similar to what it loads into its top-selling digital music player, the iPod, it certainly won't be as robust. Apple executives said the first-generation iTunes-enabled phones would hold only about a CD's worth of music, not the tens of thousands of individual digital music files the iPod holds today.

“We're really excited to bring iTunes to the mobile space,” said Eddy Cue, vice president of applications for Apple. “We view this as an opportunity to expose millions of mobile phone users to portable digital music.”

Apple's deal with Motorola isn't exclusive, allowing it to pursue deals with other vendors. But despite the obvious convergence of wireless data and digital music, Apple so far has no plans to use the wireless capabilities of its partners' handsets to access the iTunes network. The iTunes network has become by the far the most popular digital music service — having sold more than 100 million songs — since the crackdown on peer-to-peer file-swapping services like Napster and KaZaA. Customers buy songs or whole albums of music and download them to their computers usually over a broadband connection. Apple, however, doesn't plan on extending iTunes connectivity to the wireless network, making customers upload music into their handsets through a USB connection.

“Over-the-air networks today can't really support music downloads,” Cue said. “The goal is to reach the mass market, and all users don't have access to the fastest networks or high-end devices. So we're staying focused on the near term. We're viewing these new handsets as introductory vehicles for digital music.”

What the wireless industry will think of Apple's efforts to leave its impression on the handset remains to be seen. While Apple's digital music software may seem very attractive to vendors like Motorola, carriers are bound to be more skeptical, said Dario Betti, senior analyst at Ovum. Digital music will inevitably become a critical feature in next-generation handsets, and both the carriers and current digital music distributors like Apple want to be the ones providing that content. Right now, it looks like Apple is trying to bypass the carriers entirely, but maybe after making some noise with its new Motorola deal, Apple will begin approaching the carriers directly about partnerships, Betti said.

“Apple is a bit paranoid right now about mobile phones,” Betti said. “Mobile phones are not ready to take on the iPod just yet, but already there are eight or nine operators that are selling music downloads in Europe. That trend will only grow. Apple wants to make sure it isn't left out.”