July 31st, 2006

iPod phone - Myth or reality?

Posted by Adrian Kingsley-Hughes @ 9:26 am

Categories: Thoughts

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Is the next bit of hardware to be released by Apple going to be the long awaited iPod phone?  I don’t know, but if Apple does come out with a cellphone variant of the hugely successful iPod, it’s certainly going to make waves.

It has to be remembered that Apple has already ventured into the cellphone market in September of last year with the Motorola ROKR.  The ROKR wasn’t a huge success, in fact I think it’s fair to say that it was a dismal failure.  Many of the reasons as to why it failed can be traced back to the fact that it was ultimately an iPod-branded Motorola phone rather than being a true iPod phone.  Also, the ROKR was a crippled, cut-down iPod at best, capable of holding only 100 tunes.  To put it bluntly, the ROKR wasn’t much more than a marketing stunt.

If Apple is serious about entering (or re-entering) into the cellphone market, it will need to learn from the past.  The first question is obvious - is there a market for an iPod phone?  In the short term at least I think that there is, but the cellphone market is a fickle one, and something that’s a success today might not be such a success tomorrow.  The pace of change when it comes to cellphones in incredible and Apple will have to complete in a fierce market against existing, and entrenched, cellphone manufacturers.  Existing manufacturers would certainly try to torpedo any iPod phone before it took off. 

Next point to consider is price.  History has shown that Cingular wasn’t prepared to subsidize the cost of the ROKR, and it’s likely that the same would be true of any other Apple phone.  The fact that wireless operators weren’t falling over themselves to add the ROKR to their line shows that they don’t want Apple’s disruptive influence in their market.  The lack of a subsidy is going to make any iPod phone an expensive one.  Too expensive and it’ll sink just like the ROKR did.

Next is the issue of features.  The ROKR clearly demonstrated that consumers don’t want a phone with a few iPod-like features.  If Apple is going to make a success of an iPod phone, it’s going to have to be a true iPod/cellphone fusion.  That means combining the ease of use of the iPod with the bewildering array of features that cellphones currently offer, and that’s not as easy as it sounds.  Make it too complicated and you lose iPod ethos, make it too simplistic and the phone just won’t cut it compared to others on the market.

An iPod phone is also going to need the support of at least one of the major operators.  And that’s a big sticking, because an iPod phone is going to be bound to iTunes, cutting the wireless operators out of the lucrative market music download market (there the feeling is that if users are willing to pay ridiculous prices for daft ringtones, that they’ll be willing to pay ridiculous prices for music too), a market that they are just getting into.  The enormous success of the iPod and iTunes is bound to make all the big wireless operators wary of letting Apple get a foot in the door, especially given how much power the company now wields over the recording industry.

Finally, there’s an issue of DRM.  Apple loves DRM and especially its own flavor of DRM.  While other players in the market are trying to make it possible of people to share tunes (at least snippets of tunes) Apple is bound to be committed to their FairPlay DRM scheme.  Combining the restrictions of the iPod with a cellphone is going to mean a minefield of incompatibilities.

There are some advantages of an iPod phone though.  Combining a media player with a cellphone would mean one less thing to carry (assuming a healthy battery life).  This would be pretty convenient.  The ability to buy and download music while on the move would also be pretty cool.  iTunes straight to cellphone would be interesting indeed, especially if Apple can sort out alternative payment schemes.

I have to admit, I’ll be surprised in Apple releases an iPod phone any time soon.  It looks like there are too many things stacked against them.  Some of these are because the market is already crowded, but it’s also partly because of the way that Apple does business.  Apple is big on DRM and reluctant to license their technology to third parties (mistakes made in the 80s is a big reason why Mac has the incredibly small market share that you see today).  All this makes an iPod phone as likely as an iPod games console.

One market that Apple could enter into though is the in-car GPS PMP (portable media player).  This is a booming market currently dominated by GPS receiver manufacturers such as Garmin and TomTom and it’s pretty open for a company like Apple to make headway into it.

Thoughts?  Would you buy an iPod phone?  Why?  What about Apple entering into other markets, such as in-car GPS PMP?