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Apple's iTunes Phone Unveiled

Posted on: Thursday, 8 September 2005, 15:00 CDT

Sep. 8--A long-awaited mobile phone with iPod-like digital-music features debuted Wednesday, but tech watchers gave it mixed marks.

The white-and-gray ROKR E1, made by Motorola and sold by Cingular Wireless, incorporates a version of Apple Computer's popular iTunes music-jukebox software. This lets users transfer music from their computers to their phones, much as they would to an Apple iPod music player.

But restrictions built into the handset could limit its appeal. The phone has a 100-song cap, which would remain in place even if users swapped the device's 512-megabyte flash-memory card with a roomier one, according to Cingular.

The song cap was Apple's idea, Cingular said. Apple could not be reached for comment.

The handset also is unable to download music directly from Apple's online iTunes Music Store via Cingular's data network.

Some think a phone with wireless downloading could be an "iPod killer." Carriers such as Verizon Wireless plan to offer such a capability.

"We are looking at that," Cingular regional general manager Jeffrey Harkman said. "When we have something to talk about, we'll be back."

Christopher Null, editor of San Francisco-based Mobile Magazine, lamented the ROKR's memory limitations but said he's bullish on the device. "I like the ability to integrate with iTunes," he said. "That's the big draw."

Others lambasted the ROKR: "Talk about an anticlimax," said tech pundit Dan Gillmor on his Web log. "The lack of genuinely interesting news about this phone is the real story. This phone and service are late and lame."

Some are more impressed with the new iPod nano player, also unveiled Wednesday. A new iPod version with flash memory and a color screen, the nano is much thinner than the hard-drive-based iPod mini it replaces.

The ROKR, set to go on sale today at local Cingular stores, costs $250 with a two-year Cingular contract. It's $300 with a one-year agreement and $350 with a pay-as-you-go plan.

It sports features no iPod offers. It plays music through speakers as well as earbuds. Flashing lights keep time to music or voices the handset detects in its surroundings.

But this isn't the final word in music phones. "We've described this phone as a teaser," said Gene Munster, a senior research analyst at Piper Jaffray Cos. in Minneapolis.

Munster, who has tracked explosive iPod sales, thinks Apple will offer its own phone in about a year. He noted that the "iPhone.org" domain name accesses Apple's home page.

Apple makes a 20 percent profit margin off iPods compared to 2 percent off song sales. The Cupertino, Calif., firm could seek similar margins off a music phone rather than depending on Motorola.

Apple has sold nearly 10 million iPods this year, including 5.3 million in the second quarter, a more than fivefold increase over the same period a year ago. Profit for the second quarter was $290 million, compared to $46 million for the same period a year ago, largely due to iPod sales.

The ROKR is far from the first music phone. Smartphones using the Palm operating system have sported music features for a while. Microsoft provides a music player as part of its Windows-like operating system for smartphones, which are available from all top U.S. wireless operators.

Consumers have expressed little interest in phones that play music, said Allyn Hall, director of wireless research for In-Stat, a Scottsdale, Ariz., market research firm.

In a Piper Jaffray survey of about 1,000 adults, 18 percent said they would buy an iTunes-playing phone. About 775 million cell phones are expected to be sold this year, according to IDC, a technology research firm. By comparison, IDC expects only about 66 million music players such as iPods to be sold in 2005.

"What Apple has is great design and a great brand," Munster said. "This is the logical next step."

Leslie Brooks Suzukamo contributed to this report.

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Source: Saint Paul Pioneer Press (St. Paul, Minn.)

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