Reports that wireless carrier
will team up with
go a long way to suggest it doesn't plan to work with
music phone offering.
But rather than turn up the competitive heat on Apple, the move by Cingular, which is jointly owned by
, could turn out to be a plus for the digital music king.
ThinkEquity analyst Jonathan Hoopes suggests that Apple might opt with its upcoming iPhone to become a "mobile virtual network operator," which could be a better deal.
MVNOs, as they're called, don't own their own spectrum but enter into deals with carriers to use spectrum for their own brand-named services. Virgin Mobile, for one, is an MVNO.
And it might make sense for Apple to forge ahead on its own, Hoopes says. "If Apple just makes a phone and sells it, the carrier gets the recurring revenue of songs and data," he says. "If they make the phone and deliver
it in a MVNO, then they can potentially tap into a recurring revenue stream."
Success in the MVNO market requires a widely recognized and respected brand, loyal customers, differentiated content, expertise and synergy between the company's current business and the new venture, according to a ThinkEquity report from September 2005.
"When Apple does a phone, they will do it in their own way," he added. "If anyone can do a successful MVNO, Apple can." Hoopes' firm makes a market in Apple but does not do banking with the company.
Analysts have speculated that the iPhone will
hit production next year.
In the meantime, observers say it's unlikely that Cingular's move will have a significant impact on Apple's digital music dominance.
Citing anonymous sources, the
Wall Street Journal
said Wednesday that the wireless provider is working with Napster, Yahoo! and eMusic to bring portable music to its customers.
Cingular customers, then, would be able to transfer songs from the Napster library onto their phone as well their own music ripped from CDs, the latter function being something music-enabled phones can do already. Napster To Go's rental music model gives its customers the ability to load a portable player with songs from its full catalog, as long as they keep up the $15 monthly subscription fee.
Analysts say the company will need to spend a boatful of cash to advertise the benefits of a subscription model -- a concept that customers still seem slow to understand or embrace.
"It really comes down to whether they can create some buzz around this and evangelize the market for subscriptions vs. non-subscriptions," says Michael Gartenberg, an analyst with Jupiter Research.
It's a cool but complex concept to get across, Jupiter Research's David Card says, while Apple's 99-cents-a-song model is dead simple.
"The complicated thing is making people understand why people would pay $15 a month for a jukebox in the sky," Card says.
"At the end of the day, we really don't see the phone as a competition to the iPod," Gartenberg says.
Additionally, he believes phones and music players will co-exist and says he isn't convinced that music fans are clamoring for an all-in-one device to make calls and play tunes.
Apple's nano or the
shuffle are such small-form factors, they almost trend toward the invisible," he says.
Phones that can play music files are already available, anyway, and they haven't really "taken off by storm," he says.
The partnership "is the kind of thing that has the possibility of success," Gartenberg says, "but that doesn't mean that will come at the expense of the iPod.
The device has become a cultural icon in and among itself."