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Apple's Strategy Behind iTunes Mobile Phone
vishnu writes "CoolTechZone.com is running a story that analyzes Apple's strategy with ROKR. According to the author, the phone disappoints, but is this Apple's way of testing a potential market. Quote: "There was nothing wrong with the creative cells of the designers at Apple; ROKR is simply Jobs taking a calculated risk. He doesn't want a cell phone that doubles as an MP3 player to become too popular as that would cut straight into Apple's bread and butter product, the iPod. On the other hand, Jobs knows for a fact that in the future cell phones will play a huge role in portable digital music; therefore, he is hedging his bets. He wants to give people a taste of what is to come but at the same time, he wants to project phones as an extension but not a replacement of a portable music player. He's consequently hoping to discomfort Apple's competition with a cell phone that has nothing but iTunes going for it."
Apple's Strategy Behind ROKR
Written by Varun Dubey
Manufacturer: Apple
Tuesday, 13 September 2005
At a recently guarded press event, Apple launched its latest gadget and a product that has perhaps been long overdue: the Motorola ROKR cell phone. So why is Apple launching a Motto? It's simply because the phone has a mobile version of iTunes and can therefore play music. According to Steve Jobs, "it's more like a phone and a Shuffle rolled into one..."
In terms of sheer expectations, I would have to say that the ROKR fell way beyond mine, and if events keep churning the way they are, ROKR will fall short of achieving even basic industry standards. The phone can store just about 100 odd tracks while the N series phones from Nokia will store roughly a thousand. Similarly, the Sony Walkman W800i also stores just as many songs, plus you can upgrade the memory to 2GB quite easily with a memory stick. There really is no other great feature about this phone apart from the dedicated iTunes button and the fact that it automatically pauses the track when a call comes in, which isn't particularly path breaking if you ask me.
What is the Rokr about? Why would Apple waste its time, resources and brand value on something as particularly staid as this phone which, to top it all, is locked with Cingular as the carrier. I mean seriously, the product is simply not as exuberant as Apple products are supposed to be. So what happened? Why did Apple come out with a below standard product that fails in all expectations?
The answer to that question is strategy. There was nothing wrong with the creative cells of the designers at Apple; ROKR is simply Jobs taking a calculated risk. He doesn't want a cell phone that doubles as an MP3 player to become too popular as that would cut straight into Apple's bread and butter product, the iPod. On the other hand, Jobs knows for a fact that in the future cell phones will play a huge role in portable digital music; therefore, he is hedging his bets. He wants to give people a taste of what is to come but at the same time, he wants to project phones as an extension but not a replacement of a portable music player. He's consequently hoping to discomfort Apple's competition with a cell phone that has nothing but iTunes going for it.
Why would Jobs go to such great lengths at fumbling his rivals' plans to come out with an enthusiastic product of their own? That's because anything that affects the iPod sales hits Apple where it hurts the most (the cumulative sale of all iPods is estimated to be $4.8 billion).
Of course, the music industry and the music playing cell phone will take off no matter what Jobs tries, but the possibilities for Apple are quite a few. If ROKR really takes off with the iTunes mobile edition, Apple can have some serious bargaining rights in terms of digital rights and content provision for other users, which shouldn't be too difficult especially since iTunes online store has quite a few songs including the entire song by song albums of Madonna, the only online collection of such kind in the world. ROKR's success will also help Apple push FairPlay (digital rights management software) to other phone manufacturers, which would be interesting to watch as well.
The possibility that I like better, however, is that Apple could come out with its own "iPhone" (what else could they possible name it?) and beat Motorola and Nokia at their own game. Their partnership with Motorola for the ROKR could be for the simple reason that they want to understand what they are getting into before actually getting into it full time. As a personal request, if iPhone does happen, I wish they somehow include the click wheel on it so I can easily scroll through the address book.
If you get right down to it, Apple need not even manufacture the phone itself, there are always third party manufacturers like BenQ that will take care of the manufacturing while Apple can go on with thinking up cleverer ideas to leave us catching our breaths every time a produ
Could this be a lead in to apple in the cell phone market? Or at least a partnership in that area?
If they just licensed software that could greatly cut into their profit margins and their control over the style which is one of the things that makes them so popular.
Evolution or ID?
Maybe I'm in the minority, but I specifically do NOT want a device that does more than one thing. In my history of owning devices that do multiple things, it is always the case that they do each poorly. It is less than the sum of the parts.
Also, sometimes I want to invest more money into one device (say, MP3 player), but don't care as much about another device (I actually don't use my mobile phone much at all, so I don't care). I want separate devices so I can upgrade independently and invest where I want more out of one device.
So maybe the market is moving away from someone like me, and perhaps everyone actually wants one device that does everything, but I don't. To me it's no surprise that the reaction to the ROKR has been poor, because it's a poor phone coupled with a poor MP3 player (100 song limit?). How is that supposed to result in a great device?
--- witty signature
Sometimes this type of strategy is called a "call option". This means that by working with Motorola to build an "iTunes phone," Apple can test the market for MP3-enabled phones. It's probably cheaper to work with Motorola in this way than it is to do the primary market research. The ROKR, even if it does not sell well, helps Apple and Motorola be better positioned in the face of the latest telecom trend (or fad) of converged devices, specifically music-enabled phones.
If the phone is a success, Apple has a few options. First, they can build their own phone and build it with their award winning industry design sense. Second, they could work with Cingular or another wireless service provider to become a mobile virtual network operator (MVNO), similar to what Virgin Mobile (in the U.S.) and Boost Mobile do, and where Disney and ESPN are starting. Combining their ITMS with an MVNO presence would help them differentiate.
Motorola gets something out of it, too. The RAZR was an obvious choice to do this with, but I suspect the costs of that phone are pretty high, and Motorola does not want to make them higher. However, by putting this function on the uglier ROKR, the RAZR stands out better. The ROKR gets them in the store, but they walk out with a RAZR.
With the ROKR, what Motorola and Apple have done is changed the argument for convergence. Before the ROKR, a consumer might buy an MP3-enabled phone or a regular phone. The former had the potential to hurt iPod and ITMS sales, but the latter does not. If the consumer chose the music phone, Apple's role would be limited because the phone wouldn't be able to play ITMS purchases, and Motorola would be forced to compete with Nokia, Sony Ericsson, etc. So Apple and Motorola benefit from pushing the consumer towards a regular phone and away from convergence.
However, with the ROKR, the consumer will choose between the ROKR and the other music phones, if that's what they care about. And they may swing towards the ROKR because of Apple's >80% market share for online music (chances are they have bought a song from ITMS). But if they're concerned more with esthetics, standing in the store, they may look six inches over and eschew the ROKR in favor of the RAZR, and then go buy the iPod nano, which in terms of size are together smaller than most other phones.
So the ROKR actually weakens the position of other phone makers (who are pitching music phones) and pushes customers towards the RAZR and iPod nano.
Insert simplistic political, ideological, or personal proselytization here.
It is a dumb idea to bet against the convergence of personal digital accessories. If Steve Jobs really thinks people are going to buy two devices when one will do, his calculated risk is not calculating enough.
There are a lot of people who say they only want a phone that only does phone stuff. But those phones are losing ground to cell phones that are as powerful as the first Apollo onboard computers. You simply won't be able to buy a cell phone that doesn't come with some level of multimedia support. The top of the line phones will feature full-blown MP3 players (duly locked down with DRM) whether or not Apple wants to jump into the fray. The bottom of the line phones will not be as feature rich, but they will have cameras and good screens, not to mention moderately performing audio.
So you can carry one device that plays your music well, acts as a cellular phone, and can be your email address away from the computer. Or you can have two devices clipped to your belt.
Minimalism in form with maximalism in functionality is the new black. Sleek and cool. Not clunky and lame.
Jesus saved me from my past. He can save you as well.
While i do agree with Apple's statement that a too good iTunes Phone would cut into their iPod profits, why even bother at all? The cell market is very hard to get into, and the way Apple is going it could churn out small incremental updates for a long time. It's best to bet on a videoPod than on yet more convergence of devices.
Ah well, i better find my roll of doublesided tape, i got work to do.
Will wank off Linus Torvalds for fame.
product that nobody really wants apart from the usual Mac-zealot contingent who'd buy a turd if it droped from Steve Jobs' ass.
This phone is from Ed Zander's ass, not Steve's, because it's Motorola shit. Apple shit is identifiable by the white and pastel colors, and it has smooth, curved edges to make it easier on the body. Motorola shit has techy-looking colors and rough, almost serrated edges, because it's sold by phone companies, and they want you to feel it when they screw you in the pooper.
What's your damage, Heather?
and i CAN only say that the author needs his head examined.. The phone was in fact politically hampered by both Mobile Operators who did not want to give up their own ring tone revenue and etc.. remember folks ring tones sell at $25 per tune not $.99 per tune.. Apple's Mistake was relying on Moto to swing the Moblie Operators their way.. A better tact for Apple would be to give acut of the $.99 to Mobile Operators and highlight the importance of selling a large amount of handsets for their Mobile service.. Even Russ B has stated as much in his blog and his yahoo blog..
Fred Grott(aka shareme) http://mobilebytes.wordpress.com
Apple's strategy here is to sell a program and a service to Motorola. It's not Apple's hardware, guys. The ROKR is not an Apple product.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Hasn't the market shown time and again that a hobbled version of a product will quickly be beaten out by an unhobbled one? In the short term this might keep iPod sales up, but in the long run somebody else will offer a full function cell with mp3 capability (and yes, I avoided the typical, "In the long run.... We're all dead" statement).
I've never been a huge fan of Apple but I have to admit that the iPod has been a great success for them. Sad to see them repeating the history of their computers: establish a great product and cult following and then piss off your customers by limiting their growth options. They took enough body shots from Microsoft over the last 15 years that I would have hoped they learned their lesson.
Apple making the iPhone and instead of having numbers, they'd design it all cool so you'd use the mouse wheel as a rotary dial and you'll get hi-def surround "grrrringg" sound chirping out of the phone's spaker as you do it.
Zoom Player Lead Dev.
Even the brightest minds make mistakes. It's about time to suck it up, instead of touting it as a "clever tactical move".
Man is a slave because freedom is difficult, whereas slavery is easy.
No,
There is no money lost. The hardware is not apple's but the software is. Where is the downside on that?
The fact that it's ugly, small, and brain dead is motorola's fault. It's not an Apple product. I suspect that Apple has a much different draft of what that device is supposed to look like, and we will see it in a bit. They don't have a lot of exerience engineering mobile communications hardware. I'm pretty sure that a phone done correctly will be worth it's while. Make no mistake - the iPod phone will be a product of Apple's, which is why Motorola was left out to dry.
I have a Nokia S60 Symbian phone with a 1Gb memory card and a mp3 player installed. It plays all the music i want without any DRM and/or artifical limitations and is a very good phone to boot. Can someone explain to me why this new ROKR phone is supposedly the next-great-thing-for-mankind when it does not offer anything new or better?
Perhaps someone could enlighten me but I'm still unsure why the ROKR is meant to be new and inovative.
I use a Treo as a phone and have 2GB of space on my SD card (less a few MB of applications) for MP3's or OGG's, WMA's etc... and of course being a Treo I can do a hell of a lot more than just phone and music. There are also many phones that have memory card and MP3 support, so what's new? The fact that you can use iTunes? YAY - big whoop!
Surely I must be missing something here but the number of already existing phones that can play MP3's with up to 2GB storage that function better than the ROKR is outstanding! Perhaps if they'd included their 'iWheel' navigation (or whatever they call it) and gone for ease of use then perhaps my opinion might be different.
Haydn.
Time is an illusion. Lunchtime doubly so. - Douglas Adams
> when one will do, his calculated risk is not calculating enough.
This is conventional wisdom today (particularly in the tech industry), but I don't think it's necessarily true.
The problem is that a converged device assumes that the technology advances slow down enough that you can release the converged product on a cycle that corresponds to the lowest common denominator of the two technologies. Imagine an example where the - means development and + means product release. And we have two products A and B.Even if it requires no R&D to integrate the two, you can see that the converged device AB has a few options:The product releases slow down until the two technologies can be released together. Or you can do more rapid product releases, but the technology will in the converged technology will lag that of the stand-alone device for certain product releases.
If the two technologies are pretty mature, then that may not be a problem, but with rapid advances, the converged device just doesn't make sense.
We've seen similar things today. Many people have been eschewing general purpose PDAs in favor of more specialized devices, such as Blackberrys or iPods, because of the technological advances and the fact that a special purpose device will have a better user interface than a multiple purpose device.
As for carrying two devices on one's belt, when you get into the iPod nano and the RAZR phone, the devices are so small that many people won't care anyway.
Insert simplistic political, ideological, or personal proselytization here.
Yeah. Let's cut the crap about intentionality, "what Steve wanted", and look at what he got:
A) A device that has all the drawbacks of cellphone provider monopolies
B) It also gives the user the battery life of an "always on" phone
C) The need to connect to a PC for its music player functionality.
D) The need to use the vendor's network for all its cellphone functionality.
E) iTunes software, without its most intuitive interface element.
F) a crippling 100-song limit so the thing does not compete with iPods stuff.
This, folks, isn't some diabolical marketing strategy; it's a real turd cooked up through design-by-committee. Forget the convergence arguments for a second -- they don't apply. This is as convergent as one loud family and one filthy family living in a duplex: the filthy ones don't get any sleep, and the loud ones get sick from the roaches.
I love how people stretch for marketing. The ROKR's massive marketing will drive people to better products like the RAZR and the iPod nano? Yeah? Or how about a Nokia and a Creative Zen? People are going to buy the ROKR, warts and all, for access to Apple's exclusive catalog? Or maybe, now that Apple's in bed with Motorola for at least a few months, some other online music provider will take the ROKR's failure as an opportunity to team up with a successful cellphone maker, and use the leverage to increase their own catalog and market?
Give me a break. I'm with y'all when you need to look for an intelligent explanation for decisions, but every corporation makes some dumb decisions; and, no offense, but Apple's made some really dumb ones in the past. Some folks there are like the kid whom researchers put in a white room filled with horseshit. He jumps in, and starts digging with hands, feet, teeth, everything, and digs furiously. After about an hour, the scientists ask him why he's digging.
"There's gotta be a horse in here somewhere!"
Keep looking.
Because of ROKR, Apple now has Itunes running on java, which would be the third OS for their application. I think that is a pretty good risk to take.
The phone is exactly like an existing Motorola model, except they changed a single center button into two - the original function, and the 'music' button.
Apple just licensed their shit and gave some tips on wiping.
cyn, free software and *nix operating systems enthusiast.
Apparently we have fallen on the bad side of moderation here. Sorry to drag you down.
I appreciate your argument, but I just don't see that as the way things are going. Phones are becoming the central device in personal accessories. They contain the key technology that has driven almost all new tech in the last 5 years: communication. Now, you are able to talk to your friends anywhere you go, send them an email from wherever you are, or take a picture and let them see what you are seeing (albeit in VGA and through a cheap lens). These are things people didn't even realize they wanted to do until the technology became available. If operators lower the cost of packets, such services will become even more popular.
People already want to take their music with them. They have since Sony brought out the Walkman years ago. The features necessary to playback music are pretty light, comparatively. It's a matter of increasing the audio out abilities of the phone (I'm simplifying, of course), and you've got yourself a media-playing phone. These already exist in some markets, and I don't see the momentum stopping.
The primary thing holding back this particular convergence is lack of storage, but as we saw earlier Flash memory is becoming more abundant than ever. Removable memory is also getting very large, so carrying around your media isn't going to be a hassle.
I also see phones becoming cheaper (price per feature) and the cost of a cellphone/media player is going to be a better value than two separate devices. It's going to come, and I don't think that staggered technology improvements are going to hold back the convergence products.
Jesus saved me from my past. He can save you as well.
Part of the problem is that hardware designers are approaching the problem from the wrong angle. Instead of thinking in terms of "PDA", "phone", "music player", etc. they should think more abstractly, in terms of "I/O", "communications", "storage" etc.
I've got a PDA, cellphone, and iPod. Each of them has a screen and CPU. Why is that? It's completely wasteful! I don't want a PDA with its own processor and memory and whatnot; I just want a screen that I can write on, like an electronic notepad. I don't want a phone; I just want a tranceiver. I don't want an iPod; I just want a storage device.
Wouldn't it be much better for the (pda-like) screen device to be an interface for the "phone" and "iPod"? Wouldn't it be nice for the cellular tranceiver to be only the size of a USB key and get awesome battery life, because it wouldn't need that bulky and power-hungery screen and keyboard? Wouldn't it be nice to have that 20GB of space available to the general-purpose computer instead of just for music?
"[Regarding the 'cloud,'] ownership was what made America different than Russia." -- Woz