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."

Comments

apple in cell market

[millahtime]

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.

Convergence devices

[Darth Maul]

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?

Re:Convergence devices

[pinkocommie]

I currently have the RAZR admittedly not a great phone but I was comparing the the upper flip part of the fone with the nano and both are about the same thickness and cover the same area (RAZR's flip top is wider but shorter). My point? If they can fit something to the same profile (nano) as half the RAZR i'm sure they could integrate a decent phone in the same sized package? Imagine a flip with the top being like an ipod nano and the bottom being the numeric keypad? Sounds pretty cool to me.
Also along the line of convergence most new subcompact digital camera's do a decent job of capturing 30 fps video (MJPEG / MPEG etc). Yes they dont compare with a video camera but the convenience alone is worth it. Give it another generation or two and I dont see most people (casual video makers) caring enough to buy two separate devices, this will eventually happen with cell phones as well.

Re:Convergence devices

[aussie_a]

I specifically do NOT want a device that does more than one thing.

Agreed. I have a typewriter for creating documents (OpenOffice), a console for playing video games (computer games), a telephone for talking to people (Skype), a video player (porn). This fandangled thing called a "computer" just does too many things, all of them poorly. Give me seperate devices any day.

Re:Convergence devices

[NanoGator]

"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."

Duh. Seriously, duh. The reason the extra stuff in the cell phone is interesting is that not everybody has all their fancy doodads at every given moment. A cell phone typically goes with people EVERYWHERE, but it's difficult to imagine anybody walking around with a cell phone, Game Boy, iPod, digital camera, PDA, and GPS.

You're sitting here saying "It does everything poorly" and I'm sitting here thinking "It does it less poorly than nothing at all." I've got some pictures of my nephew acting silly when we went out to dinner. I have a nice digital camera, but I wouldn't have gotten those photos if my phone didn't have a camera. Why? Because I'm not lugging that thing around everywhere I go. Okay, they're 640 by 480 and a little blurry, they're still amusing photos.

Of-freaking-course they're not going to be as good as a much more expensive dedicated device. It's like saying "I don't want a Game Boy because it's nowhere near a PS2."

Call Option

[sg3000]

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.

Re:Call Option

[sg3000]

> 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.

I just thought of another way the ROKR hurts the other mobile phone makers building music phones. Now they'll have to find a way to further differentiate from the ROKR since the iTunes integration provides a big advantage. They'll have three options:

1. Make their phones better looking-- which increases their costs, and right now the RAZR wins this battle

2. Reduce their price-- and either hurt their margins, or find a way to cut production costs

3. Increase their capacity above the 100 song limitation, which will increase the costs and thus the price) -- but this still doesn't mitigate the fact that the phone won't play songs from ITMS

So Motorola gets another advantage; they have forced the other phone makers to market around the ROKR yard stick.

Re:Isn't it obvious?

[Brento]

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.

It's a Motorola product.

[jcr]

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

I can see it now...

[ZP-Blight]

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.

The UNIX philosophy for mobile devices

[mrchaotica]

It's like the Unix philosophy. Each program does one thing and does it well. And it communicates well with other programs.

That's the kicker, isn't it? The trouble is that no mobile device just does one thing, and no mobile device communicates well with others.

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?