In a story entitled Appleis Phone Isnit Ringing Any Chimes in its September 19 issue, lead reporter Peter Burrows seemed less than enthusiastic about the new phone, suggesting that Apple limited the features and number of stored songs on the phone on purpose to not hurt sales of its iPod product line.
“(Mr.) Jobs seems less than enthusiastic (at the phones debut),” he wrote. “it looks like (Mr.) Jobs is making a careful gamble. He doesnit want the music-phone market to soar, at least not right away. That could cut into his iPod franchise, the source of almost all his revenue and profit growth. At the same time, he knows the mobile-phone market could be tremendously important for digital music in the future. So heis positioning Apple to be ready for a sales boom without leading the charge himself.”
In other words, Mr. Burrows believes Steve Jobs “seems to be trying to define the music phone to his advantage. Phones such as those from Nokia and Samsung will rival the iPod as the device to carry all your music. But the iTunes phone is designed to be an accessory to the iPod rather than a replacement…”
Mr. Burrows also believes the Jobs strategy has great risks, such as a competitor coming out with a better product, or various wireless carriers not signing on and soon coming out with their own products and services, such as Verizon and Sprint Nextel.
But with risks come opportunity. Mr. Burrows thinks Apple could reap “intriguing” licensing possibilities. “If the new phone becomes a hit, Jobs could pursue other deals, including licensing software to Motorola or another manufacturer for a phone that could store thousands of songs.”
Business Week reporters also suggest Mr. Jobs “could come out with his own cell phone, leaving current partner Motorola behind. Piper Jaffrayis Munster thinks thereis a 50% chance Apple will introduce its own phone in the next year….Apple could keep all the profits — and the control to make a phone the way it wants. A long shot? Perhaps. But itis one sure way Apple could make a real splash in the wireless industry.”