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| Thursday, July 29, 2004 |
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Motorola Deal with Apple Could Widen iPod Lead
Wed Jul 28, 2004 06:18 PM ET
SAN FRANCISCO (Reuters) - Apple Computer Inc.'s (AAPL.O: Quote, Profile, Research) plans to put a version of its iTunes jukebox on Motorola Inc.'s (MOT.N: Quote, Profile, Research) cellular phones helps the computer maker extend its lead in digital music, analysts said.
The Motorola deal makes it harder for rivals such as Napster to make inroads on Apple in the nascent field, Merrill Lynch technology analyst Steve Milunovich said. He said Apple is emerging as the kingpin of digital music, likening its dominance to Microsoft's in computer operating software.
"We believe Apple is beginning to establish itself as the de facto standard in digital music," Milunovich wrote in a note to clients this week. "Apple could become the 'Microsoft' of music."
The agreement with Motorola, the No. 2 maker of mobile phones after Nokia (NOK1V.HE: Quote, Profile, Research) (NOK.N: Quote, Profile, Research) , will also let users store and play a limited number of their favorite songs on Motorola phones, the companies announced on Monday.
Since Apple, based in Cupertino, California, introduced the iPod in October 2001, it has sold more than 4 million of the sleek digital music players. Its iTunes online music store, which is integrated into its market-leading digital jukebox software, has sold more than 100 million tracks since it launched in April 2003.
Yet even while Apple has more than 50 percent of the market for mobile digital music players and claims to account for more than 70 percent of music purchased legally on line, the young industry is still in its early days.
"We've got some major players out there who have yet to show any of us their wares," said Michael McGuire, an analyst with GartnerG2 who tracks digital music, referring to Microsoft, the Virgin record label and others. "The vast majority of music lovers are still buying music CDs."
The mobile version of iTunes software will be available on all of Motorola's mass-market music phones in the first half of 2005, the two companies said.
"iPods are the leading portable music player, iTunes is the leading on-line music seller, and it appears Apple understands it has to work with others to dominate the space," Milunovich wrote.
"Although we expect Motorola music phones to have 0.5 (gigabytes) of memory for songs by the end of the year, this is a different market from the 4/20/40 (gigabyte) iPods," the analyst wrote. "Getting users to try iTunes on their cell phone introduces them to portable music the Apple way."
Earlier this month, Apple posted quarterly net income that more than tripled, fueled by surging sales of the iPod as shipments of its signature Macintosh computers rose 14 percent from a year ago.
Also this week, RealNetworks Inc. (RNWK.O: Quote, Profile, Research) took the wraps off of new software, which it calls Harmony, that will make downloads from its online music store compatible with any portable player, including the iPod.
Real said that Harmony will make commercial songs from its RealPlayer Music Store compatible with FairPlay, the digital rights management standard Apple uses to protect purchased songs from unauthorized copying and playback.
Even as rivals abound Apple continues to plug away.
"They didn't just put out a couple of versions of iPod and iTunes and said, 'we're done,"' McGuire said. "They've continually working to update the product and the store."
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| posted by Perimbean @ 10:43 AM |
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