After an exceptional amount of hype -- even for an Apple-related product -- Motorola launched the Rokr iTunes cellphone last year, the first mobile device able to download and store digital music from the phenomenally popular online store run by Apple. Unfortunately for Motorola, the Rokr's appeal quickly plummeted like... well, like a rock. Sales were lacklustre at best and reviews of the device were lukewarm, in part because it only had enough space to store 100 songs. One wag even dubbed the phone "the Ishtar of the cellphone industry," after the infamous box-office disaster starring Dustin Hoffman and Warren Beatty.
Was the Rokr a rare misstep by Apple -- a result of conflicts between the desires of the computer company and Motorola, or the cellphone maker's telecom customers? Possibly. On the other hand, Apple may not have had all that much interest in the success of the Rokr to begin with, if it was planning to move into the cellphone business itself with a true "iPhone," as some industry analysts expect it to.
In that sense, the Motorola project may have been just a stopgap measure, something to keep the market happy until the Apple version came along. There was even speculation that the computer company deliberately sabotaged the Rokr. In any case, although nothing is ever certain as far as Apple is concerned, there are signs the company may have its sights set on the mobile device business.
Among other things, Apple fans and conspiracy theorists point to the fact that the company recently registered a trademark for the term "Mobile Me," which it described in its filing as being the type of thing that could be applied to mobile communications.
There have also been blurry camera-phone shots of what is reputed to be a demo of an Apple cellphone, running on Cingular's wireless service, leading to theories that Apple plans to become a Mobile Virtual Network Operator or MVNO like Virgin Mobile, which rents service from one of the other major phone companies and brands it with the Virgin name.
Accusing Apple of deliberately sabotaging the Rokr partnership may be a little over the top, but there's no question that the relationship between Apple and Motorola was never all that smooth. After it was first said to be in development, it took more than a year for the Rokr to actually make it to market - in part because Apple, Motorola and the cellular carriers all wanted to control the device in some way (the 100-song limit was an arbitrary cap mandated by Apple - there was plenty of room on the device for more music than that).
After Apple chose to launch the popular Nano music player at the same event as the iTunes phone, Motorola CEO Ed Zander had some harsh words in an interview with Macworld. "Screw the Nano," he told the magazine. "What the hell does the nano do? Who listens to 1,000 songs? People are going to want devices that do more than just play music." (Wired magazine ran a feature article last November).
While there has been plenty of talk about Apple launching an iPhone-style device - perhaps even one that would become a Palm-style email and PDA device - the company itself has been cool to the idea in the past. In September, just after the launch of the Rokr, Apple vice-president Jon Rubenstein - who is in charge of the iPod division - told a German newspaper that he didn't see any point in combining a music player and a phone.
"Is there a toaster that also knows how to brew coffee? There is no such combined device, because it would not make anything better than an individual toaster or coffee machine... it is important to have specialized devices." Both Rubenstein and fellow VP Phil Schiller also said that moving into the PDA market "would not be a good business for Apple."
Others, however, think that an iPhone would be a natural move for Apple, if it wants to extend its reach from portable music and video into other areas of the entertainment market. And in some ways doing so makes an increasing amount of sense, since that part of its business has grown to the point that it is producing more than half of the company's revenue, and even more of its profit. For all intents and purposes now, Apple is more of a consumer electronics and entertainment company than it is a computer company.
Morgan Stanley analyst Rebecca Runkle has said that she believes Apple could generate $1.2-billion in sales from an Apple iPhone. In the third quarter of last year, more than 205 million cellphones were sold, up by 22 per cent from a year earlier.
Will Apple launch its own iPhone? One thing is for sure -- given the emails I've gotten from readers on the subject, there would be plenty of willing buyers.
Mathew Ingram is the Globe and Mail's on-line business columnist. Feel free to post a comment or e-mail Mathew at mingram@globeandmail.ca
