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Mobile Operators Could Stop Motorola-iTunes Deal, Experts Warn
by , 2:00 AM EDT, July 29th, 2004
Cellular operators could deal a severe blow to Tuesday's announced plan between Apple and Motorola to let consumers put songs bought on the iTunes Music Store onto future Motorola, MP3-ready phones if it doesn't get part of the revenue stream from the sale of music cuts, industry experts and analyst are speculating.
Jupiter Research analyst Ian Fogg and John Strand, CEO of mobile research firm Strand Consult, told London-based NewMediaAge magazine they believe cellular operators will refuse to stock and sell Motorola handsets featuring the ability to play MP3 files if they aren't included in the financial rewards, thereby putting a halt to similiar deals with other music providers and cellular phone companies.
"The deal implies that fixed broadband connections are a better way to deliver high quality music downloads than mobile networks," said Mr. Fogg. "It suggests that operators hoping to profit from music downloads will be bypassed by PC transfer services like this."
"It's a mistake to bypass the mobile value chain where content owners are making money and mobile operators (are) missing out," Mr. Strand commented.
Observer Comments
Thu Jul 29, 2004 3:56 am Subject: Are these people out of their minds?
Edit: Okay, the cellular operators did NOT say this, it was just some idiot analyst.
Would the cellular operators ask for money for a transaction they had nothing to do with, just because theoretically, you could download an MP3 over your phone? That's criminal restraint of trade. And what would it cost to download 65 MB (an album) over a cell? Last time I checked, they couldn't even hit 56K with any reliability.
Does a viable product for downloading music over the net even exist? At least Microsoft waits until they have something to sell before illegally sabotaging the competition!
[/b]
Thu Jul 29, 2004 4:12 am Subject: What??
""It's a mistake to bypass the mobile value chain where content owners are making money and mobile operators (are) missing out,"
NO, actuallly that sounds like a PLAN to me. What "value chain?" Mobile providers don't provide and VALUE on content. Personally, I think having the ability to go to a source OTHER than my mobile provider for content is ANYTHING but a mistake.
This guy is just self promoting. The only way it would be a problem would be if all the mobile networks got together and agreed as a cartel not to stock the phones. That would be dubious legally at best while the chances of none of them seeing a commercial advantage by being first to offer such phones is pretty much zero. Even if they did I am sure other operators would be happy to oblige by filling the gap. For instance would one of these top operators be able to stop one of their associate operators like Virgin from offering such phones or would they refuse to use them on the batches of airtime they have bought from them? As similar deals will also be arranged with other phone makers who would these operators actually deal with- talk about cut off ya nose to spite ya face. If they have any sense they will simply be fighting like hell to be at the front of the queue when mobile downloads ARE practical and Apple is willing to deal with a preferred operator because they see them as good partners not Luddites. Mind you we are talking Capitalism here not common sense so like the Music companies (who were/are in a much stronger position short term than mobile operators cos they own the product) I would expect some attempted but futile delaying tactics.
I had not even considered, when I read the announcement of the MOT-AAPL agreement that anybody would ever consider downloading through the mobile phone … in which case I fail to see how the cell phone provider has anything to do with what’s on the phone. Are they going to want a share of the profits of all the companies listed in my address book also ?
If downloading is involved, the point has been made by someone above: the connection time involved seems to me a sufficient financial incentive for them to wholeheartedly support these new phones …
Are you sure the “analyst†(or whatever he calls himself) is not really Rob Enderle in disguise ?
"cellular operators will refuse to stock and sell Motorola handsets featuring the ability to play MP3 files if they aren't included in the financial rewards"
Well, they didn't refuse to stock and sell handset with Smartmedia or other "storage cards" (Siemens SL54, ...), and I can put MP3 from my PC on my Smartmedia and then play them on my phone without paying anything to the cellular operators.
I can transfer my MP3 to my phone over a bluetooth connection with my PC (Motorola v600, ...), and once again, I do not pay anything to the cellular operators.
So what is the point ?
Although I don't agree with the mobile operators, it's obvious why they'd think this. They are desperate for people to use their networks for data traffic, and are pinning their hopes on things like music downloads (e.g. 50 second clips) and video downloads (rightly or wrongly - probably wrongly). If the downloads come through a PC and not the mobile network, they make no money out of it. Since they decide which phones are used on their networks, they can simply not support devices that reduce their data traffic in this way. It absolutely stinks, but fair trade just isn't about in the mobile operators these days - witness phone locking and application locking. The analyst is not an idiot, he is simply pointing out the facts. The phone companies want you to download music over their slow crawling networks so they can charge you for it, but I don't think anyone is going to fall for it.
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