Why T-Mobile Should Offer iTunes Phone

23 Comments

One of my readers emailed and asked the question: will iTunes phone ever see the light of the day? Given that both Sprint and Verizon, following Gecko’s credo, have decided that they are going to pass on the iTunes, it is a good question. Those are two of the three largest wireless carriers and the trepidation of iTunes fans is understandable. Like everyone else, I am worried about the mlackmail carriers and record companies are going to force on us.

I think Verizon and Sprint just missed an opportunity that would have guaranteed them at least a million new users. At $50 a month per user, that would have meant an additional $600 million in annual revenues, but never mind. You might be wondering why a million users. I am assuming 10% of us iPod lovers would love to own an iTunes phone. You know the same folks who were among the first million to rush out an buy an iPod back in the day when white headphones were a sign of iPoddery!

I think this is a perfect opportunity for T-Mobile, currently the laggard in the US mobile sweep stakes to step in and pick up a lot of switchers for really no cost to them. They won’t even have to spend the money to get the word out – Mac and iPod websites will do the job for them.

And then there is the question of their woeful network, starved of bandwidth and on a spectrum diet. There is clearly no 3G or for that matter 2.5G network in sight, and instead the company is betting that its WiFi network will do the trick. (Fat chance!) My sources in wireless world tell me that the Germans see T-Mobile USA as a cash cow, only to be milked and not fed enough. Frankly it does not have the spectrum or the money to buy the spectrum to roll out a high speed network.

Which brings me to the iTunes phone. Since it doesn’t have the spectrum that can support a downloadable music service, the company should have no problems in supporting an iTunes phone, that perhaps uses a USB or a Bluetooth connection to hook-up with the PC. Even through my gimlet colored eyes, this is a can’t miss opportunity for them… they should take it.

Motorola CEO Ed Zander in a conference call today said that it will release the iTunes phone within next few months,”despite ongoing speculation that Motorola might delay the launch of its iTunes phone because of lack of enthusiasm among US network operators.” ThinkSecret doing its thing predicts June One as the D-Day for iTunes Mobile.

23 Comments

Debby Williams

An uncle sent me a Apple Iphone 4GB from North Carolina in the US and i reside in Nigeria,I dont know maybe it will work in the with my local carrier sim card such as MTCN,GLO and V-Mobile..I need a response ASAP.
Thanks.
Debby.

Keylogger

A pretty good read, there’s obviously some things that Om is unaware of right now and so some of his pivotal claims are wrong (not all of us can work for T-mobile ) so I’ll give him the benefit of the doubt. That said, I personally don’t think that people would get the “iTunes phone” unless they could download songs over the air.

To me, anyway, I think that’d be the bigger selling point — to be able to pull down the latest song in the car, hook the phone up to the car’s stereo system and start blasting away

Gabriel David

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Gabriel David

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Damian

Mike D – wasn’t being really serious – I imagine a lot of people have thought about this – more power to you if you came up with first.

Just finished reading the article – great stuff – we’re definitely on the same page. Om – give my “crown” to Mike….

Thanks, as always, for the link Om!

Jesse Kopelman

MVNO is always a good option, because the big carriers be dumb.

Om Malik

i think its time to see that both mike and damian had good ideas about mvno and well that’s a good way to see that might be the only option for apple. if they can’t work something out with t-mobile.

Mike D.

Are you talking about me Damian? I think I beat you by about 5 months on that one (see article linked above), but if it’s any consolation, I’m sure others have thought of this before either of us. I just haven’t read it anywhere.

Om Malik

sorry about the bad math… i meant 10%. sorry again about. also damian – added link to your site/piece

Earle

T-Mob, bah… Surely people would rather pay Cingular $4 for the latest tracks… :~)

Pilott

10 millions ipod’s *20% = 2 millions users
ipod number 10 millionth sold December 16 2004
they might have lost 1,2 billion according to your calculations.

excellent review of the global weather change.

jbelkin

The cell phone company guys just sees the 3-second ringtone market and extapolates that out to the music market thinking there’s $10 billion (projected) just for their plucking. How do you create a ringtone – most people are not going to bother ripping, snipping and figuring how to load – $2.50 is convenience not anything else. Music is different. Everyone knows how to rip and load a Mp3 – they also get confused by looking at itunes – deceptively simple. What they should look at is the WalMart store> The world’s largest retailer – nearly $270 BILLION in revenue (not a typo – $270 BILLION) yet how are they doing with the CHEAPEST online music store (selling a format no one wants) – and the mobile guys are going to compete by trying to sell tracks for how much? $2? $3? In another weird DRM? Liquid Audio-like? Good luck on ya … and you can’t just exactly set up a crate and start selling tracks – you need an entire INFRASTRUCTURE with CUSTOMER SUPPORT – take a step back – how are they doing now with ‘advanced services/premium’ selling? Not so much? With a huge churn rate? If they can sell SMS, IM, photo uploading – how are they gonna sell $3 music tracks? Instead of drooling at the powerpoint revenue chart, look at the cost of getting back to breaking even – I have no idea what a store costs to set up but I’ll bet you need to spend $20 million to advertise you have a store – and what happens when another carrier joins in? What will be their first promotion? That’s right, cutting prices. So after $20 million in ads and maybe another $50 million to set it up – you’re back to sell “liquid audio” tracks for $.99 – only now you need to sell 70 million just to come close to breaking even.

And the real clicher? Like the PSP, you have to a phone for – why? TO TALK ON. Who’s going to run down the battery to listen to music … and franky, if they cannot design an interface that requires ten minutes to figure out ten minutes to cahnge the time, how’s that uploading, playing, shuffling and display interface?

What they should do? Charge extra for the phone & turning on Bluetooth – they get the cash upfront and ask Apple for a nice booth at the stores on a weekend.

I have t-mobile so I hope they come to their senses.

Mike D.

The failure of Apple to go directly to the carriers (thus far) is what’s causing this mess. Yes, the carriers are stupid to think they can charge 2-3 bucks a song and yes they are stupid to think they can create a store which competes with iTMS and yes they are stupid to think people will not want to move music back and forth between their phone and other components, but what choice is Apple really giving them right now? Back in July, even before the Motorola/iTunes announcement, I spelled out a phone strategy for Apple, naming T-Mobile as a potential MVNO/data/music partner. In case anyone’s interested in reading such rose-colored ramblings, the article is here: All Hail the iPhone.

Om Malik

good points jesse. which also explains that t-mobile germany is just using it as a cash machine to clean up house back in the home markets.

Jesse Kopelman

Om, don’t buy the hype about T-Mobile being spectrum starved. Thanks to the the AMR codec, if you have the quality of coverage to support UMTS, you have the quality of coverage to support half-rate GSM and free up massive spectrum. Anyway, they could have EDGE everywhere right now if they wanted, since it requires no additional spectrum vs. GPRS. Hell the radios are already in the base-stations and the software in the switches — they just need to increase the backhaul capacity to the sites and turn it on. The only real problem with their network is anemic footprint compared to the likes of Cingular or Verizon.

Om Malik

james now that you have flattered me no end what can i do to make you happy. ;-). thanks for getting the point of the piece.

James Harris

Om,

Not only are you insightful but you should be the CEO of T Mobile. After the Sidekick hacking problems T Mobile needs (read MUST) do something that regain the hip factor. The iTunes phone is their last best hope….

More power to your idea.

James

Matt Shaver

I just switched from Cingular to TMobile and the experience has been GREAT! Their packages and phones are extensive and my Motorola V600 syncs with my G5 perfectly. If they were to negotiate a deal, then I’d be willing to get another phone.

Jon Gales

If you asked me months ago who was likely to pick it up, it would have been Cingular or T-Mobile. The CDMA carriers in the US haven’t even stepped onto the Bluetooth train yet, there is no way they would be interested in such a great idea.

Cingular has a great relationship with Motorola (enter RAZR V3) and has shown it can carry cool phones (enter S710a). If Cingular doesn’t get the exclusive, T-Mobile could easily pick it up and make a mint. You make good sense Om!

There are way to many people from the Mac world trying to get in on this story–they don’t know phones!

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