There’s this bit on the Chicago Tribune today about how Motorola have delayed the launch of the iTunes phone because of objections from a wireless carrier (registration required, bless Bugmenot).
The gist of the Trib article is that the delay resulted when one of the wireless carriers objected to the inclusion of iTunes functionality on a wireless phone that would not include them in the revenue mix for sales. I have to admit that I’m somewhat taken aback by this, because I could only suspect most users would simply be transferring songs already purchased via their computers to the phone. If users are downloading the songs via wireless data networks, carriers should be satisfied and ga-ga with revenue from the downloading of those bits (data tariffs are pretty lucrative). In other words, the carrier is included in the mix on the basis of the cost of the download itself.
At Fierce Wireless there is speculation that wireless companies are focused on launching their own music services, and this is the basis of their reluctance to let Motorola fly with this phone. I can give this a degree of validity, because weve been seeing more and more wireless carriers looking to control and brand the entire wireless experience as they see fit.
The Trib rightly observes that this scenario (if indeed it is the result of carrier objections) speaks volumes about the balance of power between carriers and equipment manufacturers. Shadows of PalmOne’s decision to disable Bluetooth on the Treo 650 at the behest of Sprint, anyone? This balance of power, combined with the rise of lowest-cost manufacturers like LG spells some serious trouble for the premium brands in the mobile industry. As carriers take issue with new features and functionality, it could easily follow that the innovation that the likes of Moto, Nokia and Sony Ericsson have shown could come to matter less and less.
The competitive intelligence guy in me is hopping that the executives at these companies took the time to war game these potential scenarios and are ready with some means to respond. One idea that jumps to my mind is to push the notion of the unlocked phone harder here in the US just like its been in Europe. With number portability a reality now, phone manufacturers can really make a push on the notion of being able to take your phone with you wherever you go. An obvious obstacle that comes to mind is the diverse wireless standards in the US, such that a customer would not be able to take their phone from, say T-Mobile (who use GSM) to Verizon Wireless (who use CDMA). New chipsets, however, might alleviate this limitation.
Regardless, Motorolas lot reflects broader changes for wireless phone manufacturers. I hope they are prepared to respond, because I want my iTunes phone.
