Apple's iPhone scored another round of praise and publicity after unveiling a program that will let other companies create applications for the popular device.
But the excitement didn't make its way to the mobile music market. Although those hoping to add mobile games, corporate e-mail accounts and other content to their iPhone are thrilled, music services see little opportunity to use the groundbreaking device as a means of advancing the enjoyment or acquisition of music from mobile phones.
The background: Apple released a beta software development kit (SDK) that gives programmers various tools to develop applications that not only run on the iPhone and iPod Touch, but also take advantage of several key capabilities -- such as the touch-screen and motion sensor. In June, Apple will issue the AppStore, an update to iTunes that will enable users to buy and download these third-party applications much like they already do music and video.
This allows developers to create mobile entertainment applications without having to negotiate with AT&T -- the only carrier officially compatible with the iPhone in the United States.
On the surface, this is great news for developers long frustrated with the difficult process of partnering with wireless operators.
Why? The 30 per cent cut Apple proposes to take from each application sold via the AppStore is better (for developers) than the average 40 per cent cut wireless operators take. And the SDK process is fairly straightforward compared with the often arduous process of negotiating carrier contracts.
"They've grossly simplified it,'' says Paul Reddick, CEO of Handmark, which distributes mobile applications for smart phones. "It just seems like a pretty open environment.''
But ultimately, Apple decides which applications it will sell, and that spells bad news for music-related services hoping to find a home on the iPhone.
NAVIGATING GRAY AREAS
"It's an open question at this point how amenable Apple will be to offering products or applications that could conceivably interfere with its own iTunes revenue stream,'' NPD Group's Ross Rubin says.
An iPhone version of Rhapsody or Napster is almost certainly out of the question, as both require software and digital rights management not compatible with Apple products. In more of a gray area are online streaming services like Last.fm, Pandora and imeem. None has downloading capabilities outside of linking to such third-party services as iTunes, and as such Apple may see them as services that drive sales rather than cannibalise them.
"The real interesting test case will be Amazon,'' Rubin says. ``Here's a music vendor selling songs that are clearly compatible with the iPhone. Unlike with Rhapsody or Napster, there's no DRM you need to make work.''
The same goes for eMusic. But both are considered iTunes challengers, and Apple could easily decline to make their applications available in the AppStore.
None of the companies mentioned were available to comment on this story.
Also discouraging is that, at least in the beta version of the SDK, developers won't have access to any iTunes functionality. This severely restricts the ability for such iTunes plug-in applications as iLike, Last.fm, Qloud or OnTour to create iPhone-compatible widgets that might expand basic iTunes functions.
But they can still write Web applications that users can access through iPhone's Safari browser, which does not require Apple's SDK or approval. A few already have surfaced, such as the SeeqPod full-song streaming search engine.
The problem is that those applications won't have access to the iPhone's functionality to the same extent as those written with the SDK. Additionally, such applications would be at a tremendous competitive disadvantage compared with those that can be bought directly over the phone because a) they lose the awareness bump of appearing in the AppStore and b) they could be rendered inoperable or disrupt the phone if Apple issues an incompatible software update.
Yet developers are keen to get their applications on the device in any way possible, regardless of the risks, simply because of the quality of services it allows.
Even though the iPhone owns a relatively small share of the device market -- 2 per cent of the smart-phone market and less than 1 per cent of the overall phone market -- it disproportionately owns the majority of the multimedia activity taking place on mobile phones. Apple claims 71 per cent of all mobile Internet browsing activity with the iPhone simply because it's easier to surf the Web on it than on other devices. (Reuters)
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