iTunes Phone Seen as Imminent

Next Tuesday, July 26 marks the one year anniversary of Apple and Motorola's announcement they would jointly develop a cell phone able to play songs from iTunes. Since much has been said but nothing has materialized. Many believe the network operators are the main stumbling block because they don't want to offer a phone that will allow users to bypass their networks and services.

AmTech Research analyst Albert Lin thinks the time still isn't right for an iPhone because it "doesn’t really make financial sense for carriers." Plus, he notes "Apple’s iTunes offers CD-quality tracks for $0.99. Meanwhile, mobile phone downloads typically cost about $2 to $3 apiece with the carrier pocketing a $1 profit."

As several in the analyst community have hypothesized, it makes sense if Apple joins the ranks of Virgin, Disney amd ESPN to become a mobile virtual network operator (MVNO) and offers their own iPhones. They have many of the pieces in place and wouldn't have to worry about the issues of content portability and bypassing the operator's network to drive downloads.

Lin says "Even a few million iPhone users could be profitable. I’m sure if Apple came up with its own phone, there would be up to a million Apple loyalists who’d pay for that premium."

Makes perfect sense to me but Edward Snyder at Charter Equity Research thinks differently. He warns that "Apple is too small and specialized to handle it on its own. The phone business is like King Kong, and Apple is like Cheetah,” he said.

With the roll Apple is on, they just might be able to outrun King Kong...

via Red Herring