iTunes cell phone put on hold

/ Source: The Associated Press

Motorola Inc. postponed plans Thursday to unveil a cell phone that can buy and play songs from Apple Computer Inc.'s iTunes download service, a sudden decision which may reflect tensions with cellular companies who also want to sell music to mobile phone users.

The company briefed reporters on the new offering earlier in the week and planned to unveil the phone at the big CeBIT technology show here. Motorola's two-story exhibition booth included a display of iMacs running iTunes, but the new phones weren't there.

Motorola spokeswoman Monica Rohleder said in Chicago that the company remains in discussions with a number of wireless carriers regarding the first iTunes phone and will announce it "when it's ready to go," close to its expected release time this summer.

She asserted that the last-minute change in plans was no reflection of a dispute with carriers who offer Motorola phones in their handset lineups.

"Absolutely nothing went wrong," she said. "It was solely our decision to hold off the announcement."

In advance of the Illinois-based company's expected announcement, some analysts had said Motorola was running the risk of alienating the carriers by offering a service which might cut them out of the revenue stream for selling music to cell phone subscribers.

Music, video and Internet services are relatively uncharted markets which the cellular carriers are determined to capitalize on as the payoff on their hefty investment in advanced wireless networks with enough speed and capacity to deliver multimedia content.

At CeBit, many visitors to Motorola's booth were asking about the new iTunes-enabled handsets.

"Do you have the phones?" a Swede asked one of the demonstrators, who shrugged and said no.

Volker Haebel, marketing director of Motorola's German division, said a launch could come in the United States within a few weeks.

"The partners have to dance together," he said, referring to the marriage of Motorola's cell phones with Apple's music platform. "You have to find the rhythm."

He said the iTunes program would work just like the version available to computer users. The software would be compatible, and people who download iTunes to their phones would then be able to transfer the songs to their computers and portable iPod music players.

Notably, making music available by phone is a big theme of this year's CeBit. Providers like Vodafone Group PLC, Orange PLC, T-Mobile Ltd. in Europe are already making songs available, but none on the iPod.

In Japan, music fans already have access to an over-the-cellular-network service through network provider KDDI Corp., the second-largest telecom in Japan with 17 million cell phone users.