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Android-Amazon music deal should worry Apple, analyst says

'Winning combination' will put pressure on Apple and iTunes

September 23, 2008 12:00 PM ET

Computerworld - The new partnership that puts Inc.'s MP3 music store on T-Mobile's Google Android-powered G1 smart phone should worry Apple Inc., an analyst said today.

T-Mobile Inc. announced the G1 today, and it will ship the phone, which runs Google Inc.'s Android operating system, on Oct. 22 for $179 with a two-year contract.

Also today, Amazon said that it had partnered with the mobile carrier and will provide a G1-customized version of its online music store on the smart phone.

Amazon's MP3 store competes with iTunes, Apple's iconic music mart, but it sells only DRM-free tunes, or tracks that are not locked by digital rights management antipiracy software. Meanwhile, most of the tracks sold by Apple feature DRM protection. Amazon also undercuts Apple's pricing, selling the store's 100 best-selling songs for 89 cents each. All tracks on iTunes cost 99 cents each.

"Apple should certainly be worried," said Aram Sinnreich, a media analyst at Radar Research. "It's relied on the walled-garden approach with iTunes," he added, talking about Apple's locking the popular iPod to iTunes. "That's OK, as long as no one knows their butt from their elbow."

Calling the T-Mobile-Amazon partnership "a winning combination," Sinnreich pointed out two reasons why he's impressed with Amazon's music store. "It's gotten some real market share, and it's really been an important force in moving the industry away from DRM," he said.

G1 users will be able to search and browse Amazon's 6-million-track catalog over T-Mobile's mobile data network, as well as listen to track samples and purchase MP3s. To download tunes, however, the G1 must be within range of a Wi-Fi signal.

Apple's iPhone -- the device to which the G1 is most often compared -- also allows music downloading only when it has a wireless signal.

Sinnreich didn't see the inability of the G1 to download tracks over the mobile network as a problem. "Over-the-air download can't be a very viable business model," he said. "There's just not enough upside to warrant the bandwidth expense." Instead, he's looking for the next step in portable music.

"What has to happen is that the product model has to evolve to the next phase, and that's subscriptions," Sinnreich said.

Nokia Corp., for instance, offers a service dubbed "Comes With Music" that offers free unlimited music downloads with some phones. The concept has also been tied to Apple in off-and-on rumors, including ones that circulated earlier this year.

Although Sinnreich remains pessimistic that Apple will take the subscription step, he's more upbeat when the topic turns to Android-based phones, primarily because the platform is open source.

"A move like this is more likely to happen on open source," argued Sinnreich, "because there's a larger community willing to take, and share, greater risks. Apple is all about making everything perfect, but that doesn't always translate into innovation."

Read more about Mobile/Wireless in Computerworld's Mobile/Wireless Topic Center.

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