Steve Jobs may have just taken one step closer to wireless.
The head of Apple Computer Inc. landed a spot on the board of The Walt Disney Co. last week under the terms of Disney’s $7.4 billion buyout of computer animation studio Pixar. While the deal undeniably centered on Pixar’s expertise in making blockbuster animated films, some believe it may also pave the way for Apple to enter the mobile-phone business in a big way.
“Now everyone can focus on what is most important,” said Jobs, the founder and chief executive officer of Pixar, “creating innovative stories, characters and films that delight millions of people around the world.”
Animated films are surely not the only thing on Jobs’ mind, however.
Apple first waded into the wireless waters last year with Motorola Inc.’s Rokr, an iTunes-capable phone using Cingular Wireless L.L.C’s network. The long-awaited handset failed to live up to substantial pre-release hype, though, and Motorola has said its next Rokr will support its own iRadio service-not Apple’s digital music offering.
But analysts have speculated for more than a year that the computer- and iPod-maker may be developing its own phone. And the company recently filed a series of applications with the U.S. Patent and Trademark Office laying claim to the phrase “Mobile Me” to cover a variety of offerings including “the transmission of data to mobile telephones.”
The four filings also address gadgets and software for playing digital music and video, e-mail services and synchronization software. While Apple declined to discuss the applications, the news fueled speculation that the computer-maker is about to dive head-first into mobile.
“Do I think they are developing a phone?” JupiterResearch analyst Julie Ask questioned on the consultant firm’s Web site. “Probably somewhere in their labs, there are prototypes of phones. Whether or not they bring one to market commercially is another story.”
Such a move might be necessary for Apple to keep its iPod business thriving. Mass-market music phones are quickly becoming feature-rich handsets capable of storing hundreds of songs with a memory card, and 4-gigabyte cards are expected to be on the market by year’s end. While Apple continues to stay ahead of the curve-adding features like video to its iPod line-it seems likely consumers may soon want just one mobile device for both communication and entertainment.
With last week’s acquisition of Pixar, though, Apple may be looking to do more than simply build handsets. The company could launch its own wireless service as a mobile virtual network operator, using the same back-end support systems as MVNOs from Disney, which is slated to launch later this year, and sister company ESPN.
“I think they could share relationships with vendors; I think that’s probably where Disney is going with ESPN Mobile,” said Yankee Group analyst Marina Amoroso, noting that Apple and Disney would target very different markets. “That would very much be a possibility.”
An MVNO would also serve as a preemptive strike against carriers looking to expand into the mobile music business. Sprint Nextel Corp. began offering full-track downloads late last year, and Verizon Wireless recently launched its Vcast Music service, an aggressive offering designed to compete head-to-head against iTunes. Vcast Music allows users to download songs directly to their handset and PC for $2 each, or to just the PC for 99 cents, matching Apple’s price for desktop downloads.
An Apple MVNO would surely be seen as competition for any carrier offering its own music service, but it could also be a lucrative ally. The company owns one of the most recognized brands in America and could attract countless loyal iTunes users. Any carrier that allows Apple to use its infrastructure for wireless services would likely sacrifice mobile music revenues, but could generate lucrative data traffic on its network.
Acting as a wireless service provider would certainly be foreign territory for Apple. iTunes is a retail storefront-not a subscription service that generates continual customer relationships or recurring revenues. And, as JupiterResearch’s Ask points out, the company doesn’t have its own content, unlike ESPN or Disney.
But it does have one of the most successful brands in the country, and a solid following among the young, tech-savvy consumers countless MVNOs are targeting. While Apple’s intentions in wireless remain a mystery, Jobs continues to attract attention from the industry even as he stands on the sidelines.
“I think they are constantly under pressure to expand their markets,” Amoroso said. “They want to expand by offering services through all shapes and sizes; if they can do that through the mobile platform, they’ll try that.
“I definitely think the role Jobs plays (at Disney) is going to be something to watch closely.”
