The 800-lb Gorillas Hold A Banana Monopoly

So how did Motorola manage to make an MP3-playing phone that sucks so badly? Wired reports:

When Jobs and Ed Zander, CEO of Motorola, announced 15 months ago that the two companies were going to partner on a new phone, people imagined a hybrid of two of the coolest products in existence: Apple's iPod and Moto's RAZR. For months the new gizmo glimmered mirage-like on gadget sites - ever promised, never delivered. When it finally did show up, it bore the unmistakable hump of a committee camel. Not sleek like an iPod, not slim like a RAZR - and when you saw the fine print, you discovered that you can't use it to buy music over the airwaves, that it's painfully slow at loading songs from iTunes on your computer, and that it comes pre-hobbled with a 100-song limit. No matter how much of its 512 megabytes of flash memory you have left, you can't load any more tracks onto the thing. The consensus: disappointing....

None of this is difficult. The technology to make a cell phone do double duty as an MP3 player is readily available. Motorola and other companies have been selling phones that play music in Europe and Asia for a couple of years now - handsets with lots of memory and serious audio capabilities. And with the iPod, Apple showed how to turn an ordinary MP3 player into a great one. Put it all together and you get - the ROKR? How does a great idea get this botched?...

Each had his reasons. Zander had been hired to jazz up the staid midwestern company, and an association with iPod would provide a much-needed infusion of cool - maybe even more than the upcoming RAZR. For Jobs, a partnership with Motorola was a way of neutralizing a threat to the iPod, which already dominated the US music-player market. Consumers around the world are expected to buy 75 million MP3 players this year, but they'll purchase nearly 10 times that many mobile phones. If music players become standard in handsets, the iPod could be in trouble. Partnering on a music phone gives Apple a way to enter that market yet protect the iPod. So although the two companies were superficially aligned, in fact their ambitions were diametrically opposed: Motorola dreamed of bringing the iPod to the cell phone-buying masses, while Apple sought to protect the iPod from them....

The whole article is an excellent example of the power that incumbent players have in the telecom market. As a Nokia exec puts it in the article:

Walter Mossberg railed against this sort of orifice maneuver in a recent Wall Street Journal column that compared US carriers to the Soviet bureaucracies that fought the free market. "I read that and I said, 'Spot on!'" Vanjoki recalls, dropping any vestige of Finnish reserve. "I have not seen an example in this business or any other business where braking innovation - you know, Push the brake! No innovation! - would benefit mankind. I have not seen that! But where you let innovation come to the marketplace and even help it come to the marketplace, it has always resulted in a bigger cake to be divided."

This is the effect of the death of Napster. An mp3 player should be a relatively simple piece of equipment, and relatively inexpensive. But because of the fear of RIAA lawsuits, hardware makers are even more predisposed to muck up their crappy players with copyright protection.

I've only taken a few key parts of the article. I'd really reccomend reading the whole thing - there's a lot in there.