Why Apple Wants To Turn The iPod Into A Phone.

There’s a bigger reason that Apple wants to turn the iPod into a cell phone than just music. It’s math.

An iPod is great. A cell phone is great. One is much greater than the other. Do the math.

Apple just finished financials for 2006 and everything is working very well. Do the math.

Record Mac sales, shipments, profits. Record iPod sales, shipments, profits. What’s next?

If you think Apple’s 2006 financials were great, wait for their next target. Those are big numbers.

iPod sales, perhaps even Mac sales will pale in significance to the opportunity that awaits Apple.

Where? How? By morphing the iPod into an Apple-developed, branded, built cell phone.

“Wait a minute, Alex,” you’re thinking. “Don’t cell phones and iPods sell for about the same amount?”

More or less, and that’s the point. Apple sold over 30-million iPods in fiscal 2006, and has about a 75-percent market share.

We may think those are big numbers, but they’re tiny relative to the number of cell phones sold each year. It’s math.

Apple very much wants and needs to move the cool, hip, classy, chic, popular iPod line of portable media devices into a cell phone.

Why? First, cell phones are beginning to pick up similar functionality to that found in the iPod, presenting Apple with a mass of competition.

Second, there may be 1-billion cell phones sold this year. Apple wants in on the action. Networkworld outlines the opportunity.

They have a great brand name, tens of millions of customers are happy with their iPods, an iPod-like phone may extend the halo to even more Mac sales.

Think about it. A mere 3-percent market share in cell phones is an astounding 30-million phones.

It took Apple five years to hit that annual number of iPods.

Can Apple sell 30-million iPod-like cell phones? Motorola and Nokia hold about 55-percent of the cell phone market. Samsung, Sony, LG and others hold the rest.

Each sells many times more units than Apple sells iPods. You can easily understand Apple’s need to enter that market.

Now the questions: what should Apple’s cell phone do (features)? Who should manufacture Apple’s cell phone? What wireless carrier should Apple use? What unique selling proposition can Apple add to a cell phone?