Apple to introduce iPhone this year, says Barron's

[Alexander Turcic]

Heads up, Motorola! Apple is gunning for you. Barron's Tiernan Ray reports in an online exclusive (subscription only) that Apple could break up its relationship with Motorola to introduce it's own "iPhone" handset sometime in late 2006.

Speculation about an Apple phone is several years old, but analysts say the process is finally moving forward. Apple is working on "an iPod with phone functions" and could end up using Hon Hai Precision, a Tiawanese contract electronics manufacturer, to help them make the phone, says Johnny Chan, a J.P. Morgan analyst based in Hong Kong. Hon Hai has a big role in making the iPod Nano. But Apple still hasn't decided whether to give the contract for what's being referred to as an "iPhone" to Hon Hai or to another manufacturer, says Ellen Tseng, a Morgan Stanley analyst in Taipei. One analyst in Taipei who declined to be identified said Taiwan Green Point Enterprises, which makes plastic cases for the iPod, is in talks with Apple for a role in the phone. "The chatter about the product is all over the food chain," says Bill Shope, Chan's colleague in New York who follows Apple. He believes Apple will likely introduce a cellphone by the fourth quarter of this year.

If analysts believe that Apple is to embrace a billion dollar business by introducing its own iPhone product, in true Apple style unlike the horrible Rokr device, we very much like to believe it, too. But Barron's also mentions some of the steep obstacles that could get in Apple's way of attaining domination in the cell phone world.

To be sure, the challenges to Apple are steep. A cellphone is far more complex than a digital music player, where Apple has already achieved a bit of infamy for problems such as casings that easily scratch and short battery life. "The landscape is littered with carcasses of people who wanted to get into the cellphone business," says John Bucher, who follows Motorola for Harris Nesbitt Corp. in Los Angeles. Another big challenge for Apple: It doesn't have the relationships with wireless carriers, who subsidize the retail price of handsets, nor the experience in customizing phone software and casings. Apple could get around that by becoming its own phone company, a "mobile virtual network operator," or MVNO, albeit at the cost of subsidizing the phone's price out of its own pocket.

Whether you're the sort of Apple geek who has the company logo tattooed on your ankle or a reflexive Apple basher who's sick of the cult of personality around Steve Jobs, you have to agree that Apple's gadgets are about the sexiest on the market. And if the iPhone is going to be as sexy as the iPod, we'll predict a brilliant career for this rumored newcomer.

Related: Palm stock surges after takeover chatter

[JimKnopf]

Originally Posted by Alexander

Whether you're the sort of Apple geek who has the company logo tattooed on your ankle...

How did you know? My Apple tattoo is very dear to me and I don't appreciate when people make fun of it.

[bubi]

a good news, a just lost my mobile phone, so if iphone is not expensive as ipod, i will get one

[Zire]

@bubi...

In the long run a cell phone is much more expensive then an ipod.

[Alexander Turcic]

CNN / Business 2.0 picked up the story:

http://money.cnn.com/2006/03/23/tech...2_browser0323/

[bubi]

Originally Posted by Zire

@bubi...

In the long run a cell phone is much more expensive then an ipod.

That's true, but we do have many cheap cell phones here in China.