Sprint Nextel says it welcomes Apple's iPhone competition
KANSAS CITY, Mo. - Steve Jobs knows how to sell music, but success in the cell phone business is likely to be a far greater challenge, a Sprint Nextel Corp. executive said Thursday.
Jobs, chief executive of Apple, is partnering with Cingular Wireless to offer the much anticipated iPhone, a music-playing wireless phone.
"We welcome the competition," Oliver Valente, Sprint's senior vice president of product management and development, said during the Pacific Crest Digital Media and Entertainment Forum in New York City. "We look forward to competing with Apple in the music space."
Sprint executives consider themselves pioneers in offering music through their wireless service. Selling songs, ringtones, video and other data services has become an important part of Sprint's sales mix. Since Sprint introduced its $2.50-per-song, over-the-air service, consumers have downloaded 13 million songs.
But starting in June, the iPhone will be available for $499 or $599.
Apple has emerged as a dominant force in the music business with its millions of iPod digital audio players and iTunes, an online store offering an easy way to fill those players with music, podcasts and videos. Apple said last month that more than 2 billion songs and 50 million television episodes have been sold and downloaded through iTunes.
When he introduced the device last month, Jobs touted the iPhone as a "revolutionary and magical" product. The device has been designed as a version of an iPod, with a 3.5-inch-wide screen and a variety of new calling and media features.
Duplicating the iPod's success with the iPhone is not a sure bet, Valente said during Thursday's presentation.
"There are some barriers they will have to overcome," Valente said. "It won't be as easy as some believe to go from an industry where you are making a lot of money on hardware and not so much money on services into an industry where it is quite the reverse."
Wireless carriers typically subsidize the cost of the phones they offer, expecting to make up the cost over time through calling fees.
While Apple will be a formidable competitor, Sprint will continue to enjoy key advantages when it comes to wireless services and music, Valente said.
Sprint has about a dozen phones at "mass-market prices" that its subscribers can use to listen to music, Valente said.
"The majority of those can be purchased for $100 or less," he said.