Analyst: iTunes Motorola Phone Demo a MacExpo Possibility; Ship by July

Apple Computer and Motorola are ready to demo a yet-to-be released new cellular phone with an iTunes software client built in that could be in the hands of consumers by July 2005, American Technology Research analyst Shaw Wu told clients in a commentary released Thursday.

"We believe that Apple and Motorola are ready to demo a yet-to-be released new cell phone with iTunes software client," Mr. Wu wrote in his report, obtained by The Mac Observer. "we believe Steve Jobs may give an update on its progress during his keynote speech at the MacWorld Expo on January 11, 2005."

Mr. Wu said he believed the joint product was "on track to be ready for consumers in the first half of 2005," would have both USB and Bluetooth connectivity to transfer music files, offer 12 to 24 song capacity, but offer no direct access to the iTunes music store.

"Like an iPod, we believe one still needs access to an iTunes on a PC client (Mac or Windows) to transfer files to the cell phone," he wrote.

The west coast analyst said he considered the venture a "win-win" for both companies.

"For Apple, this deal expands its iTunes footprint beyond PCs (Mac and Windows) and iPods into the cell phone space with Motorola one of the top cell phone manufacturers in the world. We also believe this gives Apple further differentiation versus its competitors in the digital music space and gives more users the iTunes/Mac "look and feel" experience and could help accelerate AAPLis sales."

Mr. Wu reiterated Apple shares as a ibuyi with a $78 price target. "We believe that the move to digital music is a multi-year trend that Apple is well-positioned to capitalize on, having arguably the industryis most powerful and complete stack of hardware, software, and service."

Eddy Cue, Appleis vice president of applications, told Forbes magazine Dec. 16 a joint venture with Motorola was "on schedule" for a 2005 debut, but gave no further details. Both companies announced a joint venture to develop products in July.

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