Why the iPhone Might Be Able to Swap Music

It has been confirmed that Apple is delaying the release the next version of its operating system so that it can focus more attention to the iPhone. At a time when Vista was just released, it could definitely hurt Apple to delay their OS. What was so important that it needed to delay OS X by four months?

Music sharing.

I am going to make an unusually bold prediction and guess that Apple is going to add media swapping into the iPhone. To support this theory (purely a theory!), I present you some facts I feel are relevant:

• The iPhone has wireless LAN functionality. Music sharing is a pure software upgrade.
• Something is being developed now that wasn’t originally planned for the iPhone. Developers were pulled from OS X, and in enough volume to slow down the project by four months. They are working on something that is closely related to the operating system, such as modifying the Fair Play DRM scheme.
• The announcement to delay OS X came out today, but the cause must be traced back a few weeks. The decision to move resources for such an important project (OS X) could not have taken one day. Thus, the decision may have been made recently, but it must have been in the works for several weeks. Something happened in the last several weeks that directly influenced this delay.
• EMI announced they would opened up their music catalog a few weeks ago. The songs are to be available DRM free starting May 1, one month before the iPhone is released. Apple must have known about this at least a few weeks prior to the announcement date. This places this news item squarely in the middle of the target timeline.
• It has been noted that the decision to remove DRM was entirely EMI’s initiative. This is a key point. If EMI approached Apple, any corresponding decision regarding the iPhone was made in reaction to EMI’s announcement. This would have left Apple scrambling to catch up to the aftermath of the announcement, rather than being fully prepared going into it. The timeline is further validating by taking into consideration the secondary negotiations Apple had to make with EMI related to such a feature, as well as with the other labels.
• Microsoft has indicated they want DRM-free music in the Zune. If the Zune comes out as a DRM-free sharing device, Apple may lose significant market share. Even a reduced DRM version would help the Zune a lot.

I believe this makes sense on many levels:

• It would destroy the entire premise of the Zune, killing Microsoft’s ambitions in the music player market.
• The iPhone distinguishes itself as a sharing device too. This adds a ton of value to the product. It also makes it the only phone on the market with such a feature.
• It requires no changes to the hardware, keeping manufacturing costs exactly the same.
• It would hasten adoption of the product, even at its high price.
• It distinguishes the iPhone from the iPod on another dimension, no longer making it a simple “hybrid.”

Final clarification points:

• I am not saying all sharing would be DRM free — just the stuff that is already DRM free. This on its own is a huge edge over the Zune. It also completely redefines the music player market.
• Sharing Fair Play media would require alterations to the fundamental workings of the technology. This would require developers that work with Fair Play a lot, such as certain OS X developers, which makes sense.
• Changing Fair Play might effect iTunes, iPod firmware, and OS X. A new version of iTunes just came out, and nobody needs a press release about iPod firmware updates being delayed. The reallocated human resources would compound the delay to the OS.
• If this happens, you can expect a new generation of iPods to appear in 2008 that share this functionality.

I know my theory is crazy. Give it some thought and let me know what you think. 😉

Update: Wi-fi iPods are now rumored later this year.