The Apple iPhone is coming, and starting this Friday at 6pm, the audio industry is going to change forever. It's not going to happen overnight of course, and everyone (including Apple) knows this. But kidding yourself if you don't think there isn't an evolutionary roadmap already laid out for future versions of the iPhone. This Friday is just setting the stage.

Even if Steve Jobs reaches his goal of 1% of the worldwide cellphone market (that's 10 million units by the way) in 2008 - and I fully expect that he will - the real impact will be felt in 2010 and beyond, when the mobile audio market has matured to something completely different than it is today.

Planned Obsolescence
Apple's slogan should be "We Plan Obsolescence" because they are absolute pros at it. They are masters are creating desire, and continuously getting consumers to plunk down enormous amounts of cash to feed that desire. There's some key features missing from the iPhone - most notably 3G - but I think this was done with a clear plan of making the device accessible to the public.

The early adopters will buy it no matter what, even with dog-slow EDGE and the lack of MMS. Because Apple sells "sex" like no other. The iPhone is sexy. It's also ridiculously expensive. The majority of the people who want the iPhone, can't buy it.

And that makes it even sexier. We always want what we can't have. The iPhone is the femme-fatalle of consumer electronics.

Over-the-air isn't important... yet.
The lack of 3G also allows for Apple to continue to feed it's iTunes business model. Apple has effectively said with this device that over-the-air downloads are not important... yet. The reality? They're right. And the 130 million MP3 players prove this. People have built up vast collections of music on their computers, and spent a lot of effort doing so... they're not willing to part with them just yet.

But when the 3G version comes out, all the early adopters will rush to buy that version. Remember,  she's the femme-fatalle.

Apple will then be able to sell the "old" iPhone for a lower price. Those who couldn't afford the $500 iPhone will jump to get it at $300. And just as Apple opened up the door for iPod owners by selling an MP3 player without a screen, they'll create an entry-level market for people who will lust after a 2.5G cell phone.

The 3G iPhone will subsequently set the stage for Apple's over-the-air music service. Apple will most definitely have a Mobile iTunes as a result of the iPhone. But they need the infrastructure to be there first. And the right terms.

Radio being "live" isn't always a benefit
Right now, the only saving grace for the radio industry - and that includes terrestrial radio and satellite radio - is that "live" content can be received while on-the-go. The reality is that most of the content we listen to isn't really "live" anyway (most folks on the West Coast know exactly what I'm talking about).

And in a time-shifted TiVo world, we've become more and more accustomed to consuming displaced content. For a growing number of people, "live" actually has a negative connotation... because there's no control. You can't skip commercials. You can't jump to the next section. You only consume "live" content because you forgot to schedule a recording.

Apple knows this (they've helped foster a time-shifted culture afterall) and that's why the iPhone is currently dependent on side-loading content. Eventually, it's not a hard leap of effort for Apple to allow you to access your iTunes library over a cellular network. Music, talk - and yes even news, weather and traffic - will easily be downloaded to the device, for listening in your own accord. It'll probably be a lot like Slacker, in that you're not listening to streaming content, just cached content.

And for most, there's little difference.

The only thing that being "live" contributes, is the ability for listener interaction. But with terrestrial radio listening on the decline, and the growth satellite radio slowing a little sooner than expected, it's obvious that the general consumer is willing to give up that interactivity for control.

But hey, that's all just pipe dreams. This Friday is the reality. As a big, keyboard-less, extremely-expensive, and slow-ass 2.5G device goes to market.

There's nothing to worry about from that... right?

Walt Mossberg of the Wall Street Journal and David Pogue of the New York Times have both weighed in on the upcoming iPhone.

Mossberg's verdict:

"...despite some flaws and feature omissions, the iPhone is, on balance, a beautiful and breakthrough handheld computer."

Pogue's verdict: 

"As it turns out, much of the hype and some of the criticisms are justified. The iPhone is revolutionary; it’s flawed. It’s substance; it’s style. It does things no phone has ever done before; it lacks features found even on the most basic phones."

You can read Walt Mossberg's 2-week review here, and Pogue's here. Or you can watch Mossberg's video review:

What does this have to do with satellite radio? Everything.

The Wall Street Journal's Sarah McBride (who is, by far, my favorite reporter in this beat) took an in depth look at the growing space of Internet radio and it's evolution into the untethered space.

Profiling devices like the Sansa Connect, to Pandora's deal with Sprint (and their Wifi device), and of course, Slacker - the WSJ article does a pretty damn good job at looking at this rapidly emerging market. Lest we forget that terrestrial radio isn't sitting idly by, with CBS having recently acquired Last.fm and accounting for some 20% of all online radio listening.

A good chunk of the article is devoted to profiling Slacker as well as their upcoming portable device and satellite-powered car dock. One thing that we learn (well, it's news to me) is that the Slacker satellite "radio" antenna will measure in at about 4-inches. Their satellite service, because it isn't necessarily streaming (more like caching), will not initially feature newscasts, traffic reports or sports scores.

It's a good read if you have a WSJ account.

[Wall Street Journal] 

Sirius Canada and Bell Canada have teamed up to provide Sirius' commercial-free music channels on Bell Mobility multimedia phones.

Streamed directly to Bell Mobility phones via the Bell wireless high speed network, the Sirius programming is available immediately for $8/month (Canadian) on multimedia-capable Bell Mobility phones, (like the LG Chocolate, LG Fusic, Samsung m610 and Samsung a900). The service is powered by mSpot.

Melodeo, a service that delivers Web-based audio clips to phones, is currently testing a service that streams music to cell phones based on a customer's iTunes playlist.

The new Melodeo service will let consumers listen to their digital music libraries on the go without a portable player. It also lets listeners access songs from their library on more than one PC.

Mind you, Melodeo is not selling copies of songs you to store on your phone - it simply plays the songs contained on your iTunes playlist. That means Melodeo would only have to pay Internet radio usage fees (a tenth of a cent per song play).

"We're doing everything we can to follow the current legal guidelines and standard industry practices where the legal guidelines are not crystal clear," said David Dederer, Melodeo's vice president for music services.

Revenue could come from monthly fees for the service, software download fees, or even audio advertisements, added Dederer.

They expect the first version of the service to launch in 6 to 12 weeks, according to Dederer, who said he hopes to be able to announce a carrier deal by then. (Melodeo currently is partnered with AT&T and Alltel Corp.)

[Billboard.biz]
Thanks Tim!