The Coming Apple-RIM Battle

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Having tied its smartphone strategy to Microsoft (MSFT) with its Q phone line, Motorola hasn't generated much traction, while the popularity of its once red-hot RAZR line of conventional handsets has cooled substantially (BusinessWeek.com, 11/30/07). Once No. 2 in the world handset market behind Nokia, Motorola has recently fallen into third place behind Samsung. (BusinessWeek.com, 12/26/07).

Nokia is getting ready for the fight, too. In December the company announced a tieup with Universal Music Group (VIV.PA) that will put a music-download service on many high-end Nokia phones. Other labels, eager for negotiating leverage against Apple, which operates the hugely popular iTunes Store, are expected to follow suit. (BusinessWeek.com, 12/04/07).

Handset makers will get an assist in any battle with Apple and RIM from Android, Google's (GOOG) free smartphone operating system. Long thought to have been working on a phone of its own, Google revealed that instead it's creating operating-system software that it will share, for free, with mobile-phone vendors. The first handsets to use it aren't expected to ship before the second half of the year. That means Apple and RIM, both with high-profile device launches planned for roughly the same time, will have to share the stage with Google and its many hardware partners, which include Motorola, LG Electronics and HTC.

So whether the main competition is between Apple and RIM or more generally between smartphones and traditional cell phones, consumers—and their thumbs and ears—will surely take note.

Hesseldahl is a reporter for BusinessWeek.com.