Technology

Apple May Put iPhone OS on Other Devices


Apple is showing its true mobile colors. The company is on the lookout for an engineer who can help get its mobile-phone software onto additional devices.

On Feb. 15, Apple (AAPL) posted an ad on its Web site for an engineering manager "to lead a team focused on bring-up of iPhone OS [operating system] on new platforms." Days later, Apple Chief Operating Officer Tim Cook called the company "a mobile device company," echoing remarks by Chief Executive Steve Jobs, who in January said "Apple is the largest mobile device company in the world."

The posting and remarks underscore Apple's growing reliance on devices that provide Web access and computing features for users on the go. In the three months ended Dec. 26, the iPhone and related products accounted for $5.58 billion, or 36% of total sales, up from 25% of revenue a year earlier. Apple also sells other mobile devices, including the iPod Touch.

An adaptation of the operating system used in Macintosh computers, the iPhone OS runs the iPhone, iPod Touch music player, and the forthcoming iPad tablet computer. In the future, analysts say, Apple may put the OS onto Web-connected TV machines and devices that help viewers watch 3D programming. The Cupertino (Calif.)-based company may also consider licensing the iPhone OS to outside cell-phone manufacturers. Apple has shipped more than 75 million devices based on the iPhone OS, which lets users download and run applications such as games and calendars sold at the Apple App Store. Apple spokeswoman Natalie Kerris declined to comment.

Web-Connected TV

Responsibilities for the sought-after engineer include "working closely with the hardware and custom silicon teams to bring-up new platforms and prototype systems." The term bring-up "typically refers to the final stages of a technology being brought to market," says Nick Corcodilos, a tech recruiter who runs the AskTheHeadhunter.com blog. The job posting was previously reported by TheInquirer.net.

Apple may embed the iPhone OS in a Web-connected TV, says Charlie Wolf, a senior analyst at Needham & Co. "Where Apple is noticeably almost absent is in the living room," Wolf says. "It represents the natural migration of the operating system. And it's going to be a big market."

Currently, Apple sells Apple TV, a set-top box that lets users buy and rent high-definition movies through its online iTunes Store. The $229 gadget, introduced in 2007, isn't yet a big source of revenue for Apple, executives say. Cook and Jobs have both called Apple TV a "hobby." Still, Apple will invest in Apple TV "because our gut tells us there's something there," Cook said at a Goldman Sachs (GS) conference on Feb. 23.

Demand for Web-connected home entertainment is on the rise. Wal-Mart (WMT) on Feb. 22 said it will acquire Vudu, a movie-downloading service that this year will be built into more than 150 products, including televisions. Last year, retailer Best Buy (BBY) said it will sell Netflix (NFLX) movies through certain Blu-ray disc players and offer Sonic Solutions' (SNIC) CinemaNow service through an array of electronic devices.

Another place Apple could use the iPhone OS is in eyewear that lets users watch 3D movies on the go, says Richard Doherty, a director at consultant Envisioneering Group. Apple may also build a larger version of the iPhone, says Alex Spektor, an analyst at consultant Strategy Analytics. "You'll see Apple experimenting with sizes," he says.

Hardware Partners Possible

The job posting may also signal that the company may consider offering its software capabilities to hardware partners, Doherty says. Apple may wish to use other companies' brands to increase the number of devices running its software to make the OS more appealing to content providers and app developers eager to reach as many consumers as possible. "Some of the content companies have been asking if there will be other hardware products," Doherty says. Movie studios, for example, may be more willing to provide Apple with new releases sooner if Apple offers them access to more devices and potential consumers.

The iPhone is the most popular mobile operating system among developers. Apple's App Store boasts 140,000 apps. As of Jan. 5, consumers had downloaded more than 3 billion apps from the App Store.

Getting the iPhone OS onto more gadgets from partner brands would help Apple get iPhone OS-based devices into markets it doesn't want to enter solo. One example: cheaper phones for the developing world. Due to its high price, the iPhone hasn't taken off in markets like China. But Apple has historically balked at introducing lower-cost devices for fear of destroying its premium brand.

A partner like Motorola (MOT) could help Apple's software broaden its reach without jeopardizing Apple's brand, Doherty says. In 2005, the two companies collaborated on the Motorola Rokr phone, enabling it to access songs on iTunes.

Exclusivity Preferred

While Apple prefers to keep its software exclusive to its own hardware, in 2004 the company agreed to manufacture an iPod under Hewlett-Packard's (HPQ) brand; the device was discontinued in 2005 amid tepid demand. "Those folks who were interested in the iPod were going straight to Apple," says Stephanie Ethier, senior analyst at consultant In-Stat. From 2004 to 2006, HP also preloaded iTunes onto its PCs. And when the One Laptop Per Child project, designed to develop low-cost laptops for use by children in developing nations, had just got under way, Jobs offered free use of Apple's Mac OS software, The Wall Street Journal reported at the time. OLPC opted to develop its own software.

Licensing its software or manufacturing iPhone OS-based devices under a partner's brand could help Apple increase the number of gadgets running its software, and make it more attractive to developers. The iPhone is competing for developers with Android, an operating system developed by a consortium of companies led by Google (GOOG). Android may overtake the iPhone OS to become the world's second-most widely used operating system for smartphones in 2012, according to consultant Gartner (IT). Nokia-owned Symbian ranks No. 1.

Some analysts say the iPhone OS is most likely to end up in Apple's own devices. Licensing to outside manufacturers "is really antithetical to Apple's DNA," Wolf says.

Olga_kharif1
Kharif is a reporter for Bloomberg News and Bloomberg Businessweek in Portland, Ore.

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