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Wednesday, November 01, 2006

The iPod Gets Targeted, Again (AAPL)(MFST)(T)

Cingular, the big cellphone company controlled by AT&T, is about to launch a music download service aimed at the iPod. The wireless company actually has some formidable partners like Yahoo! Music, who see this as a chance to move into a market dominated by iTunes.

Of course, Cingular can add itself to a long line of companies that want a piece of the market that is dominated by Apple's 60 million iPods. The largest threat may come from the new Microsoft Zune, simply because the big software company can put almost unlimited marketing money behind the product.

Oddly, Cingular also has 60 million subsribers. Obviously almost none of them use the company's phones for music downloads, but Cingular does have the options of offering downloads to both the phone and to AT&T's new home entertainment set-top boxes. A "double play" as it were.

Apple may keep its strangle-hold on the music download market, but it has never been faced by such a large number of well-heeled competitors.

If Apple wants to keep its share, it may come at the price of reduced fees for downloads. If so, it is margins that may suffer instead of iPod count.

Douglas A. McIntyre can be reached at He does not own securities in companies that he writes about.

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