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Tuesday, January 03, 2006, 08:00 am PT (11:00 am ET)

Motorola ROKR E2 drops iTunes for iRadio

Unlike the ROKR E1 music phone, Motorola will not include Apple Computer's iTunes software on its forthcoming ROKR E2 handset and instead will use the phone to promote its own proprietary subscription-based music service, according to the New York Times.

The world's second largest cell-phone maker on Tuesday announced the service, dubbed iRadio, which will go on sale this year. It will cost about $7 a month, but the price may vary depending on which wireless phone service the subscriber uses, the company said.

The iRadio service will feature 435 commercial-free radio channels, including genres such as Heavy Metal, Rockin' Cowboys and Angry Women, according to the Times. Users will be able to download channels on the computer and transfer them to play on their phones or on car or home stereos, like satellite radio.

Motorola said the iRadio service will first run on the ROKR E2 handset, which, unlike the first ROKR phone, will not include Apple Computer popular iTunes music software.

Apple and Motorola introduced the original ROKR E1 music phone last September — the same day Apple unveiled the iPod nano. Almost immediately the phone drew criticism from reviewers and buyers, who barked at its poor user interface, design and limited song capacity.

Many Apple watchers and analyst believe Apple may have deliberately withheld its hand in the design of the original ROKR because it has aspirations of making inroads into the cell phone market with its own handset. Analysts have dubbed the potential Apple cell phone project "iPhone" after the iPhone.org domain name which Apple appears to have registered.

The iPhone rumors received a further shot in the arm in late September when Motorola CEO Ed Zander, exhausted by questions about Apple's nano during a leadership conference, erupted by saying: "Screw the nano. What the hell does the nano do? Who listens to 1,000 songs?"

"We have the ROKR, and they have the nano. They are a competitor as well as a partner," Zander said. He was quick to add: "And we know that they are going to build a smart phone—it's only a matter of time."

Analysts believe an Apple-branded cell phone could emerge by the end of 2006, but details are few and far between.

"Apple hasn’t confirmed its phone strategy (or even acknowledged that one exists), but at our recent meeting management did suggest a) handset makers will eventually get an MP3 offering right and b) Apple’s strategy is to be an innovation leader," said Rebecca Runkle, an analyst for Morgan Stanely, in a research note released last month.

In the same note, Runkle noted that consumers planned to buy more iPods than cell phones during this past holiday season.