Motorola is to embed Apple's iTunes into its mobile phone, the duo announced last night.

Apple will create a custom version of its iTunes jukebox software to run on Motorola's handsets. The app will not initially be able to preview, buy and download songs over the air directly from the iTunes Music Store. Instead, users will have to download tracks on a PC or Mac then transfer them to the phone using a Bluetooth or USB link, but that's probably the best solution until much higher data throughputs become available over cellular networks.

HP's own-brand iPod is expected to ship in September, but - barring other deals, of course - Motorola's handsets will become the first devices not produced by Apple to support the Mac maker's DRM technology, FairPlay.

Indeed, this is a key deal for Apple, and one that pitches ITMS as a revenue centre in its own right rather than simply an opportunity to sell iPods. It's also a smart deal in that it's able to both increase ITMS traffic and ITMS market presence without hindering iPod sales. It's likely to be some time before handsets feature sufficient storage capacity to match even last year's iPods, let alone today's. So handsets are likely to be used for more casual listening rather than the 'take your record collection with you' role that the iPod majors on.

Demographic differences too - plenty of kids have phones, but can't afford iPods - ensure the Motorola deal will offer an opportunity that complements the iPod business rather than tread on its toes.

Motorola is by no means the world's leading mobile phone brand, but it can still bring to the party way more users than Apple is likely to attract through the iPod alone. And if some of Motorola's customers decided that their handset's capacity is too small and they need to get an iPod, well that's so much the better.

In short, this is a very significant deal that eclipses all of those done by ITMS' rivals so far, and represents a real a win-win partnership for Apple.

Motorola expects to ship iTunes-equipped handsets during H1 2005. ®

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