Recently in Tech Biz

BOSTON (CNN/Money) - Apple vs. Microsoft feels like the computer industry's version of the Hundred Years War.

And there is no light at the end of the tunnel, especially now that a new front has been opened: the cell phone. Not surprisingly, the objective of this battle is digital music.

The latest salvo came Monday when Motorola finally unveiled the E1060, a phone featuring Apple's iTunes software. Microsoft responded with a joint venture with Nokia -- in itself a startling development -- to create phones that use Microsoft's Windows Media software for music playback.

These are two radically different approaches to converting the cell phone into a jukebox. Everyone is predicting that music phones will eventually follow the path of camera phones in terms of adoption rate.

Research firm In-Stat/MDR projects that in 2009, a little more than half of all phones shipped will have music-playing capabilities.

"If it's done right, whoever cracks the digital-music-on-the-cell-phone conundrum will do well," says Neil Strother, an analyst with In-Stat/MDR.

Based on what I've seen so far, I'd have to give the initial edge to Motorola's approach. The company's first move in a rapidly changing market isn't necessarily a good reason to jump into its stock, but Motorola might not be a bad buy for other reasons.

Most phones are sold to wireless carriers, which subsidize the cost and then sell them to consumers. The carriers make money, of course, by keeping people talking or downloading data on their networks.

Microsoft and Nokia's digital-music approach will allow consumers to download music onto their phones via the carriers' networks, as well as transfer music from a computer to a phone. What's more, it's expected that when the carriers' networks grow enough, Windows Media-supported streaming music will be available on Nokia music phones.

Motorola's approach would, at first blush, seem less popular with carriers. Using the incredibly popular iTunes to move music from a computer to a phone bypasses the carriers' networks. A risky move, for sure, yet Motorola has proven in the past 18 months that it's willing to take risks -- something it rarely did until Ed Zander took over the company.

Albert Lin, an analyst with American Technology Research, says Motorola must go this route. "Motorola has to care less what the carriers want, because the carriers essentially want [manufacturers] to have no margins," he says.

The upside: By giving consumers what they want -- iTunes -- Motorola ensures the success of the phone, which will make carriers want to sell it. And the company isn't entirely shutting out the carriers. Next year it'll launch the Connected Media Center, which will allow carriers to pipe data like album information, images, and ringtones to phones.

Motorola has shown that it's on the comeback. After a brief (one-quarter) slip, it has regained its position as the No. 2 mobile-phone manufacturer in the world, with a 16.4 percent market share last quarter, up from 13.7 percent a year ago.

Net profits are up 34 percent from a year earlier, and while the company recently dampened expectations for first-quarter growth, it has beaten analysts' estimates for the past four quarters.

Investors shouldn't expect a short-term pop -- and certainly not from the music offerings. The revenue of the entire global music market, online and off, is equal to only about 10 percent of the global voice traffic revenue for mobile operators.

"Even if all global music revenue went through a mobile phone, it would barely lift the mobile market," Lin says.

But taking a well-calculated risk is how you win territory in a war. Stomaching that risk is how you make money in stocks.

Sign up to receive the Tech Investor column by e-mail.

Plus, see more tech commentary and get the latest tech news.