For better or worse, this is the direction Apple must go. 10 million iPods...soon to be 30 million, still doesn't compare to the number of cell phones. To put things in perspective, ringtones...yes, f'n ringtones, are already roughly a $5 billion dollar industry.
If Apple does not get on phones, others will. The service providers are just dying to use Janus to set up WMA based music services while the manufacturers are looking for ways to jack up the feature sets.
Apple *does* make money from iTMS. Back when it started, Apple stated that it only made 12 cents profit per song. Well, there are economies of scale and a decrease in the cost of things like bandwidth and equipment over time. But even at the simpler math of 10 cents per song, Apple could make as much as 100 million this year. If indies come to Apple, and revenue grows to $10 billion (which seems reasonable in 3 years or so), Apple could have music profits in the neighborhood of $1 billion a year.
Of course this also discounts other things to enhance the business, for example with HE-AAC and decreasing bandwidth costs, Apple could see the cost of delivering the music drop up to 50% per song. And of course there's the opportunity for more revenue from video content.
Apple is making all of the right moves here. If anything, this should've been an iPhone "built by Motorola"...with Apple design and Motorola/Apple distribution.
