While Apple did not introduce any significant iPhone upgrades at its annual Macworld convention recently, the device still made waves.

Apple has sold more than 4 million iPhones since launch, according to leader Steve Jobs' Macworld keynote. But what's more interesting is what the people who bought it are doing with it.

In data provided to the New York Times, Google disclosed that it received more traffic from iPhones this Christmas than from any other mobile device, despite owning only 2 percent of the smart-phone market and less than 1 percent of the overall mobile-phone market. That means that while fewer people own iPhones, those who do possess the device use it to access the Internet much more than those with competing handsets.

What's not clear is whether the iPhone's slick design and simple user interface has proved useful for other functions -- such as buying music. Although iPhone users can purchase songs from iTunes when in range of a Wi-Fi hotspot, Apple declined to reveal how many have done so.

To date, downloading music to mobile phones has not proved a popular activity. According to a recent M:Metrics study, 20 percent of mobile users internationally listen to music on their mobile devices, but 83 percent of them are sideloading the music from their computers or from other devices rather than downloading it from a mobile music service.

That has music industry executives wondering whether the future of mobile music will more resemble the Web services model gaining traction on the Internet -- where fans stream music from multiple sources, including one another -- rather than the purchase-and-download model pursued to date.

In February, Apple will release a software development kit that third-party developers can use to write applications for the iPhone. To date, developers were limited to writing Web-based applications -- one of the reasons behind the iPhone's high rate of browser use compared with other devices.

The music industry will be watching iPhone versions of existing music-focused online services.

"Imagine when something like a Last.fm becomes more streamlined and becomes truly portable, either on an iPhone or regular phones,'' said one label exec who asked to remain anonymous. "Are people going to make more use of it? Maybe.''     The M:Metrics report supports this theory. In France, Germany, Italy and the United Kingdom, more mobile users were listening to music shared between phones via Bluetooth or other technologies than were doing so with music downloaded from a music store. In France and the United Kingdom, such shared activity accounted for 12.5 percent of the mobile music listened to in November 2007.

Some wireless operators are already preparing for that reality. Alltel, for instance, recently introduced a service that allows customers to stream and download digital-rights-management-free digital music files from their home computer to their mobile phone from anywhere in the operator's service area.

Alltel charges $4 per month for the service; labels get nothing, because it's based on users' existing libraries. Should more devices follow the iPhone's lead and become more open-access devices, labels are concerned that their carrier deals may no longer provide the guaranteed revenue they once had.

``As more phones become Wi-Fi-enabled,'' the label exec noted, ``the need to go through official pipes to pay the piper is not always going to be there.''  - Reuters/Billboard