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Tuesday, September 20, 2005

Something about music phones

Clearly, the mobile industry is still waiting for the enlightenment on the next or the first big application that is driving their business to the next level and substitutes or enhances the current main application, which is texting.

It is clear that in many markets, mobile phone users still prefer simplicity over technology and only use the basic functions on a phone.

Currently, a lot is pinned onto music on the phones and possibly even direct music downloads - a move that has been initiated pretty much by Motorola and Apple in the "Western World" who put iTunes onto the phone.

Japan is an example of a country, where music is already a runner. "The revenue from the music sold over mobile phones -- from simple ringtones to full songs -- accounts for about 20% of Japan's total music market," estimated to grow to US$449 million in 2005. Not much considering the total telecommunications market size in Asia, but at least a start. The basic assumption in this offering is that a phone user wants access to a song here and now, anytime, anywhere. And that is the challenge, because, downloads onto a phone are more time intensive, and thus, more expensive. "Certainly, most consumers accustomed to paying 99 cents to download a song to their PC for use on their iPod aren't likely to want to pay double or triple that to download to their phones, despite the instant gratification. A Yankee Group survey in 2004 found that Internet users' likelihood of downloading music from a licensed service declined 58% if prices were raised from 99 cents to US$1.49" This happens when consumers are trained to react to price instead of value!

People are also used to carry along their MP3 players and might initially use the phone as a substituting player. Especially, when they actually don't want to have additional gadgets anymore. So it is a challenge for mobile music, but then, it is a challenge for 3G, MMS and everything else. Over time, people will get used to a new feature on the phone and one day, with larger capacity on the phones and more competitive pricing, we will have a fully equipped PDA, mobile phone or whatever, that we slug around with us. It is a matter of timing, strategising and taking the space available, just like everything!

(By Asia Business Consulting)