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Mobile music services threaten Apple, iPod dominance

updated 01:00 pm EDT, Mon July 4, 2005

Threats to AAPL future

The future of Apple and the future success of the iPod , as the cell phone industry preps its own mobile music services. A new Wall Street Journal report says that despite the growth and success of the iPod/iTunes industry, "Apple's polishers seem to be missing a looming threat: Wireless-phone companies are teaming with the music industry to make most mobile phones into music players. While optimists think Apple could sell 45 million iPods next year, mobile-phone makers will sell more than 750 million handsets. All those phones could weigh on the iPod's growth prospects -- and Apple's premium stock valuation. Cellphone users won't need to lug around a second gadget to have their music..... With the rollout of full-track music download services in the next 12 months, the wireless phone could become the music industry's biggest and most profitable distribution channel." [paid subscription required]




by MacNN Staff

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  1. eddd

    Joined: Dec 1969

    0

    old news

    Yeah, yeah, I'm sure there will be some initial impact on iTunes/iPod sales. But after all the costs are counted, and the functionality is evaluated, I think the iPod will retain it's position. It's become an established part of most people's lives as well as a status/fashion symbol, and that will be hard to overcome for the phone companies, who enjoy the lowest consumer satisfaction of all personal service providers. Besides, there a good chance Apple will be a part of the whole deal, with branded and licensed phones that use the iTMS.

    Apple shocked so many people with its instant domination of the market, so it's natural to speculate on who or what will topple them, but they've already met all challengers to date and have not only survived, but thrived. I don't see much of a change coming in the near future.

  1. JohnnyFive

    Joined: Dec 1969

    0

    iPod/Phone No?

    It's rumoured to be announced next week, no?

  1. eddd

    Joined: Dec 1969

    0

    and another thing....

    Phones with cameras haven't really done away with dedicated cameras, have they? Will they? It's doubtful, expecially given the phone companies' peculiar way of shooting themselves in the foot by making things as cumbersome and expensive as possible for their users.

  1. Alric1

    Joined: Dec 1969

    0

    Idiotic

    How long is a 6 MB song going to take to download through a cell phone carrier. If there is an interest in music phones it will only be viable if the carriers allow direct download from a Mac/PC.

  1. bobolicious

    Joined: Dec 1969

    0

    crappy quality

    still has me buying cd's - no way hosť especially with big brother watching my every move... welcome to '1984'...

  1. t6hawk

    Joined: Dec 1969

    0

    ...

    Why the heck do you MacNN guys keep posting stories that require subscriptions to view?

  1. JulesLt

    Joined: Dec 1969

    0

    flubadub

    I think in the Shuffle market, this will prove to be true - for commuters and kids who want 30 minutes of music on the way to work and back, why have a seperate device. That's obviously where the iTunes phone comes in. There's good odds that this WILL be the mass market, just as the Mini and then the Shuffle proved to be what people wanted more than an 80Gb iPod. Maybe not as soon as the analysts think, because they tend to have a relatively poor grasp of the technical difficulties, but eventually.

    There will still be room for the dedicated music player, probably in a market the same size or bigger that todays, but it will be a minor part of the download market (I wonder who actually does buy more by download - the Shufflers or the 60G owners? I've got a full 20G and only .5% of the songs on it are IMTS purchases).

    Which brings me onto a final point - like games consoles, phones are sold with very low margins or even at a loss to get people hooked into services. That's why console games have always cost more than their PC equivalents. Jobs model is the other way round - very low profit on the downloads (services) to sell very profitable hardware. Are any of the mobile companies going to be offer tracks at a competitive price - as opposed to $3 for a ringtone version . . . one day they will.

  1. HCRefugee

    Joined: Dec 1969

    0

    Big lug

    "Cellphone users won't need to lug around a second gadget to have their music..."

    No, they will just have to lug around an extra battery pack or purchase a larger, heavier battery.

    Oh let's not forget that after you have loaded the song through your cell company, in order to synch it to your computer (to burn CDs), you have to transport it through your cell service just as you do with your cell phone photos. Better get used to carrying around an extra credit card.

  1. aristotles

    Joined: Dec 1969

    0

    Old News

    They have been harping on about this for the past 6 months. This is like those stories we see each year about how this year will be the year of linux on the desktop.

    January called, they want their story back.

  1. csimmons

    Joined: Dec 1969

    0

    Why Apple shouldn't worr

    1. MOST IMPORTANT POINT: If the phone carriers don't charge at least the same, or lower, price than the iTMS ($0.99 or less), it's going to fail. Here in Germany, three of the major carriers (T-Mobile, Vodafone, and O2) already have music download services, and they're not selling much music, for this very reason.

    2. Bandwidth. Downloading music over a cell phone would only make sense if it was a broadband-like connection like UMTS here in Europe, or what's currently in use in Japan. Otherwise, the time it takes to get the music to the phone is painfully slow. Users will most likely be charged for the time online plus the cost of the download. If that's the case, these services will fail.

    3. Rights management. If the music downloaded to the phone can't be easily transferred to a computer for CD burning or archiving, the service will fail. There have already been stories about these cell phone services only allowing the DL'ed music to be played only on the phone being DL'ed to. If this is true, these services are doomed to failure.

    4. Most people don't mind carrying more than one device around. I certainly don't. What almost all of Apple's competitors still don't understand is that the iPod doesn't actually do much, but what it does, it does extremely well, and EASILY. If the phone doesn't make the music experience easy, It's going to fail.

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