Verizon's V Cast to challenge iTunes

Verizon Wireless' new V Cast Music Service, will present a challenge to Apple's iTunes, according to industry analysts. The service, which leverages Microsoft technology, will be in direct competition with iTunes, which currently dominates the market for online music with 850 million cumulative downloads. Strategy Analytics predicts that Apple's dominance of the online music space will come under increasing pressure as competitors target the shortcomings of the iTunes Music Store. iTunes currently only allows for a pay-per-download model, which V Cast will counter by employing "a hybrid payment model allowing both subscriptions and downloads."

The service will also enable "compatibility with a wider digital ecosystem through integration with Microsoft’s Windows Media Player software," according to Strategy Analytics Senior Analyst Martin Olausson.

With estimates that sales of digital music (online music plus mobile music and ring tones) within Western Europe and North America accounted for 13.9 percent of total consumer spending on music last year, Strategy Analytics projects that by 2010 more than $8.2 billion worth of music will be delivered via digital platforms in the same regions, accounting for almost 30 percent of total music sales-- a huge opportunity for growth for whichever company can capture the market.

Olausson points out that "As a strategy to bring it into mobile, Apple's partnership with Motorola has failed. Its lack of a subscription payment model as well as the fact that it is currently limited to iPod music players, will increasingly put Apple at a disadvantage to services such as V Cast Music. The speed with which sales of music player enabled mobile phones will overtake dedicated music players will accelerate this trend."

Philip Taylor, Director of the Strategy Analytics Wireless Internet Applications service, states, "We believe that Apple's experience with Motorola rules out any quick launch of an iPod with built-in cellular radio, and that Apple will continue to build resources towards bringing a wireless enabled product to market in 24 to 36 months." He further notes, "As a result, Microsoft will gain strength as the most viable immediate alternative for manufacturers and service providers seeking to gain share for themselves."

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