September 25, 2006 4:00 AM PDT
Streaming music for smart phones
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Mercora can stream music to phones operating on 3G and higher mobile networks, like Edge, EVDO, HSPDA and Wi-Fi. Ghose says phone carriers are looking for more "consumer-friendly applications" that will enable sharing of information, like pictures, videos and music.
The NPD Group's Neil Strother says that though the concept is interesting, it's unclear how practical a service like M would be for wireless carriers that provide wireless phone service.
"I don't know if carriers are going to like that. They might think, 'That's a drag on our bandwidth.'"
Mercora's Ghose said he isn't concerned about that, as M would transfer music files at 56 kilobits per second, which takes up less space on a network than video at 200 to 300 Kbps. And, he added, many smart-phone customers have unlimited data plans provided by their employer.
Strother countered that that's not an open invitation by carriers to clog up the bandwidth with huge files 24 hours a day.
American consumers' love affair with their iPods might be hard to disentangle, as might their perceived reticence toward listening to music and making calls on the same device. But Sampath says he sees Americans coming around and catching up to their European counterparts.
"The next generation of music players is going to be a phone. It's not going to be a dedicated device," he said. Indeed, retail trends seem to back him up, as more people are buying music-enabled phones. From the second quarter in 2005 to the same quarter in 2006, music-enabled phones grew from 7 percent of all phones sold to 19 percent, according to The NPD Group. But owning a phone capable of playing music doesn't mean users necessarily take advantage of that feature, said Strother, NPD's research director for mobile devices.
Motorola and Apple's music phone, the Rokr, failed because of poor strategy, according to Sampath. The Rokr could be synced with an iTunes playlist, but was limited to about 100 songs, which isn't feasible in a world where playlists can reach into the thousands.
"Consumers are smart," he said. "You can't give them some lame device and call it a music phone."
The LG Chocolate attempts to solve the Rokr's space problem by including a Micro SD card slot, allowing for 2GB worth of songs to be plugged in. While a phone's battery would run out long before that size playlist in that situation, it's still too much fuss for casual users who just want to hear their music when they want it, according to Doherty.
"Someone who is PC-savvy will put (a data card) in, but that takes several minutes. It's not something I'm going to do as I'm racing into Manhattan for a meeting," he said.
Strother, for his part, believes "music-enabled phones are here and they're coming in a pretty big way. I think (Mercora is) going to have a crowded market, not now, but in the next six to 12 months. The (LG) Chocolate phone is just starting to get out there. A lot of non-smart phones have MP3 players in them. The storage issue isn't necessarily going away, but you're beginning to see mid-tier phones starting to have data cards."
Strother said he's not a big believer in the myth of an "iPod killer" coming out anytime soon. He says that growth in music phones "doesn't start to cannibalize iPods as much as grow the pie. The iPod's not going to go away that quickly."
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