Focus on 3G music phones -report

September 15, 2004

Cellular Music Decks (CMDs) are the next 3G opportunity beyond still and video imaging, while total music-enabled device sales will scale to 54 percent of global handset sales in 2009, according to Strategy Analytics' newly released report, "Music Enabled Handsets- Next 3G Device Focus."

This report includes device segmentation research that finds that traditional GSM players are establishing an early brand position in CMDs - dedicated feature phones with cellular music as the centerpiece of functionality - clearly outpacing their Asian counterparts who are absorbed in the imaging device frenzy. Nokia, with its 3300 and 5510 handsets, and Motorola, with its aggressive pursuit of music-focused alliances with MTV and Apple, illustrate the importance that both device segmentation and branded music content will play in the emerging music-enabled device market.

Strategy Analytics Analyst, Eddie Tapiero, comments, "Music has strong emotive value which rivals that of imaging. As we move towards broad based music download services, vendors must walk the thin line between engaging "Sporadic Downloaders" with engaging feature sets while simultaneously limiting carrier exposure to expensive customer support requirements."

Chris Ambrosio, Director of the Wireless Devices Strategies Service, notes, "Music will be a "bridesmaid" value-add mostly found on converged devices and high end camera phones until 3G services are more widely deployed. Then, it is up to device vendors to make significant improvements in sound quality reproduction, storage capacity, wireless-fixed connectivity, and the user interface to make cellular music a broader reality."

Other findings from this report include:

-- MP3 is to remain a requisite format in the mobile market due to strengths in the wired broadband domain.

-- Converged devices will account for 50 percent of music enabled device sales through 2006, as the technical challenges of MP3 support force it to devices with robust platforms.

-- "Sporadic Downloaders" encompass the wider market opportunity in the long term. Tech savvy "Digital Musicphiles" are already indicating critical feature "must haves" for CMDs and music enabled feature phones.