Mon, Oct 03, 2005 page11

• Cellphones are becoming portable music players

  • NY TIMES NEWS SERVICE
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  Music is in the airwaves.

  The hot topic among mobile phone executives gathered here for a cellphone trade show is the push to transform handsets into portable music players. By next year, phone makers expect to market several phones that will allow people to store and listen to songs and even download them wirelessly over cellular networks.

  Industry leaders said they were gearing up for a major marketing pitch in 2006 to sell consumers on the idea that music is a must-have phone feature, just like cameras and Web connections.

  At the three-day trade show, which ended Thursday, the potential success of the new iTunes-compatible phone, the Rokr E1, recently introduced by Motorola and Cingular Wireless was the subject of much speculation.

  Nokia, the Finnish phone manufacturer, announced this week that it would introduce a line of Xpress Music phones. And Sony Ericsson showed off the Walkman W800 phone, which it began selling in August.

  Carriers like Verizon Wireless and the phone makers said they hoped to offer handsets next year that could download songs over the air. (Phones like the Rokr can only download tracks from a personal computer.)

  They have ample reason to push the music feature. Competition to acquire and retain mobile customers is brutal, and the carriers are looking for new streams of revenue, like taking a cut for selling songs.

  Clint Wheelock, an analyst for NPD Group, a market research firm, said the wireless carriers were hoping to follow the huge success of the Apple iPod music player. Evolving technology has made it less expensive to build music capability into a phone than in the past. Some analysts say the cost of adding music-organizing software and more memory will be as little as US$30 a phone.

  Equally important to the music phone's success is having millions of consumers accustomed to downloading and listening to digital music. Some phone companies believe a music phone can become a strong competitor to a standalone music player like the iPod.

  "We give you the iPod -- plus," said Brenda Boyd Raney, a spokeswoman with Verizon Wireless. "We also give you voice." Verizon Wireless, Sprint and Cingular are all developing services to sell downloads of full tracks.

  Still, there are obstacles. Consumers have not always embraced new features, particularly when they absorb battery life and could detract from the phone's main use: making calls.

  The handset makers also are not likely to add so much memory that the phones will be able to hold the vast music libraries that iPods can hold.

  This is not the first time carriers have tried to introduce music player phones. Nokia first introduced a phone with music software in 2000, and then another such phone in 2003, said Ilkka Raiskinen, senior vice president of the company's entertainment products unit. Other carriers have had phones with the software and memory necessary to store and play back MP3 files, a popular format used for digital music, but those phones have not been aggressively marketed.

  Raiskinen said the older phones had some success, but he said improved technology, consumer awareness about digital music and better cooperation from record labels would make the new phones more successful.

  Edward Snyder, a wireless industry analyst with Charter Equity Research, said he was optimistic about music phones, and that listening to music, unlike watching TV or reading e-mail, could be done while the user was on the move.

  Indeed, he says he believes that over time, the huge size of the cellphone market, which he said could reach 780 million new phones sold worldwide this year, gives carriers and handset makers a chance to become the main source of portable music players.

  "It's a very big threat," to existing portable music companies, Snyder said.

  The Motorola Rokr E1 costs US$250 with a two-year Cingular contract. The Sony Ericsson Walkman W800 phone costs US$499. Nokia's first two Xpress Music phones are due out in the first quarter next year. Verizon's latest multimedia phone the VX9800, made by LG, which includes music and television capability, sells for US$299 with a two-year service contract.
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