Music phones no threat to MP3 players

Apple clearly doesn't perceive Motorola's ROKR phone as a significant threat, and neither does market watcher Canalys, which today said the MP3 player makers are, for now, safe from mobile phone manufacturing rivals.

It doesn't need to worry about portable media players, either, if forecasts from market researcher In-Stat prove correct.

Canalys calculates that 25.6m music players shipped in H1 2005, not far from the total for 2004 as a whole. Then, some 28.3m devices were sold. Of the units shipped in the first six months of 2005, 44.8 per cent had Apple's name on them. That compares with the 16 per cent shipped by Creative and the 7.1 per cent sold by the now-defunct Rio.

The researcher said it believes MP3 player sales will continue to grow despite support for music in mobile phones.

"A mobile phone-based player doesn't offer much to a high-volume music consumer. The convenience of having to carry one device less will usually be outweighed by the design compromises that result", said Canalys analyst Rachel Lashford. "And a heavy user isn't going to pay a premium to download each track over the air to a phone when there are cheaper service alternatives that offer a more sophisticated browsing experience, interface and file management."

The exception is the low-end of the market, where casual listeners may look to load music on their phones rather than fork out for a dedicated playback device. Targeting such users with well-known names, as SonyEricsson has done with its Walkman-branded handset, makes sense, but is arguably more about competing with other phone vendors than attempting to win significant business from Apple, Creative, iRiver and co.

Lashford said Canalys believes network operators will favour "modest-capacity" Flash-based music phones, particularly in markets where they subsidise the cost of the handset to consumers. That, in turn, will steer music player vendors toward more sophisticated devices, such as the iPod Nano, differentiating their products not just on storage capacity but also on the quality of their user interface, file transfer system, playlist management and feature-set.

The cross-over point comes when Apple allows a phone vendor to brand a handset with the iPod name. The only Apple brand on the ROKR is iTunes, which shows exactly where Apple sees the device's value: as a platform for encouraging music sales.

That said, Motorola officials appear to have claimed the handset's 100-track limitation is Apple-imposed, via its DRM technology, rather than a fundamental lack of storage capacity. So Apple does feel the need to hobble the ROKR to a small extent.

Separately, market watcher In-Stat recently said it expects some 7.5m portable media players to ship worldwide in 2009. Compare that to the 25.6m music players that shipped in the first-half of 2005, and you'll appreciate the gulf PMP vendors are going to have to cross to bring their products into the mainstream.

For now, at least, early-adopters are their main audience, In-Stat said, while the mass market looks to MP3 players, PDAs, handheld games consoles and portable DVD players instead. ®