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MP3 capable cell-phones outsell total iPOD sales

According to an article in today's Sunday Times (London Times), last year the sales of MP3 capable cell phones exceeded the entire sales of Apple iPOD products with over 130 million units shipped.

I posted on this topic back in February triggered by the initial sales of digital music in MP3 format without digital rights management – a precursor to EMI's recent decision to sell its music through iTunes without DRM. Convenience (and not wanting to walk around with a belt sagging with too many digital gadgets!) suggested that there would be a natural convergence between the cell phone and the music player. Apple's move with the iPhone just makes all the sense in the world in this regard.

Despite the unit sales of MP3 capable cell phones, Apple still has a major strategic advantage over the phone manufacturers – they have iTunes AND the license agreements to sell digital music from the majority of the record labels. Unless (or perhaps until…) other record labels follow EMI's example, it will still be less convenient to buy music for a cell phone. There's a telling quote on this topic in the Sunday Times article:

Tim Grimsditch at Frukt, a specialist music consultancy, said: "I don't doubt that mobile phones will eventually destroy the stand-alone music-player market." He said the last key barrier for the mobile-phone firms was ease-of-use, an area in which Apple excels. "They'll get there," said Grimsditch. "And then the end will be pretty swift."

I think one of the next interesting areas of development will be discovery and purchase of music over the wireless networks. Not an easy space for a startup to play unless the capability is delivered over the IP data capabilities of the cell phone (too much cooperation required with the wireless carriers). This triggers another thought… I wonder how long it will be before the speed and robustness of the data connection on the cell phone makes more and more applications (like Skype has already done) bypass the telephony services provided by the wireless carriers?

Just a thought!

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STU PHILLIPS
MENLO PARK, CALIFORNIA

Intense Brit, lived in Silicon Valley since 1984. Avid pilot, like digital photography, ham radio and a bunch of other stuff. Official Geek.

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