(STAR) TXT IN D CITY By Patrick R. Garcia, BIDSHOT WIRELESS SERVICES - The use of MP3 players is just so prevalent among the masses these days that I canít help but notice the increasing number of consumers strolling in the malls or plying the pedestrian lanes with the all-too-familiar cords dangling from their ears. As this lifestyle becomes the norm, handset manufacturers have wasted no time in deploying mobile phones capable of playing music files. Great, they have freed up more space in my pockets! Based on data from Mobile Consumer Track though, so far only two percent of mobile phone subscribers said they listened to digital music on their handsets and only one percent downloaded music to their mobile phones. For now, this type of music content download may seem insignificant but that is not to say it wonít be a huge revenue generator in the future.

Manufacturers are, indeed, seeing huge dollar signs in over-the-air music sales. They began last year by deploying to the high-end market music-enabled devices such as the Nokia Nseries phones, Sony Ericssonís Walkman line and LG Fusic. This year we saw the number of music-enabled phones increasing from 36 models to about 70, indicating that even mid-priced phone models now carry this feature. Pricing has also come down accordingly with a reported 26 percent decrease in the price of a music phone as compared to this time last year. At this rate we may see entry-level models with music capabilities debut by end-2007. These factors will definitely lead to the mass usage of music-enabled handsets.

On the network side, telcos would prefer their subscribers to use over-the-air or OTA downloads as these generate for them more revenues as compared to phone owners utilizing their handsetsí Bluetooth connectivity, cable connections or removable memory to load music. As such, manufacturers are aggressively working toward simplifying the buying of music. Despite the minute penetration of music-enabled phones, telcos have been aggressive in marketing their own mobile music stores which offer OTA downloads. Early adopters in Europe have enjoyed the service but what most of the marketing and advertising has served to do is to create buzz and aspiration for the millions of potential mobile music subscribers.

In the news last week, Nokia is coughing up $60 million in cash to purchase Loudeye, a provider of white-labeled digital and mobile music services. Nokia intends to enhance the mobile music experience of its users by launching a new technology sometime in 2007. Not to be outdone, I just read about a Bearn Stearns analyst disclosing that an iPod phone is currently in the works and Apple would be deploying its mobile technology initiative by late 2007 via an MVNO (mobile virtual network operator) strategy. Well, with the way things are shaping up, it is obvious that all these giants want to take a direct role in the mobile music future.

It will likely take a couple of more years for the music-enabled phones to go mainstream and huge revenue flow from subscribers to enrich both content providers and telcos. But given the improving OTA experience of subscribers, increased availability of reasonably priced music handsets, and aggressive marketing efforts, it may become a reality sooner than we think.

Chief News Editor: Sol Jose Vanzi

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