New Industry Study Indicates Music Features Drive Mobile Phone Market
A recently released report reveals that worldwide shipments of music phones exceeded a billion units in 2007, outnumbering shipments of personal media players like the iPod by almost 300 million. The study also predicts that by 2011 over half of all the 941 million phones shipped will be considered music phones. The authors of the report define a music phone as a phone with two features: (1) Music codec functionality: MP3, AAC, etc. and (2) a memory slot which allows for a full featured music experience by allowing the user to carry a personal music library. This is only possible with expandable memory.
The report shows that voice commoditisation and falling voice Average Revenue Per User (ARPU) are driving a shift in wireless operators to focus on data revenue models and services, which is why many data plans top out at 200 messages per month. Music has been the first important factor for the operators to drive the consumption of premium content on the handset. As polyphonic ringtones gave way to realtones, operators found consumers desire to personalise their handsets as a way to enhance ARPUs. The report further shows that music companies discovered a way to sell a form of music which was less susceptible to piracy and provides incremental revenue.
However, authors of the report note that realtones are but one form of cellular music enjoyed. As the ringback tones, full track downloads and streaming music markets join the ringtone market, the mobile music market promises to hit over $6 billion in 2008. With such significant revenue and customer demand at stake, the operators and handset providers concerted efforts to use music as a central part of their handset strategies.