Mobile sonic boom

In today's mobile world, it's all about music. Start with the splashy introduction of new music phones. Mix in falling mobile Web access prices and new music download services. And finally, trumpet a high-profile deal, like Nokia's Loudeye acquisition, and the band is clearly warming up. But are we ready to call this music?

Mobile music is not just the next big thing. It may be the catalyst that once and for all brings together the digital home with the mobile data revolution. Finally, those who enjoy music (and other multimedia content) on their home computer will be able to enjoy this content anywhere, anytime on mobile handsets, smartphones and converged devices.

It's happening fast. Nokia expects to sell more than 80 million music phones this year, more than all the iPods sold to date. Motorola has shipped 10 million music phones in the last year. And don't count out Sony Ericsson, which has received rave reviews for its Walkman phones and will undoubtedly remain a big player in portable music.

The numbers are enormous: 2.5 billion mobile users worldwide, 1 billion handsets shipping this year, and more than half of the handsets sold in 2007 will offer music functionality.

Can the iPod and other stand-alone music players without wireless connectivity compete with the connected mobile music and multimedia device on this veritable bandstand?

Outside the US, the battle is probably over, the music phone the likely winner. In the US, the more network operators force a walled garden approach to music with mediocre music phones, cumbersome interfaces and dedicated (and costly) single-track download services, the safer will be Apple's market share. Attempting to "out-Apple" Apple is a fool's folly.

What will make mobile music the success that the numbers and trends all indicate? First, phones optimized for playing music must at least approximate the quality of stand-alone music players. Despite the hype, there is a substantial difference in quality and usability among the first wave of music phones. Frankly, many of these music phones just don't cut it in terms of user interfaces, ease of operation, open file formats and sound quality.

The tunes that people will be listening to on their music phones will primarily be pulled from their own collection of music. Those who enjoy music today on stand-alone music players have substantial (and organized) home music collections, averaging more than 700 songs on their PCs. They want to own their music and won't pay premium prices to repurchase music they already own nor use network operators as their principle source of online music.

Network operators must think of music as a way to generate higher data revenues and profits rather than adopt walled garden strategies that limit or control subscribers' music purchasing options.

In the end, operators are best served by offering a wide range of the best music phones and unlimited data plans that give subscribers a full range of choices for accessing their music. Low-cost access and choice will bring the power of the mobile Web and music phones to their full revenue and lifestyle potential.

The question becomes how many devices people want to carry. The mobile phone is the one device that most people don't leave home without. People will decide which device wins based on the money and amount of space in their pockets. Logically, subscribers will pay more for a mobile device that does it all, eliminating the cost and clutter of both a mobile handset and a $300 music player. Music phones might even wean U.S. operators from the subsidized handset model.

Outside the US, the mobile ecosystem is more democratic, and resistance to Apple's proprietary audio encryption strategy is stronger. In the US, the value proposition — music phone choice and quality, economic data pricing, and subscriber access to the full range of music (and video) choices on the Web — is the key to outflanking the mighty iPod.

Done right, the coming sonic boom will leave stand-alone music players to join today's mobile pagers and yesterday's transistor radios in the personal electronics compost pile.

Whitey Bluestein, a 25-year telecom veteran, is a strategic consultant with clients in media/entertainment, retail and wireless. Bluestein (www.whiteybluestein.com) is deeply involved with MSPs, mobile TV, fixed/mobile convergence, mobile entertainment and CRM/loyalty.