My Photo

Ordering Information

Tomi on Twitter is @tomiahonen

  • Follow Tomi on Twitter as @tomiahonen
    Follow Tomi's Twitterfloods on all matters mobile, tech and media. Tomi has over 8,000 followers and was rated by Forbes as the most influential writer on mobile related topics

Book Tomi T Ahonen to Speak at Your Event

  • Contact Tomi T Ahonen for Speaking and Consulting Events
    Please write email to tomi (at) tomiahonen (dot) com and indicate "Speaking Event" or "Consulting Work" or "Expert Witness" or whatever type of work you would like to offer. Tomi works regularly on all continents

Tomi on Video including his TED Talk

  • Tomi on Video including his TED Talk
    See Tomi on video from several recent keynote presentations and interviews, including his TED Talk in Hong Kong about Augmented Reality as the 8th Mass Media

Subscribe


Blog powered by Typepad

« Coming soon... | Main | Picture Tells It Better (part 2) - iPod global market share 12.9% at EOY 2006 »

January 17, 2007

TrackBack

TrackBack URL for this entry:
http://www.typepad.com/services/trackback/6a00e0097e337c883300e008c8faea8834

Listed below are links to weblogs that reference Requiem for a Heavyweight: iPod reign is utterly over:

Comments

Stefan Constantinescu

A) I can't believe I just read all that. It flowed so well. Content, stats, no fluff. A few pie charts would've been nice. That's just being picky.

B) If I ever meet you at a trade show you must let me buy you a drink!

C) So what do you predict the market will be like in the next 1-2 years?

Tomi T Ahonen

Hi Stefan,

THANKS ! With such nice words, the drinks are on me. Are you in Tokyo next week when I give my keynote on how handset design is now evolving (and will of course discuss the iPhone impacts...)

About pie graphs? Its your lucky day. As you were reading that, I went out and drew them for you. See the update posting "Picture tells it better"

Thanks. I am bracing for hostile mail.....

Tomi :-)

Stefan Constantinescu

I won't be in Tokyo but if you could post a link to a podcast of some sort I would be happy to listen/watch it.

Dave Hunwick

Wow you wasted a lot of keystrokes, thanks for boring the SHIT out of me! Talk to us in a few years when iPod is still the king of DAP's till then keep wasting your keystrokes.

Tomi T Ahonen

Hi Stefan and Dave

Stefan, funny you should mention podcasts.. stay tuned.

Dave - you are entitled to your opinion of course and I am sorry if I bored you. You do recognize that the iPod may be the king of stand-alone MP3 players, but is a total bit-player among portable MP3 players, even FOURTH largest cellphone maker SonyEricsson outsold iPod in 2006 (yes, SonyEricsson shipped 60 million musicphones vs 46 million iPods).

Thanks for visiting and leaving your comments

Tomi Ahonen :-)

Dean Bubley

Very cogently argued Tomi.

My one over-riding question though.... exactly where ARE these 400m active musicphone users, outside of Japan or Korea?

I'm struggling to think of a country I've visited in the last 12 months where "identifiable" MP3 listeners in cafes/public transport were predominantly phone-based. Forget the surveys for a moment, and think about what you actually see in real life. I know the UK is an Apple stronghold, so I realise that real-world empirical observations of music listeners on London's Tube (I'd guess 4:1 in iPod's favour) aren't globally representative. I'd be interested if any of your other readers could do a "straw poll" of MP3 listeners they see on their daily commute or around college.

One other thing.... what happens when today's downloaded music purchasers switch operators or upgrade handsets & lose some of their content because it's DRM-locked to that phone? Will we see a sudden clamour for "Content Portability" laws to go along with number portability?

PekkaR

Dean, spot on about UK being an Apple stronghold. Like Tomi wrote above, Apple itself named UK one of the six markets where their share (40%) is above single digits. Yet, quote from above text: "The most recent survey by Continental Research from the UK in November, of the most attractive 16-24 year age group shows the future. Of this group in Britain 47% own a musicphone, and 39% listen to music (ie 83% of the British youth who own a musicphone listen to music on them). Two thirds of these also own a stand-alone MP3 player, yet over 80% of the musicphone owners were either very satisfied or satisfied with their musicphone. This battle is so totally over by now."

Here in Finland, the entirely unscientific method of spotting devices on the street makes me think people are using phones and stand-alone players roughly half and half. Only some of the stand-alones are iPods.

Is the music that people are listening to locked to their phones? Let's skip the MP3s ripped from CDs, fileshared or bought from stores like eMusic that don't use DRM (second-largest online music download store in the U.S.). Are operators selling music with DRM? If so, then I guess you might have to be careful when changing handsets so the next one can also play your music that you switch over on a memory card or by syncing with a PC. The software that came with my Nokia only offers to help me back up and move my data to another Nokia phone. Understandable technologically but a little annoying. Maybe operators (could) offer to sync all my data to my next phone. They've done that for me in the past, but then it essentially meant copying contact information and text messages via the GSM chip, not gigabytes of music.

Ringtones (and ringback tones and other tricks that most of the world doesn't know yet) are a big market alone. I'd really like to know if people in South Korea (where the replacement cycle is shortest) take ringtones with them to the new phone or feel that it's any issue to have to buy new ones.

Bertil

I would have many, many comments but I would like to re-read your paper, structure my thoughts and proof-read my own points: is it OK if I come back to comment a little latter?


In the mean time, I'd love to know:

* what is best:
- to have an 80% market share in a segment you invented, or
- to hold the best, most lucrative 1% of a market several hundred times larger, growing like mad, and that could, by accidental side-effect resolve poverty in Africa, tyrannies in the Middle-East and allow East and West to bridge?
Jobs thinks it's better to go and make a revolution in an industry that is the biggest thing since the Gregorian calendar (or the coming of Jesus) --- but what does the financiers think? I'm not sure your "market-share" is the relevant argument in technology, where new brands change so fast, take over market with a leading product, etc.

* if I tell you nuclear energy by fusion is so passé, and repeat it until it actually is overthrown by fission, does it make me a visionary? People change their tech gadgets every two years or less: forecasting something will by old a year and a half in advance is not that difficult, just wait for six months. I would admire Jobs for seeing the big picture two years and a half ahead of making it public --- but hardly so.

I love your elements, but your pride to be visionary, and they way you picture that as a failure of the iPod sound really odd to me. It is still a fine product making piles of money; obviously not for long --- and neither will last the first generation of music-phones.

Tomi T Ahonen

Hi Dean, PekkaR and Bertil

Thanks for visiting and posting comments.

Dean - good question, and boy do you force me to work hard ha-ha... I haven't updated my subscriber stats for all countries for 2006 yet as that data isn't yet available, so I'm working off national EOY 2005 numbers and adjusting for my best estimate of the regional growth rates. Also I definitely don't have the national breakdown for all countries, so I used the actual survey data for countries where I had it, and used a simple adjustor, +/- 50%, so "heavy user country" (22.5%) eg Indonesia, "average user country" (15%) eg Turkey and "low user country" eg Mexico (10%).

I get this kind of breakdown:

Asia/Pacific 208M (out of 1.3B subs)
Western Europe 83M (out of 440M)
Latin America 31M (out of 320M)
Middle East and Africa 30M (out of 260M)
Eastern Europe 26M (out of 160M)
North America 22M (out of 230M)

The largest countries by numbers of consumers listening to mobile music by the same analysis are:

China 90M
Japan 47M
Russia 25M
USA 20M
South Korea 19M
Germany 16M
Spain 14M
Italy 13M
UK 13M
France 10M
Brazil 9M
Indonesia 9M

I believe these are as good numbers as any currently in the public domain. I'm expecting several of the big research guys, Gartner, Ovum, IDC/Informa, Yankee etc to have national breakdowns better in their next mobile music reports. Also the IFPI digital music report for 2006 will be very useful reading.

Thanks Dean for the added stats work, but seriously, I know you are very serious with your stats too, and this was a fair follow0-up question, and for you, I'm happy to provide this..

PekkaR - thanks for stepping in there for me, and you are very right. You asked about South Korea, there the music industry is fully working with the telecoms industry and they are innovating like mad to migrate digital music to phones AND to the services by the operators. So for example, Ringback Tones ie Waiting Tones are operator-specific. You don't actually get the MP3 file which plays before you answer the phone, but rather it sits on the operator network and is played whenever someone calls you. You are charged a simple monthly fee to activate the service, and then pay a one-time fee every time you change your song. In this way there is no MP3 file to move with you, and the service works with any phone (at either end, caller or owner of the subscription) and lasts as long as you continue your relationship with the operator.

Similarly the music inside Cyworld where it is ambiance music to enjoy with your friends, and the "Juke-box style" Welcoming Song, these are in the network, not on your phone. And the cost is 40 cents US per song if its a South Korean artist (South Korea is one of Asia's pop music powerhouses, similar to the UK in Europe, so South Korean artists regularly occupy top spots in say Japanese, Taiwanese, Chinese etc pop music charts). For Western artists the South Korean MP3 files sold to phones cost about 80 cents, due to the royalty contracts with international music. But even there, much cheaper than iTunes at one dollar per song, or some of the horribly predatory MP3 file pricing in America for example at 2.50 dollars per song.

Bertil - Very good point, on the 80% vs 1% comparison. I do think, however, that it is a false dichotomy. Apple was exceptional in that it could have had both. And no, obviously not quite 80%, but well over half of all MP3 players sold worldwide could be branded Apple today, if Apple had been brave and moved into this space in 2005, before the LG Chocolate (America's best-selling musicphone), The SonyEricsson Walkman brand (60M of SonyEricsson's phones sold last year were musicphones, but not all Walkmans obviously), or Nokia's N-Series (Nokia said it sold 70M musicphones, and it sold 40M "Multimedia phones" which most probably means N-Series, all of which are top-end smartphones that all have MP3 players).

If Apple released its first fledgling iPhone in 2005, while not necessarily as awesomely revolutionary as the iPhone seems at least by its UI design, in 2005 the competition would have been just about only the sad Motorola Rokr and phones like the Nokia 7600 3G phones (the plastic phone with the teardrop shape with the keys around the display). ANY phone by Apple, that integrated iPod functionality and SOME innovation, would have swept the floor in 2005. This would have been not unlike Lisa, allowing then time to release this glorious iPhone as Apple's second generation when the Walkman phones and N-Series and LG Chocolates would have emerged.

Apple could have licensed its iPod to several of the manufacturers (not unlike RIM/Blackberry) and today well over half of all musicphones could carry Apple iPod branding.

Now to the false dichotomy - it means Apple could have had both the mass market - mostly through partnerships but also by a mass-market musicphone of its own; AND still have the top end most lucrative 1% for the iPhone (have your cake and eat it too). I know for a fact that several handset makers were in serious talks with Apple over the past years to try to license the iPod technology, so this is not mere fantasy. We saw the one commercial release of those discussions in the Motorola Rokr, if you remember two years ago, it was briefly hailed as the iPod phone.

On my arrogance in my predictions, I'm sorry. I tend to do that, such as with SMS, ringing tones, waiting tones (ringback tones), etc. I regularly chair the forecasting conferences for the telecoms industry and am also reguarly taken to task for my widely quoted forecasts, which of course cannot always be right. Some of my big failed forecasts include the adoption of videocalling for 3G, the spread of LBS (Location-Based Services) and MMS picture messaging. Nobody gets their forecasts always right. But where I think professionals in the forecaster community stand out from the crowd, is admitting clearly when their forecasts go wrong, and try to explain what went wrong. That is also what I do, publically at conferences and in my writings in my books, articles and blogs.

But yes, when one of us gets the forecast spot-on, we tend to get rather smug about it. Sorry about that tone in my posting. In this case (iPod vs musicphones) there is a history of vicious e-mails and comments, if you go reading the previous three major blog postings I made on this story in 2005 and 2006. So that perhaps also colours my emotions about it. That classic, but so annoying comment you often get from your parents when they say "I told you so".. I'm sorry for that. I'm very happy you can also see the analysis in the article beyond that arrogance of mine.

I'm greatly looking forward to your considered comments, Bertil, when you have had time to digest.

Thanks all for writing

Tomi Ahonen :-)

Dean Bubley

Tomi

Sorry for creating the extra work for you! But unfortunately, I think some of your data & estimates are not entirely reasonable. The Continental Research report you cite is UK-only, not worldwide, and is based on around 2400 responses. http://www.continentalresearch.com/products/reports/mobile_phone.asp

Further, based on the write-up this article: http://www.mobilemarketingmagazine.co.uk/2006/10/musical_mobiles.html only 15% of these 2400 people had listened to an MP3 file on their phone in the last 12 months, of whom 70% used it at least weekly (ie 10% overall), but only 13% on a daily basis.

Let's go with the weekly figure as a reasonable indicator of "active usage", and assume that Continental's sampling methodology is rigorously representative of the market as a whole. That gives 10% of UK mobile users listening to music on phones regularly - ie about 5m people (or 1m using them daily using the other figure). Personally, I still don't think this reconciles well with my own empirical observations of peoples' behaviour in the UK, where I reckon I see around 4x iPod users vs. musicphone+other MP3 users - and I'm sure you'd agree that no way are there 20m iPod users in the UK!

I don't have enough knowledge about the Chinese market to say whether 90m is reasonable, but I'd guess that the German & especially Spanish figures (14m out of 40m total population) look a bit high as well (I have an "on the ground" anecdotal comment on my own blog from Madrid saying that musicphone usage is pretty rare).

Tomi T Ahonen

Hi Dean

Thanks. I need to go examine that report in more detail. It came in the series of several findings in the Autumn of 2006 which seemed consistent to me (ie the In-Stat, Nokia, IFPI, ABI, Ovum and IDC/Informa) so didn't catch that detail.

But then lets assume that is true, then we need to downgrade the overall numbers (global) to two thirds, from 400 million to 267 million. It still 3 times more users who consume music on mobile, than the total of iPods ever sold. And a significant part of iPods (especially Nanos and Shuffles) go to existing owners. So the installed base of iPod users is something like 60 million. Therefore 4 times bigger use of music consumption on musicphones than on iPods.

Yes, the numbers are less, but the big picture does not change, this market share battle is completely over, don't you agree?

Thanks for writing, good to see you here as always.

Tomi :-)

PekkaR

Tomi: Thanks for great and informative answers. Really interesting stuff to learn and contrast with the state of things in most of Europe. I was especially awed to learn more about things in Sweden from your comment under "Picture Tells It Better"... Quoting Tomi:

"in Sweden you can download MP3 songs direct to your 3G phone, off the air, and get a duplicate to store on your PC. You don't need a credit card or PC to gain the songs, they are charged directly to your cellphone account. And songs start at - get this - 8 cents per track. No wonder the SMALLEST of the carriers (mobile operators) in Sweden outsells iTunes Sweden."

Wow, that sounds great for the users. Especially because you said MP3s instead of some DRM format.

Tomi T Ahonen

Hi PekkaR

Thanks! These are the kinds of tidbits we collect here at this blogsite on all the areas experiencing convergence, pc, internet, mobile phone, gaming, music, TV, advertising, credit cards etc. And we add the matters of digital communities and thats what this site is all about... Almost all of those statistics and stories have been reported already at our blogsite or in the book...

Thanks for stopping by!

Tomi :-)

Joe Pemberton

Tomi, once again a very insightful and indepth write-up. I really appreciate the multi-continental perspective to this. My reaction has been to first understand the differences in user behavior you're highlighting. I'm still letting that sink in, but I can't help offering some insights into US consumer behavior when it comes to the iPod experience.

It's not just about listening to music. It's about carrying your entire music library with you all the time. That you can go for days without charging it. That you can guest DJ an evening with friends with it. Those aspects of the iPod experience cannot be replicated with the current crop of musicphones.

You're very right that US consumers, like their non-US counterparts, carry their phone everywhere. US consumers want to eliminate the multiple devices they carry and would welcome a move to solely to a musicphone (or smartphone w/ music capability).

However, if your numbers are correct, 70% of those US consumers will be weighing a new musicphone against the high expectations of the iPod experience. This is precisely why the ROKR flopped. It was touted as a music device when it was merely a phone with MP3 capability.

For musicphones to succeed in the US they have to be extremely good at being a music player before people will be willing to give up the ease of use, the massive capacity and speed of syncing an iPod for a musicphone. Merely enabling MP3 capabilities and music downloads won't convert iPod users. This is not disputing your evidence. I actually think it complements the differences in buying and listening behavior that you highlighted.

The bottom line is that if the Asian and European OEMs (and US carriers!) want to kill the iPod in the US, they need to understand what it will take to convert the US market to music phones. The expectations are very high for portable digital music experience and the current crop of “music phones” doesn't even come close. Here's a rundown:

-- Poor battery life when you actually listen to music (3 to 5 hours compared to an iPod’s 12 to 20).

-- The inability to manage playlists. Even on the SonyEricsson Walkman you touted, users cannot move or delete Cingular's cutesy ringtone from the music folder. Maybe the carriers got it right in Korea and Japan...

-- Proprietary headphones. Here's a great irony: so what if you have a nice pair of Sony brand headphones; don't expect them to work with your so-called musicphone, also made by Sony.

-- Limited extendability. iPod users are used to carrying their entire music library with them. It plugs into any stereo, many automobiles, most radios and some TVs. This behavior is something musicphone users will miss, in part because carriers are more concerned about closing off their systems than they are interested in driving adoption by giving users what they want.

-- Very limited storage capacity. The beauty of an iPod is the capacity and ability to store an entire music collection and take it with you anywhere (I’m talking about 20 to 40GB, not the 4 or 8GB iPhone).

-- Slow. Over bluetooth it takes 15 to 20 minutes to sync 12 tracks to a musichpone and I have to do that every time I want a fresh set of tracks. Contrast that with the 5 minutes it takes to sync 5GB over firewire.

Trying to convince me that the iPod is dying (or dead) outside the US is one thing. But I have difficulty believing US consumers will give up an iPod experience for the current crop of musicphones. Musicphones have a long ways to go, and I am welcoming the race.

(If your blog enabled links I would refer you to my full response to Requiem for a Heavyweight over at Idlemode...)

Cheers.

Rajiv

Nice analysis. We recently have been bombarded with ads of Sony Walkman phones as well as Nokia NSeries phones which show off the music phone capacities. I especially like the Sony ad. Even I was wondering how it was affecting iPod. Although here in India, iPod hardly has a presence.

An interesting comparison is from the digicam industry. The low end digicams market has completely been taken over by cameraphones. But the mid range and high end one's have held theirs. The cameraphone do not yet deliver the quality of those cheaply enough. The cameraphones instead has interestingly given a fillip to the mid range and high end phones by introducing people to digital photography. Some of them do go on to own a more capable digicam.

Wonder this will hold for the MP3 player industry as well. Arguably there is no technical barrier in playing high quality music on a phone.

I am intrigued by background tones. How successful are they? Any data on them?

Tomi T Ahonen

Hi Jim and Rajiv

Thanks for visiting and posting the comments

Jim - I'm sorry you weren't able to post the link to your website. I will try, I hope it works. Your article is very good and worth reading. It is at this link:

http://idlemode.com/2007/01/19/musicphones-finally-overtake-ipods/#more-34

Or for any reader, just go over to idlemode.com and you'll find the article there.

Jim, your position is well-reasoned and very much fits with conventional wisdom. It reminds me almost exactly of the arguments we heard from PDA makers when the first smartphones started to appear in 2000-2001; and the same song was echoed by the big cameramakers in 2003-2004. That their device was technically superior. They did not understand that adequate performance is enough, if one device is in your pocket - and you upgrade it every two years - and the other device is a high-cost extra purchase, sitting at home most of the time.

The smartphones demolished the stand-alone PDA market in two years, by 2003 were outselling PDAs 4 to 1. The cameraphones did the same and by 2005 were outselling stand-alone cameras at about the same rate. Musicphones entered the field in 2004 and most iPod experts had similar opinions like yours, that the device was superior, TECHNICALLY, to the listening experience. It is irrevelant.

I can openly grant you the argument - yes the iPod is and will "always" be superior to listening to music and to managing your music collection. Most people do not own 500 CDs and 10,000 songs. The iPod serves very well the top end of the music consumer, including the professional musicians, DJ's etc. That the iPod is superior as a music device is IRRELEVANT to the utter dominance by the cellphone. I explained this in my original posting in October of 2005, entitled 2006 the Year the iPod Died. See it here:

http://communities-dominate.blogs.com/brands/2005/10/2006_the_year_t.html

You see you are thinking from a music fan's point of view. That is valid - BUT ONLY for the SMALL minority of the population who care enough about it. The mass market doesn't care. They want "something" to play music, when they sit in the bus or subway train to work, or go jogging or wait for class to start or going out on errands at the lunch break. We always carry our phone.

Most people don't have an iPod (only 86 million sold worldwide, and perhaps 60 million of those are unique users, with the rest being replacements and second iPods to existing owners). If we assume half were sold in America, it would mean only 10% of Americans own an iPod. Yet 75% of Americans own a cellphone (and in Europe there are 110 cellphones for every 100 citizens from newborn babies to great grandmoms). Those phones are replaced (worldwide) today in 18 months and that is ever speeding up. In Japan, Korea, Hong Kong etc the replacement cycle is about a year.

You talk about understanding the Americans for their iPod experience. I agree with all you write. Yet already last year - 2006 - more musicphones were sold in America than iPods (by only a slim margin, but that gap will now widen fast in 2007 as America follows IDENTICALLY the pattern of the rest of the world in ALL parts of the cellphone experience). It will now take time for those consumers to get familiar with their musicphones, and for the carriers also to experiment and find the best solutions in this space. Still today, in mobile music, America is the backwaters. Even so, all analysts suggest that even in America specifically, the musicphone will take over from iPods by users and music consumption before the decade is over. I say it will happen next year (2008)

I'm not disagreeing with your analysis, but I've heard it all before so many times. It only applies to those - probably similar to you - who care enough about their music to buy a very expensive stand-alone MP3 player like the iPod - and have enough music in their collection to transfer it to the iPod. Like I said, only about 10% of Americans have an iPod but 75% have a cellphone.

Incidentially, among several hundred comments to the three previous big blog entries I made are many by iPod owners from Europe and Asia. Roughly half of those iPod owners in Europe and Asia, in 2005 and 2006 - admit to having started to use their music consumption on their phone. Of course therefore about half say their current phone(s) are not good enough. But again, in the rest of the world, iPods really are a tiny minority, so here the economics really work in favour of the musicphone. But it would be well worth your while to read through those reply series and look at the testimony in them.

Your view is very "reasonable" and "conventional wisdom" suggests it has to be right. But now the actual user data proves this to be wrong. It would best serve you to understand what is happening. HOW COME people who love their iPods are starting to abandon them - and why so many others are actually willing to ignore the superior experience of the iPod in favour of the lesser music experience on musicphones...

Rajiv - Yes, the camera market is the second analogy I have been using in my lectures and writings for several years now (after the PDA-smartphone as the first case study) when yes, similar technical arguments were made but the cameraphones totally took the market. Nokia became the world's largest manufacturer of digital cameras from 2004 - only two years after it introduced the camera feature to some of its phones - and by 2006 two of the big classic camera brands (Konica and Minolta) had quit the digital camera business altogether as they had lost the mass market to cameraphones.

But yes, the wedding photographer won't show up with a Motorola cameraphone to take wedding photos. The professional fashion fotographers will continue with their Nikons and the news photographers with their Canons and the serious amateurs will buy stand-alone digital cameras. Of course. They have their vast array of accessories like interchangeable lenses, flashguns, tripods etc. But for the vast majority of the world, their ONLY camera, digital or film-based, today is the simple VGA or 1 megapixel camera on their cameraphone. About 1.3 billion people on the planet own a cameraphone and about 500 million cameraphones were sold last year. Digital camera manufacturers have zero chance in that race. They can only go upstream to be the niche product for professionals and semi-pros.

The same is now happening to the iPod. Only a niche product, only for the serious music fan or professional musician or DJ.

About background tones, they were just launched a few months ago, so we don't have any data yet. Sorry. Will probably take a year before we get early numbers. I am intrigued myself. Waiting Tones (Ringbacks) were introduced a few years ago and already are a 2 billion dollar industry so the potential is enormous.

I myself, however, can't see myself subscribing to a background music service - yes ringing tones, Ringback Tones, Welcoming Tones, but DURING the call? I want to hear the other guy, and be heard ha-ha, not to have a private radio station creating more noise during the call. But maybe its me and my old age speaking ha-ha..

We'll report on their success the moment the first data comes out. Keep reading our blogsite :-)

Thanks for visiting

Tomi Ahonen :-)

Katrina

I love all of the devices that come with the ipod. I only hope that my purse can keep up with all of this stuff.

Katrina
http://www.ellistrations.com/ipodmaniac.htm

Joe Pemberton

Tomi, the comparison to the PDA and the cameraphone are very interesting and they seem analogous. It takes guts and foresight to separate your own behavior and preferences from what the masses might be doing... As a UE professional it just spurs me to want to make music-capable phones better. Much better. I also think it's the same reason that Apple's rabid fans are so eager for an iPhone, because they've found musicphones and even Windows Mobile smartphones to be lacking. Yet, the iPhone price tag, plus the hefty data plan pricing is bound to make the iPhone an elite (i.e. a luxury) piece of hardware or worse, just a status symbol. What I'm hoping is that the net effect of the iPhone is better musicphones (from all the OEMs) and a better user experience all around.

Regards,

// Joe Pemberton

PekkaR

Many people would have benefited if some of the original iPod and music phone market comparisons had pointed out that the "death of iPod" means becoming a niche market like the Mac is today. Not dying out and disappearing entirely. The latter claim would surely be hard to accept for a music enthusiast. :)

Professional and enthusiastic hobbyist digital cameras and music players will probably keep driving the technological advancement. Integrated devices will later bring those technologies to the mainstream. Right now they're creating the mainstream by marginalizing the iPod through sheer numbers.

If camera phones are, in distant future, capable of shooting high definition video that is good enough to record current movie content, will stand-alone devices always have more room to grow to? Is there a point where advancement (in photo shooting, or video/music recording/playback) stops or slows down and the best technology becomes cheap and small enough to be put into the integrated devices? I'm thinking of a phase like umbrellas not significantly evolving for decades. Although nano and smart clothing technologies might be now showing some promise on that front.

Slowly pondering,
PekkaR

Xavier Henzel

Dear M.Ahonen,

I am currently writing my independant study (as a final year international business student) on the potential threat that Music Phones represent to stand alone mp3 players (with a focus on the Sony Ericsson products). I have read your article thouroughly and want to thank you as it is a gold mine of information that will contribute a lot to facts and figures to include in my study.

I do definitely agree that Music Phones are making ipods becoming a niche product. However I think they still are leading the market very strongly if only stand alone players are considered (clubic.com reported a 85% market share on the 5th of february). That is obviously not counting the Music Phones. Do you agree with such a figure, and do you have any figures of ipod sales in the last 3 months? Are they still confirming Ipod sales decline?

I'm curious to know what you expect small mp3 manufacturers such as iriver, cowon, creative, iaudio etc. to become as they already were niche players when music phones weren't there. Do you think they are condemned to disapear? How about PMP's, do you think they are the kind of product that might save them thanks to higher storage and larger screens?

I disagree about Camera Phones replacing Stand-alone cameras. I don't think only professionals and semi-pros would consider purchasing a digital camera as camera phones are limited to 3.2 mega pixels at the highest, and even though pixels will go up, most people including amateurs (including myself and the huge majority of people I know and see around me) would rather purchase a seperate device that will provide better pictures. (At least right now they would definitely opt for a separte device).

Hope I didn't reach you out too late, thank you once again

Xavier

Tomi Ahonen

Hi Joe, PekkaR and Xavier

Thank you for stopping by and posting the comments.

Joe - good points, I think we are now starting to see the next cannibalization after the PDA, digital camera and iPod: credit cards. In South Korea all 3 cellular networks offer credit card functionality and over half of South Koreans have at least one mobile phone based credit (card). In fact, Visa South Korea will ask its South Korean customers "do you want plastic with the credit card?" meaning that they will automatically issue the credit card functionality to your phone, but ask if you would ALSO like the classic plastic into your wallet - if for example you travel abroad and would like to use the old-fashioned credit cards there...

On the iPhone. It will help redefine the MP3 player experience in the smartphone context, but that is almost a trivial dimension for Apple. Apple knows that stand-alone PCs and laptops will go the way of the dinosaur. Not this year or this decade, but during the next decade. The transition will be gradual, but the evolution of the smartphone is the mass market for computing (and don't think Blackberry, think iPhone). So Apple needs to set its stake in the ground, this is our vision of the pocket computer of the future, and where Apple company is no longer Apple Computer, it will offer Apple smartphones (iPhones) which combine PDA functionality (grandson of Newton), media player funtionality (son of iPod) and much of why we want to buy a PC today (eg traditional web access, e-mail etc).

So my feeling and the way I read Apple's iPhone related PR, is that this is the strategic move. So big, they HAD to do it after the iPod Christmas sales period, knowing if they announced the iPhone in October, it would have killed the record-breaking iPod Christmas of 2006.

Willing to sacrifice a small niche market - MP3 players - to win the big war (pocket smartphones) in the long run. Its my read on the iPhone (and I've blogged about it a lot in separate stories, you might want to search our blogsite)

PekkaR - good points. I should mention that in each of my four major blog entries about iPod vs musicphone, I expressly stated that the iPod was not going to die, but it would become a niche product. But yes, in some of the related comments and shorter blogs, I did not always repeat this significant theme. I did assume people had read the main blog where I made my main case. And I did say, with the original blog that started this - death of iPod coming in 2006 that I posted in October 2005 - that the iPod would not physically die ie stop functionig, nor that the iPod would disapper from the market, only that its market share would shift from market dominance to a niche player.

On the evolution of cameras etc - we are now at the point of the Nokia N-93 for example with optical zoom, 3 megapixel camera, and DVD quality video recording (30 frames per sec at VGA resolution) with stereo sound capture. Its not quite the replacement for the serious home video enthusiast, but hey, five years ago Nokia didn't offer one cameraphone. Today they're the world's largest manufacturer, and their top end models are very impressive (and expensive ha-ha)

How far can we go? Samsung has a 10 megapixel cameraphone. With the in-built digital TV tuners/set-tuop boxes now appearing on many phones (DVB-H and DMB) the display resolutions and video acceleration is also making the viewing on the fourth screen very impressive.

What next? True DVD quality is just around the corner. Then High Definition TV? and 3D? Three Dimensional displays (already appearing on the first handsets in 2008 in Asia). These are bandwidth-hungry, and will put serious drain on the processors, batteries, heat etc of the phone. So at least the near future we still have a lot to expect ha-ha

Xavier - nice to hear from you, and good luck on your research. You'll understand from reading my blogs about this, that I think you're unfortunately just a bit behind the story in terms of timing.

You asked about the reported 85% market share this Feb as reported by Clubic? Notice ANY Apple iPod market share which uses a percentage above 60% has to be USA-specific (not even North America). Apple CFO has reported on the sales of iPods in their next best markets, and in no other market is iPod even at 60% even when excluding musicphones. If I remember correctly, the next best markets are Australia, Canada, UK, Japan. These are in the 40% - 60% range. Germany and France are in the 20% - 30% range. Apple's CFO says that iPod market share in the rest of the world is single digits.

So don't every make the mistake of reading any 85% number to be valid outside of USA. The world market share among stand-alone MP3 players for Apple is certainly in the low double figures, maybe even high single digits. Check out the discussion threads to the big iPod postings I think around summer of last year here, you'll find the exact dates of Oppenheimer's worldwide iPod market share numbers etc. Then you make your judgement.

Only in the USA can iPod's market share be anything over 60%. Even Canada is below that. Just be careful when you read those numbers.

As to iPod now, I haven't followed the story anymore, sorry. Apple's this quarter ends 31 March, so you'll see Apple report around April 10 or so, and you'll see latest figures then.

We'd be interested in learning what you found in your reserach when you are ready to publish, so do tell us when you do, ok?

Thanks for writing

Tomi Ahonen :-)

Xavier

Thank You, I sure will transfer you my study with pleasure :) I have to give it back before the 15th of april, so I'm gona need those Ipod sales figure pretty quick!

I forgot to mention I found a few results that seem to go in favour of Ipods, now I have no idea if they are accurate:

From Apple insider posed on February 28:

“An extrapolation of January data from market research firm NPD suggests that Apple Inc. is on track to exceed Wall Street's expectations for iPod sales during the company's second fiscal quarter of 2007 ending March. In a research note released Wednesday afternoon, PiperJaffray analyst Gene Munster told clients that his analysis of the sales data leads him to a preliminary iPod sales estimate between 11 million and 12 million units."

and from http://www.macnn.com/articles/07/03/01/apple.to.sell.108m.ipods/

"Apple could sell as many 10.8 million iPods in the March quarter, beating Merrill Lynch estimates of by 6 percent if the company's iPod line continues its January sales trends. The firm currently estimates that Apple will sell 10.2 million iPods during the quarter."

That would be a pretty good quarter for Apple, and due in part from good sales of coloured nanos and the new Shuffles.

I hope I can find the real figures before the 10th of april, but it really seems they won't be doing bad.

Keep in touch,

Xavier

alex

Hi,

this article contains a quote of an interesting piece of analysis around the EMI-Apple launch of DRM-free music.
http://playlistmag.com/news/2007/04/02/emidrm/index.php

The way Sinnreich laid it out, Apple had to push for freeing music from copy protection, even though it’s been the biggest beneficiary from the proprietary nature of the iTunes-iPod combination. “Jobs’ rhetoric [in his February letter] didn’t cover the real reasons,” said Sinnreich. “Apple’s had all its eggs in the iPod-iTunes basket, but the growth of mobile distribution poses a great strategic threat to that.

“Jobs is smart, and sees that for Apple to forestall any serious competition from the wireless carriers, the music has to flow freely between devices and platforms,” Sinnreich said.

EMI, he added, was also thinking about wireless when it pulled the DRM-free trigger. That, and it could see what was coming. “The tide is turning on consumer’s willingness to tolerate DRM,” said Sinnreich. “Everyone sees the writing on the wall.”


I think that this could very well be true, also when considering that this "DRM-free and little higher quality" music consumes twice the storage space and bandwidth (256 instead of 128 kbps AAC). No problem for PC downloads, iPods and iPhone, but a serious limitation for most music phones and cellular downloads. And if DRM-free will dominate the market, then too bad for those companies, who invested a lot in sophisticated DRM, i.e. the whole telco industry (OMA) and Microsoft.


This will of course not change the fact the the iPod/iPhone will be marginally few compared to music phones, but might give Apple a bigger part of the business value than if they hadn't done this move.

Alex

Alan moore

Alex,

Thanks for this a fascinating insight. Thank you for sharing it with us.

Alan

James - Boomtrek

I consider myself part of the upper middle-class lifestyle of most Canadians, alot of my friends buy lots of "toys" and seem to be in similar mindset as mine for devices. A phone is a phone... you talk on it, an MP3 player is just that. Use one device to perform one very specific function. That's that.

Pardon my philosophical rant here... but, it's the mindset against that of a Swiss-army knife (musicphone), it does everything well and you take it camping (like when you're on the road you take your mobile phone) but at home you use a steak knife to cut-up your dinner not the Swiss-army knife (just like you use a VoIP/landphone instead of your mobile when you're at home) I don't know if that makes any sense at all.

I mean category killers... I prefer buying one device, to serve one function. Swiss/camping, Steakknife/home, Mobilephone/road, Voip/home, etc. If it is clearly the market leader and does one thing the best, and not just a few things OK. I think its possible for both the iPod and the iPhone to exist in harmony. There will always be those niche/fans/wannabes whatever.

With that said, 2 stories - first I have a Sandisk MP3, its super slim, rechargeable... I can leave it unused for days and it holds power, take it to the gym 3 times a week uncharged and it has lightweight form-factor with amazing battery life. I agree with another poster that musicphones need to be alot better for me to make the switch, to use that exlusively, I'm going to talk on a musicphone and use the music part like (10% or less of the time)

The second story is about cellular in Canada. It sucks. Companies here charge a carrier fee of $6.95/month which is meaningless, they gouge you from everything data plan to voice minutes. It just doesn't make sense, so I got rid of my cellphone completely (it was sort of like quitting smoking like you said haha) I use my Vonage/VoIP exclusively and make more plans ahead of time now... its so easy. I won't get into this Fido thing much (however, when Rogers bought them out... I think its almost class-action worthy) I had an ALL-of-Canada plan for 750 minutes, they started charging me for "extended coverage minutes" and I was calling from INSIDE-Canada... wtf? So I called and I said take out the "extra coverage zones" I dont want them, I want it like before... they said "we can't do that" so I said "then you broke my contract now, and i'm not a customer, i cancel service today" and basically they sent my $350 early termination fee to collections, and I gave in and paid it, finally... what a joke! Hence my jaded-nature toward mobile phone carriers. They totally try to fuck you once you're a customer.

So this is why I dont have a cell phone, I want more choices, more options in Canada!!! I think Google bidding on the 700MHz spectrum (in the USA) is great and they'll revolutionize the industry, if they can nail it. I just wonder... how can we get help in Canada? Or a similar "open-network" We're always so proprietary in mobile and far-behind! I want to develop my own applications for my phone and personalize it. And finally, what do you think of the open-Android platform? I think it can be that "category killer" I was speaking about in the wireless smartphone space.

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Available for Consulting and Speakerships

  • Available for Consulting & Speaking
    Tomi Ahonen is a bestselling author whose twelve books on mobile have already been referenced in over 100 books by his peers. Rated the most influential expert in mobile by Forbes in December 2011, Tomi speaks regularly at conferences doing about 20 public speakerships annually. With over 250 public speaking engagements, Tomi been seen by a cumulative audience of over 100,000 people on all six inhabited continents. The former Nokia executive has run a consulting practise on digital convergence, interactive media, engagement marketing, high tech and next generation mobile. Tomi is currently based out of Hong Kong but supports Fortune 500 sized companies across the globe. His reference client list includes Axiata, Bank of America, BBC, BNP Paribas, China Mobile, Emap, Ericsson, Google, Hewlett-Packard, HSBC, IBM, Intel, LG, MTS, Nokia, NTT DoCoMo, Ogilvy, Orange, RIM, Sanomamedia, Telenor, TeliaSonera, Three, Tigo, Vodafone, etc. To see his full bio and his books, visit www.tomiahonen.com Tomi Ahonen lectures at Oxford University's short courses on next generation mobile and digital convergence. Follow him on Twitter as @tomiahonen. Tomi also has a Facebook and Linked In page under his own name. He is available for consulting, speaking engagements and as expert witness, please write to tomi (at) tomiahonen (dot) com

Tomi's eBooks on Mobile Pearls

  • Pearls Vol 1: Mobile Advertising
    Tomi's first eBook is 171 pages with 50 case studies of real cases of mobile advertising and marketing in 19 countries on four continents. See this link for the only place where you can order the eBook for download

Tomi Ahonen Almanac 2009

  • Tomi Ahonen Almanac 2009
    A comprehensive statistical review of the total mobile industry, in 171 pages, has 70 tables and charts, and fits on your smartphone to carry in your pocket every day.

Alan's Third Book: No Straight Lines

Tomi's Fave Twitterati