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July 21, 2006

Comments

Tomi T Ahonen

Hi Tim/Goebbels and Elan

Tim/Goebbels - we are finding some common ground. I am FULLY WILLING to abide by what Informa/IDC counts for their global music player survey for this year. Its the source Apple uses, it is the most respected company reporting global shipments. I am fully willing to give this "dispute" to IDC/Informa to "decide". And their numbers will appear in early drafts towards the end of the year, and in full numbers in early 2007.

If then, IDC/Informa feels there are two separate markets, I will be fine with that. If however, IDC/Informa does count musicphones and iPods as part of the same market - then iPod numbers will be less than 14% for the full year 2006 and I trust you will accept that my "early warning" radar, of showing the early data, was in fact insightful and appropriate?

But yes, lets wait. I WILL REPORT the formal IDC/Informa numbers on music players when that data becomes available for this year. If you want my projection for the full year 2006 iPod market share? Not 14% but 10%. But let us see.

Elan - you are falling into the "my technology is better than yours" argument fallacy. The Rolls Royce and Ferrari are better cars than a Kia or Smart. Yet Kias and Smarts are mass market cars, Rolls Roycses and Ferraris are not. The Betamax was better than VHS. The Concorde was better than the Boeing 747 Jumbo Jet. The Macintosh PC is better than what once were called "IBM compatible" DOS computers and today are called Windows computers. Being technically better will not give you the market leadership. On the contrary, in almost every case (of actual physical goods sales, like that of an iPod; I'm not arguing for software shipments) of being the best does not give you the biggest market share.

Elan, you say you don't like your own musicphone, and that most don't use phones for music. That is fine, and I'm sure a 100% accurate report of what you've observed. You do admit, obviously, that you had high hopes for the phone being usable for your music needs. You OWN an iPod. This year SIX out of SEVEN who buy a musicphone, DO NOT HAVE an iPod to compare it with. No matter how lousy the experience, for them its their only musicplayer, and for many, if that is the only device, they will actually use it.

NOT ALL, obviously. Some will simply give up, decide its not worth the hassle or trouble (or battery drain etc) and won't use it as such. But you yourself validated my premise. You tried to use your phone as a music player. Average users like you are now considering the musicphones and iPods as part of the same market.

Some (almost all existing iPod users) will find it unsatisfactory. There ARE users of iPods who say the new Walkman phone, LG's Chocolate, Nokia's N-91, etc ARE good enough, and are using both, or even abandoning the iPod. Read through the 120 comments on our site, there are many who wrote they already use their phones for music.

But don't take my word on it. Two independents. The world's first global end-user survey by TNS this spring, reveals that twice as many people are happy enough for musicphones to use them for music listening, as there are using iPods.

MORE RELEVANTLY, while Bill Gates of Microsoft or Anssi Vanjoki of Nokia have said musicphones will dominate over iPods - that is predictable and arguably has a strong bias. But Apple's own CFO Oppenheimer admits they track the Walkman phones as rivals to iPods (so Apple internally know the market is the same, and customers compare the two) - the most relevant, neutral observations come from the music industry. THEY SELL ON BOTH. All of the four global music labels have picked a winner within the past year, EMI, Warner, Sony BMG and Universal have all said it will be musicphones, not iPods.

Your own observations are fair. Keep in mind, we report on global trends, and globally in ONLY three markets Apple has more than 50% market share - USA (77%), Australia 58% and Japan 54% (Oppenheimer reports national iPod market share stats on April 19). In countries like Germany its 21% and France its 11%. Oppenheimer says that in Italy, Spain, China, Eastern Europe etc, iPod market share is "much less". And this was based on end-of-year 2005 market shares, BEFORE the drop of 46% of iPod sales in the first two quarters that Apple also freely admits. So those national market share numbers have taken a huge tumble in the past six months - as the phone makers each report record sales and huge demand for the musicphones.

Thanks for writing.

Tomi :-)

Tim

"Tim/Goebbels - we are finding some common ground."

By my refuting every statement you make and you not addressing them? Okay...

"I am FULLY WILLING to abide by what Informa/IDC counts for their global music player survey for this year. Its the source Apple uses, it is the most respected company reporting global shipments. I am fully willing to give this "dispute" to IDC/Informa to "decide"."

They have decided: they said Apple had 75% for this quarter. If you are willing to accept their figure, remove all reference to this 14% nonsense. (But actually, I think it's NPD, not IDC in this matter.)

"And their numbers will appear in early drafts towards the end of the year, and in full numbers in early 2007."

Ao you are going to hide for half a year?

"If then, IDC/Informa feels there are two separate markets, I will be fine with that."

They do now, and you are not fine with it. Figure it out: what is what?

"If however, IDC/Informa does count musicphones and iPods as part of the same market - then iPod numbers will be less than 14% for the full year 2006 and I trust you will accept that my "early warning" radar, of showing the early data, was in fact insightful and appropriate?"

No, I will not. You are completely unwilling to attach usage to marketshare when you fully know that the usage of the device doesn't even come close to 100%.

"But yes, lets wait. I WILL REPORT the formal IDC/Informa numbers on music players when that data becomes available for this year."

Why wait? I want you to answer for the utter nonsensical interpretation of existing data. I want you to understand that you are now saying you will accept their numbers next year but not now. How do you make sense of that?

"If you want my projection for the full year 2006 iPod market share? Not 14% but 10%. But let us see."

Why would I want your projections? Seriously.

"This year SIX out of SEVEN who buy a musicphone, DO NOT HAVE an iPod to compare it with. No matter how lousy the experience, for them its their only musicplayer, and for many, if that is the only device, they will actually use it."

This is absurd and specious. Just because they have the phone does not mean its their only music device. It means they have a device that they may (or may not) use for the usage you claim. Just because they do not have an iPod does not mean they are using the phone for music.

"Some will simply give up, decide its not worth the hassle or trouble (or battery drain etc) and won't use it as such. But you yourself validated my premise. You tried to use your phone as a music player."

No, he invalidated your claim: he got one, tried it, and didn't use it. That is one of many phones you cannot count as a music player.

"The world's first global end-user survey by TNS this spring, reveals that twice as many people are happy enough for musicphones to use them for music listening, as there are using iPods."

No, it does not. It says 19% of people have used their music phone (with no specificity of frequency); of this 19%, only 16% do so daily -- that is 16% of 19%. Of the 19%, only 10% use an iPod, true... But that doesn't mean 90% of people aren't using iPods... it is a subset of the 19%.

"MORE RELEVANTLY, while Bill Gates of Microsoft or Anssi Vanjoki of Nokia have said musicphones will dominate over iPods - that is predictable and arguably has a strong bias."

I still do not understand how opinions and statements from people count more than actual data. Pleas explain this absurdity? Oh, I forgot, you have no data so you use opinion.

"Your own observations are fair. Keep in mind, we report on global trends, and globally in ONLY three markets Apple has more than 50% market share - USA (77%), Australia 58% and Japan 54% (Oppenheimer reports national iPod market share stats on April 19)."

And note: those three markets make up the largest % of the music market.

"BEFORE the drop of 46% of iPod sales in the first two quarters that Apple also freely admits. So those national market share numbers have taken a huge tumble in the past six months - as the phone makers each report record sales and huge demand for the musicphones."

No, they have not: those %s are based on the product category every other firm accepts so even with Apple having a big drop in sales, their marketshare does not decrease because no other products in the category saw huge growth, they too had a drop after Christmas. The same firm that said 77% two quarters ago said 75% for this quarter.

Tomi T Ahonen

Tim / Goebbels. Now you are no longer reasonable. Fine. You hold onto your opinion and I'll hold onto mine. I've said right from the start that iPod's global market share is 14%, not 77%.

You have several times admitted the 46% drop in iPod sales from Christmas (as Apple itself openly admits). YOU try to claim it is seasonal, and that there will be a bounce-back in the next quarter and end of year. I have accepted your premise on that, and will report any such climb in sales if it does indeed happen.

I accepted YOUR position on this. Now its no longer good enough for you. You are not being reasonable.

You have also accepted that the IDC will be the company we both will accept as the one to report the actual market share, BY WHATEVER STANDARD THEY CHOOSE to use for musicplayers. No ifs, no buts. Whether phones are used for music or not, is no longer the issue, YOU wanted IDC numbers, that is what we will report when they come out for this year 2006. Don't try to back-peddle out of it now.

You are being unreasonable. You suggested IDC. You'll have IDC. They do report annually for the whole industry. I cannot force them to give a number today.

You now suddenly claim that IDC reports iPod global market share at 75%.

NO IT DOESN'T.

Apple in its quarterly review said the ONLY country with above 70% market share is USA. The next best country by iPod market share according to Apple is Australia at 58%. Some industrialized countries like Germany and France are at 21% and 11%. MOST COUNTRIES including Italy, Spain, China and all of Eastern Europe - quoting Apple CFO Oppenheimer from April 19 - have iPod market shares much less than the quoted countries. Apple said they were quoting IDC and NPD for those market share surveys.

You are inventing things now when you claim iPod global market share of 75% "according to IDC". If you refuse to live in reality, then we have no reason to continue this dialogue Tim/Goebbels.

You cannot change reality simply by argument. Apple openly admits that in NO COUNTRY other than USA do they have a market share of even 60%. Please return to planet earth

Tomi :-)

Tim

"I've said right from the start that iPod's global market share is 14%, not 77%."

What crack are you smoking? You've said about 50 times that it was at 77% two quarters ago. If you accept that number (from NPD), you have to accept their current number of 75%.

"You now suddenly claim that IDC reports iPod global market share at 75%.

NO IT DOESN'T."

No, I said NPD who you said is just as trustworthy.

"Apple in its quarterly review said the ONLY country with above 70% market share is USA. The next best country by iPod market share according to Apple is Australia at 58%. Some industrialized countries like Germany and France are at 21% and 11%. MOST COUNTRIES including Italy, Spain, China and all of Eastern Europe - quoting Apple CFO Oppenheimer from April 19 - have iPod market shares much less than the quoted countries. Apple said they were quoting IDC and NPD for those market share surveys."

Why do you keepo repeating this? Yes, these are their numbers (Apple's, NPD's, and IDC's) , and they still put TOTAL marketshare at 75%. If you are so unhappy with that: show me where ANYONE besides you says 14%!

"Apple openly admits that in NO COUNTRY other than USA do they have a market share of even 60%. Please return to planet earth"

You keep trying to escape the fact that NO data supports your argument. Apple and the rest of the world know that the US, UK, Japan, Australia, and Canada make up a huge % of the music world. (I am admittedly guessing, but I would say around 80% of the music buying...) SO, yes, it is prefectly reasonable they are still at 75% of the total market considering that even in countries with small %s, very few if any other music players have a larger %. You cannot refute this. You cannot cite any numbers to support you... So now you are basing claims on future numbers that don't exist because you don't like the one which exists now: 75%.

That's unreasonable. Not me.

Phillip McKrevice

It is important to keep in mind that the ability of mobile phones to 'play music' is a feature that has been incorporated into most music phones over the the past several years. So, everyone who buys a mobile phone (including my mom, who will absolutely, positively NEVER use it as a music device), is now counted as part of your 'musicphone' 86% market share. As people have pointed out, the USAGE of those mobile phones to play music is the critical factor, and I would estimate this to be FAR below 50%.

Also, your analysis of iPod growth is also misleading. While it is true that Apple sold fewer iPods in the past two quarters compared with the holiday quarter in '05, their year-over-year growth has been positive for every quarter. Anyone who follows consumer electronic devices can tell you that there is seasonal fluctuation in sales; Apple's iPod have not yet experienced a 'negative quarter' in year-over-year growth. I would predict that Apple's iPod sales for the coming holiday season will trump the 14M sold last year, ESPECIALLY if there are new models out. Care to take a wager on that?

Mobile phones absolutely represent a threat to the iPod in the long term, but to suggest that Apple's market share has dropped from 80% to 14% by counting every cellphone that is sold as a 'competitor' is simply nonsense.

Tomi T Ahonen

Hi Phillip

Thank you for writing. I've responded to the very same comments you now present, numerous dozens of times, presenting evidence and facts and studies to support my position, rather than your personal opinion without any evidence of any kind. I am sure you are right about your mother. However, your mother is not willing to wait for a specific musicphone model - like an Nokia N91 or SonyEricsson Walkman or LG Chocolate at the mobile phone dealer, to acquire the MP3 player ability. Yet Motorola, Nokia, SonyEricsson and LG all report that their music phones are in exceptional demand.

People do not wait for these phones then not to use them. I provide global end-user survey data and global music purchase data which prove that phones are used for music. The measurement of musicphones as part of the same market as iPods is valid. I also have provided a dozen of the world's leading experts saying so - including executive opinion from Apple.

Please read the commentary. I don't want to repeat all of it one more time.

Thank you for writing

Tomi Ahonen :-)

Tim

"I also have provided a dozen of the world's leading experts saying so - including executive opinion from Apple."

No, you have not. What you say is that musciphones are being used and that they already dominate the market. You have no experts saying that. You have people predicting that someday that will be true. You have presented NO ONE willing to say what you have said.

Cotten999

I hate these Mac Weenies as much as the next guy but in all fairness if this guy were correct the subscription music services, Napster, Yahoo, Real Networks would be doing much better.

These phones may have MP3 functionality but that isnt what they are being bought for.

At least not yet

alan moore

Today, I sat in a garden in Hampshire and let my cousin who is 13 play with my mobile device. what did she do?

She connected to the web and started downloading music.

game over.

mobile is the logical conclusion to all of this.

The only reason it is not exploding is that the operators are charging too much rather than attracting people to use data with flat fees. This will too change.

Dear tim - reference: luddites, cotton weavers, steam trains and the telegraph. when was the last time you got a telegram delivered by steam train?

Who thought toyota a Japanese company would become one of the biggest car manufacturing companies in the world? As GM falters.

Isn't it great to have a dialogue :-)

Digital immigrant or digital native Murdoch asked us before he bought myspace. Mobile immigrant or mobile native is my question we already get the digital bit.

Best regards

Alan

Tomi T Ahonen

Quick comments (am on vacation and only once per week visiting the blogsite) - this week's Business Week says musicphones are now iPods rivals. This week's Fortune says the iTunes and music downloads future is "increasingly to mobile phones". The Economist this week has its cover issue about the 25 year anniversary of the PC. In its editorial, the Economist says the real future of the personal computer is on mobile phones. Yes, the Economist is not specific to iTunes/iPods, but a much larger picture. If the whole pc-based internet migrates to mobile phones (like we say at this blogsite) so too will all of iTunes.

Tomi Ahonen :-)

Tim

"She connected to the web and started downloading music.

game over."

No. not game over. What form of logic is this? None, it is rhetoric.

"The only reason it is not exploding is that the operators are charging too much rather than attracting people to use data with flat fees."

I thought you said the game was over; now you say it is not exploding.

"Dear tim - reference: luddites, cotton weavers, steam trains and the telegraph. when was the last time you got a telegram delivered by steam train?"

Is that a sentence, a question? Am I supposed to derive some logic from that? Am I being called a luddite? Sorry, not a luddite. Just a reasonable functioning person with a brain capable of logic.

Tomi T Ahonen

Hi Tim

Yes you are a luddite. In the 1820s steam emerged as the method to power trains first used in Britain (first trains were used to haul coal, and first rail roads were built out of wood). By 1900 electricity and diesel had emerged as train engine candidates. The peak of steam engine production didn't occur until around 1920. Ever since then more diesel, electric and diesel-electric trains were made than steam engines. Steam engines kept on getting better. The last and arguably greatest steam engine was built in the UK in 1960 (the Evening Star) and certainly some steam engines were built in the developing world long after that.

But the tide had irreversibly turned in the 1920s. Anyone who continued the "losing track" of steam was harking to the past, trying to make a good thing last. Nothing wrong with that. But the pace of progress is unstoppable. That change happened LAST YEAR for MP3 players. Today more devices are built into phones (we have all the evidence, you show us none to refute it). The shift is dramatic with 2004 iPods leading 4 to 1. In last quarter 2005 phones leading 4 to 1. Now second quarter 2006 phones lead 6 to 1 and all trends suggest by end of 2006 it will be more than 8 to 1 in favour of phones. This is game over time. Only a luddite would live in the iPods will rule fantasy.

Those devices, while often of lesser ability than iPods - although dozens of musicphones are equal to a Nano, and superior to a Shuffle in capacity today - are being used to consume music. Now two studies prove that. You have given us no studies to refute the facts. iPods were launched in 2001. Musicphones launched in 2003. At end of 2005 music was consumed twice as much on phones than iPods. the shift is dramatic and rapid.

And it is not only copying our own music to the musicphones, both for iPods and musicphones, people purchase music. We have given the studies. You have given no studies to refute this. Like the global body representing music said, in 2004 the sales to musicphones were negligable. In 2005 it was matching iTunes. In first quarter 2006 already half of all digital music goes directly to mobile phones.

This is game over time. You have seen each of these studies explained to you Tim, over and again. I have also given you national survey data from Japan, UK, Germany, Sweden and South Korea. You have given us nothing. I am now fed up with repeating myself to you about this.

If you cannot give us anything new, there is no point in repeating myself to you. We have dozens of other topics this blogsite tracks. The phone has won over the iPod, and increasingly the mainstream media gets it too. Alan was right, you Tim are the luddite in this.

Tomi :-)

MacKeyser

I look at design and function a lot. No phone EVER would inspire me to take a picture I valued. And I don't know what phone you're using, but how many people have phones that would inspire them to actually USE them as their primary cameras. To snap photos of celebs if they ever see one or an accident, sure. But to be their primary camera? That's nonsense. And I don't just mean as opposed to SLRs. What makes a good picture, even in this digital age is the optics. Plain and simple. That is a function of the physics of light that no marketer can ever dispute. Megapixels do NOT indicate quality. Not in the slightest. A 5MP phone camera will have a CRAPPY picture compared with even an entry level digital camera and it would be unwatchable compared to older high end SLRs when 5MP was a big deal. So, you could put a toaster function in my phone. So what? If I don't use it as a toaster, then how can it be measured against worldwide toaster sales?

Same with music. I think rather than looking at phone sales and INFERRING that they get used as music playback devices, look at the music SELLING services. If all these phones are downloading music (and thankfully, idiotic, low quality ringtones are accounted for separately), then even with casual phone usage versus vibrant iTunes usage, the cellphone market would be drawing MORE than 50% of the music market. Sorry, but it isn't even 25%. You say twice as much music was consumed on phones. What does that mean? It sure doesn't mean that iTunes has 30% of the worldwide market or even that the Moto phones are a major dl source for iTunes. So how then if iTunes is the dominant music dl service with a worldwide marketshare of 80% can 50% of all digital music go directly to phones. Something doesn't add up there.

What you have are a LOT of phones being used as....PHONES!!! Sure battery life is an issue, but considering how many people just whip out their phones to play games (like I saw in line during my last visit to the DMV), I don't even see that as a concern. People will use their phones as whatever they need if the need arises. I mean a crappy song on buds beats listening to the drone of a bus engine. Doesn't mean I'm porting my whole digital library if it costs anything to the phone, tho.

Don't get me wrong. I see where you guys are going with this. I just think you guys presented this in an overly aggressive manner and ignored the CONTEXT of the data. The iPod isn't DEAD. If the steam engine was still being produced in 1960, the it sure as hell didn't die in 1920. It just wasn't where the distant future lay. The iPod will continue to sell millions of units for some time. I have a feeling that the iPod line will become a brand with the top end becoming a sort of mobile video recorder and repository ala a portable Tivo unit with another branch being devoted to portable phones and truly mobile audio with little pretense made towards fidelity (which would be a departure for the iPod because all the iPods I've listened to on decent headphones sounded great). It will be "good enough" for phones. What it means is that a) the music experience is NOT THERE yet with phones. The batteries in phones cannot power any headphones other than earbuds. I would just LOVE someone to try to run some Beyerdynamic 770DTs with a cell phone. Four bars into the first song....battery's dead. As well, while the future likely will see a split, the here and now says that the reason Apple hasn't done a phone already is likely that it has to sound at least as good as what they have and no one is gonna confuse the sound of a phone's mp3 player for an iPod. And b) HOW people relate to their devices is changing and YES, Apple will have to account for that in their product line. Just as they did when they introduced first the Mini and then the Nano when whole markets couldn't acquire or didn't need all that the original and subsequent full versions provided. So will it be with phones. If I'm on my bike, I would LOVE to have an iTunes phone that properly syncs with my Powerbook. Unfortunately, no plan I ever heard of allowed for only paying $25 dollars and getting one of these top of the line phones. That's crap. Got any data for THAT? You absolutely can NOT upgrade to a RAZR or any of the other Moto phones that use iTunes for that little money. Best deal I've seen in $149 with 2 year plan. That was a few months ago, granted, but still. Doubt prices have dropped all that much. Maybe in a year or two, those numbers may pan out, but it took camera phones a solid two years before they were even close to "throw-in" upgrade phones.

As sure as the Sony Walkman gave way to the Sony Walkman CD which gave way to the iPod, surely a new interface will emerge. And it likely will be the phone. However, the difference here is that all the aforementioned products could power big headphones. Even iPods could power Beyerdynamics 770 DT80s with 80 Ohm impedence (most buds have an impedence around 30). Phones cannot and unless they revert to a Nextel i1000 size phone, they won't for some time. And that means a fracturing of the market rather than a complete migration.

As well, seeing that the subscription services are really strugling, I have a feeling that much of the growth of purchasing online music is waiting for Apple or someone to get to that iPod quality level in a phone with decent battery life. Unfortunately, that phone will cost $400 or $250 when I upgrade...still out of range.

Tomi T Ahonen

Hi MacKeyser

Thanks for visiting and writing. You make many very good points.

It seems rather clear from your posting that you write from an North American viewpoint. It will probably surprise you that here in Europe for example, you can get a top-end musicphone, like those from the Nokia N-Series or SonyEricsson Walkman or Motorola Razr V3 for 25 UK Pounds plus 18 month contract. 25 UKP is about 45 USD. But the USA market is estimated to be about two years behind mainstream Europe (and four years behind the leading cellular telecoms markets like South Korea, Japan, Scandinavia, Italy, Israel etc). So if you go and take a new survey of what kinds of musicphones (or cameraphones) are now available, you may be pleasantly surprised.

Then on music. I believe the wireless carriers in America are not very user-friendly in their music services. Consider these - in Sweden you can download full track songs for 8 cents each. In Japan the second largest wireless carrier, KDDI, already reports that on their network musicphone users average 8 downloads per year of full track songs to their phones. But the more advanced services are the various subscription "all you can eat" services that are now appearing from South Korea to Scandinavia.

So your views are well considered, but probably only USA based. If we look at what the most advanced markets are doing, and we know these trends are global, then soon they will also appear in the USA.

The same goes for the iTunes vs MP3 downloads to phones statistics that you considered and found inconsistent. That 80% market share for iTunes that you cited, is a "USA-only" statistic. The IFPI collects the global data to pay the royalties to all national recording associations like the RIAA in the USA. The IFPI is their global umbrella organization. All national recording associations report to the IFPI. The IFPI in its annual report for 2004 said music sales to mobile phones were negligable. In 2005 the IFPI said that music sales to phones were worth 440 million dollars globally - when Apple said iTunes music sales were worth 400 million for 2005. The IFPI said digital music was worth 1.1 B USD in total. That included iTunes, plus all other legal downloads like the new Napster etc, and all sales of songs to mobile phones.

Now for the first quarter of 2006, the IFPI says music sales to phones are growing so fast that direct sales to music was half of all digital sales. Meanwhile Apple reports that its iTunes sales are down 8% sequentially from the previous quarter.

Is there a trend. Yes. Is it global. Yes. But is it less visible in America, for sure. We discuss global trends here at this blogsite.

Will the iPod die? Of course not. We said so in the first blog entry back in September, and repeatedly in all subseqent blog entries. No, its not that iPods die, only that they no longer control or dominate the market. They are being rudely shoved into the corner of a niche market. The high-end top-of-the-line music players. They will continue to live a good profitable life long into the future. But the iPod is no longer the mass market. The mass market has voted with its dollars. Today musicphones outsell iPods at a ratio of over 6 to 1. iPod sales peaked in December of 2005 and have fallen each subsequent quarter since then. Something iPods never did in the previous five years. Now the iPod is finding its niche, and a comfortable sales level of perhaps 7-8 million units per quarter. Meanwhile musicphone sales are growing explosively, projected to sell 250 million units this year.

Briefly about cameraphones and the quality of the image. First, Nokia has taken the bold step of introducing top-end cameraphones with Carl Zeiss lenses. So if your point is that the cheap plastic lenses in cameraphones cannot deliver high quality images, even that argument is now being lost.

Meanwhile I argue that it is not the serious amateur who is the target. A serious amateur or a semi-professional photographer, will of course UNDERSTAND and value the difference that things such as variable shutter speeds, F-point settings, tripod receptacles, separate flash units, etc can deliver. They will appreciate these features, and will buy the top-end cameras.

But not the mass market. Our mother, father, uncle and aunt are not savvy enough about cameras. For them its good enough if they can print the occasional image. Even for many pictures taken on a pocketable stand-alone digital camera, are ONLY viewed through the view finder (and not printed). So for them it makes no difference if the quality is much better or not. They take snaps. Occasional use. Pure amateur. "Ignorant" if you will. But this is the mass market. They do not understand the intricacies, and they will never pay for it. So they buy the cheapest that delivers the level of quality they expect.

And for them, if you can print a photo to a regular photo size - and this any 1 megapixel camera can do (I am not talking about enlargements) very easily. For them the cameraphone is good enough.

And the recent Nokia study proves it. For 44% of phone owners, their cameraphone is their primary camera. I own a cool digital camera but the one in my pocket is the 3 megapixel Nokia N-80. Most of the pictures I take are with my cameraphone, not with the Canon.

You said you wanted the ultimate phone/iPod. If Apple would release a top-end musicphone iPod-phone, that would also synch with the Mac powerbook, you'd be happy. And you'd want it for 25 dollars.

Guess what. I was just in Finland, and the current advertising there pushes the "entry level" Nokia N-Series phone, the N-70 for one Euro (1 dollar 30 cents) and a 24 month contract. That phone has bluetooth - allows the synching with your laptop obviously. The phone has a two megapixel camera and an MP3 player. Is built-in memory is not much, but it has a memory slot that accepts 1 GB memory chips (and 2 GB chips are just appearing). So you have an iPod Shuffle capacity in an N-series Nokia brand 3G phone, plus reasonable camera plus 3G connectivity

While here in the UK, Vodafone offers the N-70 for free on four of its six consumer tariffs, starting with those that charge 40 UKP (70 USD) per month. Its not in any way beyond the reach of regular customers to get this type of gear, at reasonable costs. Which then does put the pressure on any stand-alone devices.

You forget the replacement cycles. We replace our phones globally on average every 18 months. That means that in less than 2 years we get a new phone. For most phone owners, the next phone is an "upgrade" in terms of time-adjusted performance. In other words most users move up on the scale towards more premium phones. Even if we didn't care for the first cameras and screens and music, as these keep getting better, and all of our friends start to have them, by our next phone, we'll take one of those higher end models for trial.

Then it soon becomes the only device we use. Read through the replies here to these postings. You'll find several who say they initially were doubtful of what a musicphone could deliver, yet after they got one, they are now very happily using them.

And that is where the global user survey by NPD comes in. Twice as many people around the world use musicphones to consume music, than use iPods and other stand-alone MP3 players.

The tide has turned, there is no going back.

I don't argue with you that the iPod is and will continue to be the top-end model. It will have a (fiercely) loyal target audience, not unlike the Macintosh computer users. But like the Macs, the iPods will be niche devices for the top end. From last year 2005, the world changed, and now the mass market belongs to the musicphones.

And quality of listening is irrelevant to the masses. They are quite willing to PAY MORE and get less out of purchasing 5.1 BILLION dollars worth of ringing tones. For them any MP3 songs are a vast improvement. The mass market is gone.

What we are sorry about at this blogsite, as Alan and I are both big fans of Apple, is that this was Apple's market to control. They lost it.

Thank you for writing

Tomi Ahonen :-)

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