Why The iPhone Matters: 9 Out of 10 MP3 Phone Users Don’t Use TelCo Music Services

Jan 13th, 2007 | By | Category: Digital Music, Mobile Podcasting

Apple iPhoneAccording to recently published research from Telephia, there are now 23.5 million mobile subscribers in the U.S. who have phones with integrated music players, but only a tiny portion of these users are downloading music over the air.

The low adoption rate of over the air (OTA) music services could be an opportunity for Apple. Its newly introduced iPhone takes an alternative approach to loading music. It is designed to easily sync music with a computer.
The number of consumers with music-enabled phones is up five times from the same period in 2005 and nearly 20 percent of the new phones purchased in Q3 2006 were music capable. Many of these subscribers report loading music on to their phones via their PC, but only a small number have actually downloaded music over the air (OTA) from a wireless carrier music store.

In Q3 2006, a little over two million subscribers, about 8.5 percent of those with capable phones, reported any purchases of music via OTA downloads (see Table 1).

“It is still early days in the market for OTA music purchasing and carriers are experimenting with pricing models and working to improve the user experience,” said Kevin Burden, Senior Manager — Mobile Devices, Telephia.

Mobile phones with integrated music players have been in the U.S. market for more than two years and have gone through substantial improvements in memory capacity, file format capability and sound quality. Nearly all of the major device manufacturers are featuring music-capable phones as an important part of their current product portfolios.
Mobile operators have launched their music stores much more recently and OTA purchasing is still not available on all the major carriers. Sprint was the first major U.S. operator to launch its music store in October 2005, followed quickly by Verizon Wireless in January 2006. Subscribers on these carrier networks represent the majority of the two million OTA downloaders. Music phones and OTA music stores were the focus of much of the advertising spend from carriers during the holiday season. Of the more than $3.5 billion of carrier advertising dollars that was spent in 2006, $234.3 million or 6.7 percent, promoted music phones and music download services.

“If we see the widely anticipated product launch announcement from Apple this week it could greatly accelerate adoption of music phones and OTA purchasing,” added Burden. “By building on its loyal iPod user base and ability to deliver a seamless music purchasing experience, Apple could make a huge impact on the market for music phones.”

No Responses to “Why The iPhone Matters: 9 Out of 10 MP3 Phone Users Don’t Use TelCo Music Services”

  1. Alex says:

    On the flip side, some of the iPhone’s negatives are just beginning to be discussed: it’s going to be prohibitively expensive for most consumers. Most people who will be considering an iPhone will already own a cell phone and, probably, an MP3 player too. The battery life is a big potential problem, as is the slow network speed of Cingular’s network. It’s sexy for sure, but there are significant potential issues.

    More here: http://technologytailor.typepad.com

  2. dave says:

    Yes. People have shown they would gladly pay an extra 100% just to download a song directly to their phone [+ data charges of course]… Course, ringtones are similarly priced, but then people are force to buy them through the cellular provider because of artificial device limitations…

  3. info says:


    There are always significant potential issues with any of Apple’s products. Remember what a fuss people made when iMacs came out without floppy drives? Or when Apple switched over to USB and made all your old Mac stuff incompatible?

    Apple is trying to anticipate where the mainstream will be in a few years. iPods have gone from 5g to 80g in five years, adding video and gaming along the way. I think that we can expect the iPhone to be the best compromise that Apple can make given current technology and options, and what they come out with in a couple of years will blow today’s iPhone away.

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