February 14, 2005
CANNES, France - Eyeing the success of Apple's iPod and its iTunes music service, the mobile phone industry is betting on music downloads as a way of boosting revenues from the faster "3G" networks and handsets now becoming widely available.
Nokia Corp., the world's largest handset maker, announced Monday a new 3G "smartphone" with integrated music player and stereo output. It is working with Microsoft Corp. to make it easier to transfer music between mobiles and PCs.
Sony Ericsson, another leading phone maker, outlined a similar strategy last week, when it said music will be a "new focus for 2005."
The announcements came on the first day of the 3GSM World Congress, a major mobile industry gathering in the French Riviera town of Cannes.
Nokia unveiled three new phones Monday: two high-end 3G phones, the 6680 and 6681, and a folding camera phone that can be heavily customized to suit operators' needs and branding, the 6101.
Each of the smartphones features two cameras - for video and still images, the latter a 1.3 megapixel camera with flash - and supports video calls and sharing, backed up by up to one gigabyte of optional memory.
In addition, the 6681 has a music player delivering high-quality audio through stereo outputs. It comes with software for organizing music tracks in iPod-style playlists.
"Music is the next big thing in mobile multimedia," said Anssi Vanjoki, head of Nokia's multimedia division.
With high-speed 3G networks now widespread - based on UMTS in Europe and mainly EDGE in North America - the ability to download music tracks has rapidly become a reality as consumers look to their phones to be portable entertainment centers that offer wireless gaming, instant messaging and more.
Nokia's deal with Microsoft furthers that goal. Files downloaded onto Nokia phones will be compatible with PCs equipped with the Windows Media Player - and vice versa.
Amir Majidimehr, corporate vice president of Microsoft's Windows Digital Media division, said consumers will be able to "buy music (files) on either platform, seamlessly transfer them, organize them any way they like, in a way they haven't been able to do before."
Nokia's U.S. shares rose 1 cents to $15.98 in morning trading on the New York Stock Exchange, while Microsoft shares rose 7 cents to $26.04 on the Nasdaq Stock Market.
Nokia, the Espoo, Finland-based company that already sold 10 million phones equipped with music players last year, has teamed up with Seattle-based Loudeye Corp. to provide a download service to make songs available.
The mobile industry, which previously offered largely cosmetic downloads such as ring tones, believe music offerings have the potential to win new customers for mobile networks and the handset brands they offer.
Jonas Guest, Nokia's vice president for entertainment, said the company is already "in talks with operators about the implementation of this service," but didn't say which ones.
Mobile operators like Vodafone and O2 are seeking new ways to generate revenue as it becomes more and more difficult to find new subscribers on saturated industrialized markets.
Analysts say the success of Apple Computer Inc.'s iPod digital music player, which sold more than 4.5 million units in the quarter ended Dec. 25, has whet appetites in the mobile phone industry.
Nokia, Sony Ericsson and others are hoping they can win a slice of the iPod's phenomenal business if they can provide a broad choice of reliable, high-quality music downloads on a single handheld - with a phone thrown in.