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August 9, 2006

Music phones pick up the beat

Posted by Tricia Duryee at 12:29 PM

It has taken awhile, but sales of cellphones that play music are on the rise, according to The NPD Group. With that trend on the rise, the report questions how Apple's iPod and Microsoft's Zune will fit into the picture.

In the second quarter, music-enabled mobile phone sales were about 16 percent of all new models sold, a jump over the year-ago period when only 7 percent of phones sold were capable of playing music. In total, more than 3 million were sold in the second quarter, a 100 percent gain over a year ago.

There are two main reasons for the increase: more models available and pricing. Last quarter, 67 phone models could play music vs. 36 a year ago. Prices are also going down, from $125 in May 2005 to less than $93 this year.

Right now, I'm testing the LG Chocolate from Verizon Wireless. For an extra $100, it came with a 2 gigabyte mini SD card that's the size of a fingernail. With that notion, it's not hard to imagine a time when phones are capable of storing a person's entire music collection.

The NPD report questioned how standalone music players like iPods will continue to compete, and how Microsoft's Zune will fit into a rapidly changing music-player industry when it eventually launches.

"While telephony was not part of Microsoft's recent announcement for its Zune music device, it's not hard to imagine a Zune product with a cellular radio embedded for voice (and data) in future versions, especially considering the years and money Microsoft has already invested in Windows Mobile handsets," the report said.

Despite the two-in-one devices becoming better, however, the report said: "Stand-alone devices have a way of hanging around, despite threats from combination devices."

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Tricia Duryee
Tricia Duryee
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