Thursday, January 05, 2006

Verizon to Offer Phones That Can Download Music

A couple of articles on Verizon's launch of its full music download service, which will officially start on January 16. The New York Times reports Verizon is undercutting Sprint's recently announced service, which charges $2.50 a song, by selling over the air downloaded songs for $1.99 and including "software to let people download songs from their personal computers for 99 cents," similar to iTunes. Currently Verizon's basic offering, will allow customers to store 250 songs on their handset.

Ed Snyder at Charter Equity Research said, carriers "are scrambling for a story that makes sense to investors on how they'll grow revenue and earnings." He noted enabling music playing capabilities in a cellphone "is less difficult and expensive than adding a camera to phones" but expected consumer would rather transfer songs from their PC than download over the air, which probably won't "wind up developing a meaningful revenue stream by charging $1.99" a song. Snyder said, this development means "Apple gets hurt and the carriers don't get helped."

According to Verizon, they "will sell three music-capable phones, the least expensive being $99 for consumers who sign up for a two-year service contract. The phones come with nominal memory and an expansion slot to add additional capacity, with a one-gigabyte memory card costing $100 (and holding 250 songs)."

Roger Entner at Ovum said noted the key challenge was software usability. He said, "We're in the early days of the mobile music world. With MP3 players they played around with it for two to three years before Apple finally got it right."

Over at the Kansas City Business Journal, Lewis Ward at IDC said, "I'm surprised. I thought Verizon would have come in at $2.50 or quite a bit higher."

Like everyone else in the industry, Verizon is hedging its bets. Of course, they didn't show much faith that people wanted over the air downloads by pricing OTA songs 100 percent more than ones via their PC service. Methinks adoption will be quite low, unless people absolutely need to have the next Gwen Stefani song right away...