Nokia Plays Catch-Up in Race Over Music-Player Cellphones

The Wall Street Journal (subscription required) reports that Nokia "is playing catch-up in the cellphone industry's rush to add music players to cellphones." According to the article, "technical glitches mean that Nokia will be pitching its latest handsets this summer into stores already awash with rivals' models. In particular, Nokia's N91 and mass-market 3250 phones will have to compete with a range of models from Sony Ericsson -- owned by Sony Corp. and Telefon AB L.M. Ericsson."

The move into the music playing handset market is part of Nokia's attempt "to sell more lucrative, high-end phones and to stanch a drop in selling prices. The average selling price of Nokia's models fell below €100 ($120) for the first time in the fourth quarter, compared with around €150 only three years ago. " Mattias Cullin at Hagstroemer & Qviberg said, "This is one thing that gives upside potential for Nokia. Eventually upgrades to more advanced models can help reverse the downward trend for average selling prices in the industry."

Many are predicting that music handsets will take away sales from dedicated devices like the Apple iPod. The article cites research from iSuppli, which "estimates the total 2005 market for music players was 129 million units, or $14 billion, and Apple Computer Inc. sold 32 million of its hugely popular iPods for $6.2 billion that year."

Nokia will have its hands full trying to take on Sony Ericsson, Samsung and Motorola in this space. Ben Wood at Gartner thought Nokia needed "to unveil more models in the high-end N series range or risk being further stuck behind the competition. Presented in April, Nokia's flagship N91 music phone has been dogged by delays because of problems with handling digital rights of copyrighted material and technical issues."

The handset, "which stores around 1,200 songs and has a megapixel camera, is expected to sell for €700, compared with Sony Ericsson's W950i, which has a more durable storage technology but no camera and is expected to sell for €500."

Some folks believe "the 3250 is the most important of Nokia's new models. It has enough storage for 300 songs and a megapixel camera." However it's not enabled for 3G networks and will "be priced at €350 before subsidies or taxes."

The big question is whether Nokia will be able to successfully brand its mobile music experience. Wood warned, "They have some time, but it's not unlimited."