Monday, July 31, 2006

Verizon calls on new phone to boost music sales writes that Verizon Wireless (VZ) is changing its cost to access mobile music with the introduction of the Chocolate cellphone by LG. The handset will sell for $149 with a service contract, and comes with a USB cable "that connects the phone to a PC, and transfers in MP3 and Microsoft's copy-protected WMA formats. The phone has a slot for a storage card. With a 2-gigabyte card, the phone can hold 2,000 songs."

According to the article, "Verizon will continue charging $1.99 for downloads to the handset, or 99 cents a song for customers who download directly to PCs," but users will no longer have to pay $15 a month for the right to access music.

Roger Entner at Ovum said by dropping the monthly fee, Verizon "now opens up the market to the youth segment. Let's be real: You want to download a song or two, you're not going to sign up for $15 a month to do that."

According to Ovum, "32% of new phones shipped this year are equipped to play music. That's forecast to grow to 75% by 2010. That's 309 million handsets today, vs. 898 million by 2010."

Entner estimated that Verizon has so far sold 3 million music downloads, and thought "Verizon will sell 5 million Chocolate phones."

In a Wall Street Journal article, Yankee Group analyst Linda Barrabee thought "musiccentric phones aren't likely to replace the iPod anytime soon." She said, "We're not at the stage where people are looking to substitute their phone for their total portable music listening experience. But as a complement to the iPod, I think there's a place for these things."