Nokia Take On Apple

Posted on: 09 September 2008 by Gareth Hargreaves

A phone that lets owners download an unlimited number of tracks and keep them indefinitely aims to rein in the iPod.

Nokia is aiming to take on the might of Apple's iPod by releasing a phone that will allow owners to download an unlimited amount of music for a fixed fee.

The world's largest handset manufacturer has signed a deal with Carphone Warehouse to distribute its new "Comes With Music" phone, which will give owners access to about 2.1 million music tracks and goes on sale in October.

Owners of the Nokia's new phone will be able to download an unlimited number of songs from the world's three largest record labels - Universal, Sony BMG and Warner - for a year. The music can be played on the customer's phone and computer.

At the end of the year, customers can buy a new phone to keep on downloading music but if they choose not to, they can keep all the tracks they have put on their device, which will continue to make calls and send texts.

Nokia hopes that its new offering will take on Apple's iTunes website, which so far only sells music on a per track basis. The Comes With Music phone also represents a threat to the mobile network operators, many of which now offer music through their web portals.

Nokia has not yet succeeded in persuading a UK operator to subsidise the phone, which will mean that when it goes on sale on the 2nd October, it will probably only be available on pay as you go, and could cost upwards of £300.

More financial details, including the cost and the terms of any fair use policy that may be applied to the number of downloads, is yet to be released.

But analysts said that operators would be unwilling to subsidise the phone to customers as part of a monthly contract because the service will compete directly with their music offerings.

"You're not going to get a carrier supporting it when it competes with their own services, so Nokia's only route to market is going to be through retailers and distributors," said Paulo Pescatore, an analyst with CCS Insight.

Carolina Milanesi, an analyst with Gartner, said the new phone would only be available on pay as you go, but declined to estimate how much it would cost.

Apple's iPhoneAt present, the only UK-based unlimited music download service on a mobile phone is Vodafone's Music Station, which allows customers to download unlimited tracks from the collections of all the major labels for £1.99 a week, or about £100 a year.

The device on which Nokia's new service will be offered — the 5310 — retails from Carphone Warehouse without a contract for £145.99, which would mean that the combined price of the phone and the music licence fee would be about £250.

But, analysts said, the ability for customers to keep all the music they have downloaded after a year — a feature that Vodafone's service does not offer — would mean that Comes With Music would cost more.

"If a distributor is able to say to the average punter: this phone will give you unlimited access to music for year and you can keep the tracks you download indefinitely, that is an extremely compelling proposition," says Pescatore.

"It definitely has the potential to kill any mobile music service that is out there today."

Similar unlimited music download services on phones have been introduced by TDC, the Danish operator, and Orange in France.

Record labels have long been searching for a way to bolster sales of digital music, which are growing but accounted only for $2.9 billion in revenue, or about 15 per cent of the total market last year, according to the IFPI, which represents the record industry.

They are also keen to support a device that will compete with Apple's iPod. Record label executives are known to be dissatisfied with the deals they are forced to accept to sell tracks via the iTunes site.

Do you own an iPhone? Would you consider buying a new Nokia? Do you download music?

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