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Department of Hmm....
In the last quarter, Nokia sold 88.5 million phones to Apple's 8.7 million iPods. If the Finns can convince just a fraction of buyers to spring for music phones rather than iPods, they'll trounce Steve Jobs and co.
Read more here. "Trounce," of course, is a tricky word. Is the mark-up on cell phones as high? Would they cut into the iPod market or appeal to different buyers? Would content suppliers leave iTunes or just sell to both markets? Here is a good, short piece on the roots of the iPod appeal.
Posted by Tyler Cowen on October 25, 2006 at 07:30 PM in Music | Permalink
Comments
Which is why Apple is coming out with an iPhone next year:
http://www.appleinsider.com/article.php?id=2146
Posted by: Eli at Oct 25, 2006 8:41:05 PM
Nokia makes money on what cell service providers subsidize them - not on volume of headseats sold. Their margins are razor thin on the ones they do sell directly. The margins of ipods are huge - they are just fancy white USBs. (One underaprecited aspect of the iPods is that they stuck people with the horrible iTunes and turned apple's online music selling business into a hugely profitable venture.)
Posted by: Pienso at Oct 25, 2006 8:44:11 PM
Sounds like every businessman who went to China saying if every person bought just 1$ of my product ...
Posted by: Jeff Burrow at Oct 25, 2006 8:55:41 PM
Since the market for Nokia phones is much greater than the market for Ipods, this statement makes sense. Apple would have to a spend lot more capital to attempt to become a large provider of cell phone service than Nokia would have to in order to introduce a high qualtiy music phone.
Many phones today already have some type of MP3 player equiped with their regular services. Unless Apple can offer new services from thier Ipod in the near future, cellular companies will close the gap and the Ipod market will drop dramatically.
Posted by: Johnny Kuker at Oct 25, 2006 9:42:44 PM
Nokia specializes in communication, while iPod focus on mp3.
Similarity: we carry both around.
-----------------------------------
Armani makes dashing suite, while Victoria Secrect produces underwear
Similarity: we wear both around.
Then, why don't Armani produce suites with lacy underwear enclosed?
...
because buyers with two tastes are involved.
Posted by: Kanub at Oct 25, 2006 11:20:46 PM
But buyers with two tastes are seeking the same product: a digital portable music player. Currently I carry around my Motorola Razr cell phone and 20 GB iPod. As soon as someone creates a 20 GB (or even, say, 5 GB) cell phone music player, the iPod runs into trouble.
They better hope the iPhone is a success.
Posted by: dynamicinfo at Oct 25, 2006 11:40:04 PM
Anyone remember the Motorola phone with iTunes? Didn't think so...
A concise article at the Economist about mobile phones: http://www.economist.com/business/displaystory.cfm?story_id=7921934
Posted by: lyle at Oct 26, 2006 12:26:57 AM
This type of inference is so bad that the FTC proposed making it a deceptive practice with regards to the sellers of distributorships.
Posted by: michael webster at Oct 26, 2006 3:24:35 AM
Why would Nokia _want_ the ipod business? They and the cell phone providers can probably make more money selling 30 second ring tones for $2.50 a pop that they can selling higher quality music for $0.99. They face an innovator's dilemma, where any attempt to compete with ipod will threaten much larger revenue streams.
I will cling furiously to my ipod and my tivo, because I don't believe that either cell phone or cable companies will be able to shift to a quality/innovation/customer service model.
Posted by: DK at Oct 26, 2006 8:28:25 AM
I have an iPod (love it) and an LG Chocolate (like it). I won't be giving up my iPod any time soon. Until they make a phone that can rival the hard drive size and ease of use of my iPod then I'll stick with having two gadgets. It's not like I have to carry around a Zach Morris-like cell phone and a boombox.
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