Cellphones Converge with Consumer Electronics

Strategic Insights -

Cellphones and consumer electronics are finally becoming one with the imminent launch of a cellphone with an integrated iTunes digital music player. Expected to be launched by Motorola and Apple through carrier Cingular Wireless, this device will be one of the first to marry a popular consumer product with a phone. However, a big question remains: Do most people want these multipurpose devices? The answer may be no, as many tech analysts say people are not flocking to phones with new features, and instead, are looking for an easy-to-use device.

Key Takeaways:

  • The iPod phone is expected to be expensive, priced between $250 to $300, which is about the same cost as a separate iPod and phone.
  • The device's capacity is expected to be limited, although theories vary on exactly how many songs it will hold.
  • Many tech analysts say people are not interested in new phone add-ons, such as video, citing a recent In-Stat survey that showed relatively little interest in these features.
  • Cellphone companies are persisting with fancy phones, as data is lucrative, with cellular carriers making big bucks selling text messages, ring tones, and other add-ons.
  • In Sprint's most recent quarter, it reported $6.50 in average revenue per user in data fees, which is about 10% of its total user revenue.
  • The market for cellphones is huge, with about 2 billion cellphone users worldwide, making a modest hit in this market a huge financial success.
  • The iPod phone's success is not guaranteed, as it will face competition from existing cellphones and consumer electronics devices.

Statistics:

  • 12.0% of respondents were very or extremely interested in a cellphone with video on demand (April 2005 In-Stat survey of 694 tech-savvy consumers).
  • 10.7% of respondents were very or extremely interested in having television on their cellphone.
  • 8.6% of respondents were very or extremely interested in having FM radio on their cellphone.
  • 8.5% of respondents were very or extremely interested in having a digital music player on their cellphone.

Sources:

  • April 2005 In-Stat survey of 694 tech-savvy consumers
  • American Technology Research
  • In-Stat
  • Cingular Wireless
  • Sprint
  • Apple
  • Motorola