Nokia and Microsoft Join Forces to Revolutionize Mobile Music

Last Monday in Cannes, Nokia, the world's number one supplier of mobile phones, and Microsoft, the software giant, agreed to work together to allow digital music to be easily transferred between personal computers and phones. This partnership is part of a larger trend in the mobile industry, where phone manufacturers are racing to differentiate themselves with new features, such as music players, in response to the success of Apple's iPod. The mobile industry is seeing a shift towards music, driven by the growing market for portable digital music players and the decreasing cost of memory capacity, making it more economical to store a more useful music library on a mobile handset.

Key Takeaways:

• Nokia's partnership with Microsoft is a strategic move to differentiate itself from competitors and establish itself in the market for portable digital music players.
• The mobile industry is shifting towards music, driven by the success of Apple's iPod and the decreasing cost of memory capacity, making it more economical to store a more useful music library on a mobile handset.
• Phone manufacturers, such as Nokia and Sony Ericsson, are racing to differentiate themselves with new features, such as music players, to excite users to upgrade their handsets.
• The partnership between Nokia and Microsoft highlights the change in the environment around the handset, such as the progress made by Loudeye in establishing a music catalogue and a platform that can enable telecoms operators to deliver music wirelessly.
• The deal between Nokia and Microsoft will enable users to download music on their PCs and then transfer it to a Nokia phone, potentially creating new revenue streams for the telecom operators.

Statistics:

• Over 650m handsets were sold last year, compared to about 10m units sold by Apple's iPod since its launch in 2001.
• For a Sony Ericsson phone to bear the Walkman brand, it must be able to hold at least 10 CDs worth of music.
• Nokia's 3300 phone, launched in 2002, was the company's first music phone.
• The sight of a Microsoft executive on the Nokia stage in Cannes was a shock to many, highlighting the shift in the industry towards collaboration and partnership.

Sources:

• "Nokia executives say few customers ask about music feature in phones" by Phone House store in Stockholm, where Peter Lofstrom, a salesman, stated that "Many don't know it is there".
• Researcher Ben Wood at Gartner, quoted that "it is becoming increasingly difficult to differentiate yourself with a camera; there has been a commoditisation of the feature".
• Analyst Richard Windsor of Nomura, stated "We think this is a body blow to Windows for Mobile as this announcement will allow Nokia devices to perform as well as Microsoft in corporate e-mail".