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Mobile Phones Reach into Music Market ; Future Handsets to Have Players, Download Capability

Posted on: Wednesday, 16 February 2005, 06:00 CST

With a covetous eye on the success of portable music players, mobile phone makers are going after would-be iPod buyers by building high-quality players into their handsets.

Nokia Corp., the world's leading phone maker, yesterday announced an alliance with Redmond-based Microsoft Corp. and Seattle's Loudeye Corp. to let mobile subscribers load music from a PC onto their phones - much like the way a digital music player works.

Unlike owners of dedicated MP3 players, Nokia users will also be able to download tracks directly onto their handsets through the wireless phone network and then transfer them to computer for storage or burning onto a CD.

Also yesterday, Sony Ericsson announced it would soon market music-player mobiles under its parent's Walkman brand, drawing on the music catalogue of a sister company, Sony BMG, the world's No. 2 record company.

The announcements came at a news conference on the first day of the 3GSM World Congress, a major mobile industry gathering on the French Riviera.

"Music is the next big thing in mobile multimedia," said Anssi Vanjoki, head of Nokia's multimedia division.

Mobile phone makers and networks are looking for ways to boost their revenue given difficulties finding new customers in saturated industrialized markets and even in some developing countries.

Free voice calls over the Internet pose a further threat to revenues, forcing mobile operators to look to entertainment and data services for future profitability. Such calls could soon be possible with mobiles: Motorola Inc. and Internet phone company Skype Technologies SA have just teamed to explore that possibility.

With high-speed networks now widespread, companies like Nokia hope demand for pricier, more sophisticated phones and airtime will be spurred by new features from wireless gaming and instant messaging to pay-TV and remote banking services.

The uptake of high-end phones last year fell short of earlier predictions, but Nokia said yesterday it still expects usage to reach 70 million people at year's end, up from 16 million in December.

In the deal announced yesterday, Microsoft licensed to Nokia the right to use its Windows Media Player to move music between a cellular subscriber's Windows XP-based PC and a cell phone, but not necessarily to play that music on the phone. Nokia also licensed the right to use some Microsoft server technology to synchronize music collections on PCs and phones.

Nokia contracted with Loudeye Corp. to provide a download service to make songs available, hinting that deals with recording labels could follow. Jonas Geust, Nokia's vice president for entertainment, said the company is already "in talks" with unspecified mobile network operators about implementation.

It's unclear whether yesterday's deal might favor Microsoft or rival RealNetworks Inc. when it comes to selecting software for actually playing music on the new phones.

RealNetworks has reason to expect Nokia will use its RealPlayer, not Microsoft's Windows Media Player. Last week it announced it had broadened its relationship with Nokia, making RealPlayer available on a much wider range of handsets than during the prior three years.

Nokia, based in Finland, couldn't be reached for comment, and spokespeople for RealNetworks and Microsoft said they didn't know its plans.

Seattle P-I reporter Dan Richman contributed to this report.

Source: Seattle Post - Intelligencer

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