Nokia takes on Apple in music
2008-10-03 13:02
London - Nokia, the world's top
mobile phone maker, launched its free music package on Thursday,
issuing a challenge to Apple Inc's dominance of the digital
music market.
The Finnish firm also launched its first touch-screen phone
5800 Xpressmusic to rival Apple's popular iPhone.
Nokia said at an analyst and media event in London it would
start selling the phone shortly, pricing it at €279 (R3 287)
excluding subsidies and taxes, which it said was roughly half
the price of the other main touch-screen phones on the market.
The price means consumers on many large markets will get the
phone for free from operators when signing up for contract.
Free music bundle
"The price and positioning of the product may result in
substantial demand and will undoubtedly put some pressure on
Apple," said Ben Wood, research head at CCS Insight.
Nokia said all major music labels and most independent
labels will offer their tracks as part of Nokia's free music
bundle "Comes with Music".
"Comes with Music" and similar products from other hardware
vendors could help the music industry make up for falling CD
sales and cut illegal downloads.
The battle for mobile music is increasingly crowded. Sony
Ericsson launched its music package this month in Sweden, and
South Korea's LG Electronics plans a service similar to Nokia's.
Nokia's package will differ from others on the market since
users can keep all the music they have downloaded during a
12-month subscription period.
Music to millions
Nokia said it will also offer
18-month package together with operators on some markets.
There are no charges for tracks downloaded as the cost is
bundled to the phone price.
Analysts and music industry players said Nokia's offering
could bring free music to millions of consumers and change the
music industry significantly.
"Apple's days of dominant digital music retailer outside the
United States are numbered, if they don't do anything radical,"
said Rob Wells, head of Universal's digital music business.
Apple controls slightly more than half of global digital
music sales through its iTunes store.
"In a market where price and selection are so much more
important than brand to consumers, Apple cannot count on
retaining users when competing with an offering which seems free
to the end user," Strategy Analytics' David MacQueen said in a
research report.
Push into services
The music download package is Nokia's first major push into
the services business. Last year the company unveiled a revamp
of its whole organisation, aiming to build a new business from
internet services to combat slowing growth in sales of handsets.
Nokia has acknowledged the impact Apple has made on the
industry with its iPhone over the past year, saying the
Cupertino, California-based computer and consumer electronics
company had done the mobile phone industry "a big favour".
"We have a new, credible competitor in this business," Nokia
Chief Executive Olli-Pekka Kallasvuo told the Churchill Club on
Wednesday, a speakers' forum for Silicon Valley civic leaders.
"Of course we need to be able to respond to any competitor
and we will."
Nokia will launch the package in Britain, the world's third
largest music market. Carphone Warehouse, the exclusive UK
retailer for the range, will start to sell the first model,
Nokia 5310, for £130 (R1 955) from October 16.
Analysts said the choice of a relatively cheap model was a
clear indication Nokia was trying to win over consumers who
often are not paying for music but getting it through
file-sharing sites on the internet.
"If you have access to everything, what's the need for
pirated music?" said Universal's Rob Wells.