Trial devices

11 Aug 2006
00:00

Convergence is still a notion in the networking world - just ask any CIO who's tried to integrate an IP network.

But it's a disruptive reality on the device side.

Nokia has thrown down the gauntlet to Apple in the music biz, with plans to set up its own online iTunes-style music store next year.

Anssi Vanjoki, executive vice-president of Nokia Multimedia, announced the move with these fighting words: "We want to be a global leader in mobile music experiences, and if that means operating in areas where Apple is, then so be it."

The numbers tell the story.

The Finnish vendor already outsells Apple in music devices. Among the 265 million handsets it sold last year were 40 million music-capable phones. Apple shipped about 35 million iPods.

Nokia accounted for a third of all phones sold in 2005, posting 20.8 billion euros ($26.8 billion) in sales with a gross operating margin of 17%. But the average selling price of 103 euros was down 6.4% on the previous year.

Music, along with smartphones and mobile TV, is an obvious option to lift those margins. Juniper Research predicts mobile music will be a $14 billion industry by 2011, with full track downloads - as against ringtones - going from 9% to 32% of the total.

The other half of the digital music equation is the online library, which Nokia rounded out last week with the $60 million acquisition of music store Loudeye.


Music and communications
Nokia's not the only one challenging Apple. Microsoft is promising a music player and online store called Zune. Device news site engadget.com reports the first device will be out in November.

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