Cellphones may not be the iPod killer despite Gates' prediction

Bill Gates recently gave warning for Apple Computer that its success will unlikely continue in the long run despite how well they are doing now, much like the Macintosh in its Apple's early days.  Apparently he predicts what will likely kill the iPod off is mobile phones (cellphones).  Currently most mobile phone handsets come with cameras and the next widespread feature will be music playback, especially as most of the major mobile phone manufacturers plan on releasing a various handsets that feature a built in audio player later this year.

However, while mobile handsets with built in music players may take off, Apple's iPod series may still keep its lead with many advantages over music enabled handsets, especially when it comes down to iPod's well known brand name and ease of use.  With mobile phones, consumers usually change their phone when every time they change contract, when the battery gives up or after about a year to upgrade to the latest model.  Ease of use comes into play due to how the iPod is designed to be simple such as easily navigate through thousands of songs.  As mobiles are designed for phone calls, it is trickier to offer the same simplicity for playing and navigating through music on a mobile.

Finally, PC/MAC connectivity will be another issue.  With the iPod, the user can easily transfer music such as CDs from their computer to their player.  However as most music content providers for mobiles will deliver purchased music directly to the consumer's mobile, there are questions about the ability to transfer music to the PC (including burning to CD), restoring lost music and transferring to another phone if the user replaces their handset.   As mobile operators will likely require their customers to purchase music directly from their mobile instead of allowing them to use their own music, this will likely put off many consumers from using this feature.

Apple's iPod is likely to survive the onslaught of MP3-enabled mobile phones because it is "the tech world's best consumer brand".

Competing with the iPod's design and function will be a "big challenge" for the mobile phone operators, states the The Wall Street Journal.

"Design wise, many mobile-phones are a lot like icebergs: one function obvious, the rest submerged and navigable only by the brave. It's a big leap of faith to think handset makers can approach the iPod's ease of use with a jack-of-all-trades device. Apple's competitors haven't managed it with their standalone devices, and they've had years to try," write reporters Tim Hanrahan and Jason Fry.

The report also notes: "Mobile-phones command little brand loyalty, with users switching willy-nilly as service agreements end and phones die."

There are also questions about how music will be transferred to the mobile-phone. "Could you transfer music to a PC? Back it up on a CD-ROM? Restore it if the phone is lost? Reclaim it if you get a new phone?" asks the report, suggesting that consumers will be sceptical and that it is likely that they will prefer to transfer songs from their PC rather than download from the mobile-phone networks, as no doubt the carriers hope they will do.

Some more info on this WSJ (Subscription).

In my opinion, if a consumer is prevented from transferring their own music to their mobile handset, especially from purchased CDs or downloads, this will be the main factor in preventing music enabled handsets from becoming a success.  However, becoming the market share for digital music players is likely, but whether consumers use their phones for the music capability or simply buy the phones for their other features will be something else to consider.  For example, while the majority of mobile phones come with a mobile web browsing capability, only a small percentage of consumers actually use this feature.

Finally, integerating a music player into a mobile phone may lead to other issues, such as sending/receiving SMS text messages and phone calls while listening to music and what happens once the battery runs low :p

Source: Macworld UK

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