Cellphone/Music Players -- Will Americans Ever Go For Them? (MOT, AAPL, VZ, SBC)

Includes: AAPL, GOOG, T, VZ

RokrMotorola's Rokr was launched to less-than-stellar sales in the US recently. While some, including Motorola execs, blamed this on poor marketing (it only holds 100 songs, but buyers thought they were getting iPod-level memory), an article in today's Wall St. Journal asks if there's a larger resistence on the part of American consumers to incorporating MP3s with their cellphones. Extracts:

So far, the cellphone-music player combination has found few fans in the U.S. Such devices first became available in the U.S. in 2003, but only 2% of cellphone subscribers own one, compared with 14% of European subscribers, according to a recent report by research firm Telephia. In addition, according to Piper Jaffray Co., Cingular Wireless's recently released and heavily promoted Rokr music phone, a joint venture with Motorola Inc. and Apple, has had slower-than-expected sales. Motorola said Tuesday it will offer iTunes on the Razr, its most popular phone model, before the end of the year...

The lackluster response is a disappointment to the wireless industry, which is counting on new services like music to sustain revenue growth rates. Verizon Wireless, a joint venture of Verizon Communications Inc. and Vodafone Group PLC, plans to launch an over-the-air music-downloading service in the 2006 first quarter. Cingular Wireless, co-owned by SBC Communications Inc. and BellSouth Corp., plans a similar service later next year...

Wireless companies believe demand for mobile music will grow because consumers will appreciate the simplicity of carrying one digital music device instead of two. But people already carry multiple digital devices, and Apple keeps shrinking the sizes of its iPods to make them more portable, notes Mike Goodman, an analyst at Yankee Group. Persuading consumers to carry one device means "trying to break an existing behavior," he adds.


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