[Updated May 12, 2005] — Consumer interest in multimedia-enabled mobile handsets runs low, warns an In-Stat survey of “early adopters.” The survey found only about 10 percent or respondents enthusiastic about phones that play music or TV. The report validates the mid-tier phone market strategies of several Linux phone software and hardware vendors.

In-stat analyst Neil Strother says that phone makers and carriers are investing in the development of devices and services that revolve around music, as well as broadcast and VOD (video on demand) television. However, he says In-Stat's early adopter survey shows that consumers are not yet widely aware of such efforts, or have not yet seen offerings that appeal. “We're still in the press release phase, the hype stage.” Strother said. “Consumer interest is low mainly because the devices are not there.”

Earlier this year, Motorola brought out a second-generation multimedia smartphone with music-playing capabilities, the E680i. Marketed mainly in China, the E680i is a tri-band GSM/GPRS that works with some US GSM networks, including Cingular's. However, says Strother, “Cingular doesn't have its music model figured out yet. Carriers are looking at how to do this, whether its going to be their own store, or [based on] partnering with Loudeye or Melodio or someone else. They're stepping gingerly towards it.”

In-Stat's report suggests that multimedia phones may follow that same path as smartphones, which are only now gaining market traction after several of “hits and misses.”

One crucial determinant for the success of multimedia phones will be establishing enough volume to bring pricing down into the mid-market or “feature-phone” range — similar to what happened with camera phones, Strother said. “Camera phones boomed in Japan, and that created the volume to drive costs down, and made it easy for phone makers to slap in a phone module. Now, virtually every consumer wants [a camera phone] — although usage levels have not been what carriers had hoped for,” Strother said.

Focus on the mid-market

When Linux first appeared in mobile phones, it was clearly positioned as a high-end OS for smartphones — devices characterized by user file storage, user-installed applications, and PC networking capabilities. However, Linux phone software and chip vendors have since shifted their focus toward multimedia-enabled mid-tier feature phones, including camera-phones, Web-enabled phones, gaming phones, and phones with basic PIM (personal information management) features.

Microsoft, meanwhile, has remained focused on the higher-end PC-compatible smartphone, announcing its Windows Mobile 5.0 platform this week at its high-profile Microsoft and Embedded Developers Conference (MEDC) this week in Las Vegas. That isn't to say that Windows CE can't scale down into featurephone-level hardware — Microsoft partner Intrinsyc offers a feature-phone extension for WinCE.

Trolltech was the first Linux phone software vendor to target the feature-phone market, saying in October of 2003 that Linux could bring PDA-like applications such as media players to feature-phone-level hardware. In February of this year, PDA software giant PalmSource began marketing a complete Linux-based feature-phone OS and stack, while offering only an application stack for smartphones. MontaVista, which supplied the OS used in Motorola's Linux smartphones, targeted its own first phone-specific Linux distribution squarely at feature-phones, saying when it launched Mobilinux last month that it thought most users want “a phone that's a phone, rather than a PDA.”

Bringing prices down, in order to achieve higher volumes, is also a focus for companies making mobile phone chipsets that support Linux. Second-largest phone chipmaker Qualcomm announced last week that it would support Linux — running alongside its proprietary BREW phone OS under hardware virtualization software — on a single-chipset hardware design aimed at bringing multimedia capabilities to mid-market phones.

In-Stat conclusions

In-Stat analyst Neil Strother said, “Cell phone manufacturers, carriers, and content providers face serious challenges in convincing [the end-users surveyed] of the benefits of music- or video-centric phones. The survey did reveal some positives from respondents, however, including a willingness to spend a modest amount more for music or TV phones, and for additional storage.”

Strothers adds, “Personally, I'd be happy to pay $0.99 a song, or maybe $1.50 a song [to download music onto a cell phone]. Whoever can figure out a device that has enough storage, and develop the service, the ecosystem, and the business model is going to be a winner. But it's too early to tell [who that will be]. That isn't to say it won't happen.”

Availability

The findings discussed above are part of In-Stat's report, “Warning: early-adopters have lukewarm response to multimedia handsets,” which discuses TV on cell phones, storage capacity for music and video files, payment schemes, and video content preferences. The report includes worldwide shipment forecasts, discussion of some of the latest handsets, and details on the looming battle between DVB-H proponents and Qualcomm's MediaFLO,” In-Stat says.

The report is available now, priced at $2,995. More information is available here.

 
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