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New Jupiter Music Device Forecast October 25, 2006

Posted by David Card in Media.
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Apple’s iPod remains the dominant music device, but closed-loop ecosystems are back, Microsoft has debuted Zune, and music phones are on the horizon. As the market moves beyond early adopters who purchase multiple devices and upgrade regularly, the music player user base will steadily increase from 37 million in 2006 to over 100 million in 2011, even while the growth rate of device sales slows. Apple shows no sign of losing significant share in the next 12-18 months.

What does that mean for digital music?

Both iPod users and paying downloaders spend more on music — in total, for CDs and digital products — than the average music buyer. Currently, most music device owners spend between $10 and $50 a year on digital downloads. That’s an encouraging figure, but even with data-use fees, it’s hardly enough to entice a phone company or sustain a pure-play digital music retailer.

And impulse, over-the-air song downloads will be an even tougher challenge for both wireless devices and music phones, due to infrastructure limits, incompatibility, pricing tensions, and user interface issues. Most US carriers are underemphasizing or ignoring altogether the necessity of enabling users to “sideload” existing music collections onto a phone, because they can’t charge for it.

Our latest MP3 player forecast. Our press release for you freeloaders.

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