Flash MP3 player market gets threatened by mobile phones

There was a time when portable music was basically where one carried a cassette player along with a couple of tapes such as home compilations.  Later the portable CD player gradually took over until a few years ago when the iPod and MP3 players became the main things consumers carry music on.  As mobile phones are becoming more sophisticated, with some integrating an MP3 player as well as the ability to download music via 3G, it looks like they will start seriously competing with the MP3 player market. 

Despite the iPod's higher HDD pricing compared with flash based MP3 players, most consumers are happy paying the extra for much greater capacity considering how big the iPod market is.  So for the foreseeable future, iPod sales will likely be unaffected, since most music player based mobile phones have a very limited storage capacity.  However the main manufacturers that will suffer will be those offering budget MP3 players, since consumers are unlikely going to buy a budget MP3 player if their mobile phone already offers this same capability.   

As mobile phone's music player functionality and memory continues to improve with each new mobile hitting the market, Apple is keeping a close eye on this.  Apple already has partnered with Motorola with some iTunes enabled phones available on the market; however the current series have a 100 song restriction.  The next step will likely be an Apple iPod phone.

MP3 players from the cheapest cigarette lighter-size all the way up to the iPod Nano offer a dedicated music device that can store and manage our favourite tracks. But while these gadgets are very popular, they face a significant challenge in the form of the mobile phone. Over the last five years mobile bandwidth and handset design have made it possible to download music files and store them on mobiles. 3G networks and next generation handsets are raising the bar in terms of memory size and functionality on a regular basis posing a real threat to the low end of the MP3 market. Some handsets can already match the performance of the cheaper MP3 players, and while the latest iPod is quite safe for the time being, other manufacturers might soon start to feel the pinch.

If Apple decides to launch their own branded iPod phone,
it could potentially be a good competitor to other handsets, at least for consumers looking for a phone with a built in music player.  On the other hand, as the features of mobile phones change so frequently with handsets often becoming obsolete within a year of launching, Apple would have to keep up with this also, even though Apple's policy has been for simplicity and doing away with unnecessary features.  Even though the iPod may sell very well as a dedicated portable music player, there is a good chance that the 'iPod' brand is not going to make their phones sell as easily if it lacks the features that competing mobile phones have.

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Source: AVinfo