Cingular does PlaysForSure despite iPhone rumors (and bollards!)

Listen to IT Blogwatch, in which Cingular jumps into the music-on-cellphone fray. Not to mention why you should always pay attention to road signs in the UK...

Paul Julius Reuter writes:

Cingular Wireless is expected to team up with online music services, including Napster, Yahoo Music and eMusic, to launch a music service on its cell phone network ... The move by Cingular, which is jointly owned by AT&T Inc. and BellSouth Corp., may set the stage for a battle with Apple Computer Inc.'s iPod. The service would work on cell phones that double as music players. Cingular's service initially will support transferring music from PCs to cell phones using a cable. Users will be able to transfer music acquired from subscription services like Napster to Go, Yahoo's Y Music Unlimited or eMusic ... They will also be able to transfer music that has been downloaded in MP3 and Windows Media formats or from CDs.

Cellular operators have been frantically offering media services in the last couple of years in hopes of offsetting declining voice revenues. So far, they've been pretty clueless about what their subscribers want, but Cingular seems to have figured out one important piece of the puzzle, at least if stories about its forthcoming music service are true. Its solution, at least in part, is to embrace Microsoft in that company's ongoing battle with Apple over mobile media. It may also cozy up to Apple, but that remains to be seen.

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Sprint's and Verizon Wireless have their own proprietary music services, which are expensive and don't offer nearly the selection of either iTunes or the subscription services ... There also are persistent rumors that Apple is developing an "iPhone" that would work with iTunes and that Cingular also will adopt that phone and service. It would make sense for Cingular to adopt both approaches.

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Sprint and Verizon are trying to have their cake and eat it by trying to sell both data access to music lovers and the music as well. So far, their approach isn't working -- despite their protests, those proprietary services are going nowhere fast. Cingular, however, isn't being as greedy and, as a result, is likely to sell a whole lot more data service than its competitors. And, in the cellular business, data service, and not music, is what the cellcos are really about.

Eric Bangeman has more:

The download service will reportedly use an interface similar to that used for purchasing ringtones, and will allow users to quickly locate songs on Napster's service via "Music ID." Music ID works by allowing subscribers to hold a phone up to a speaker. If the song played on the speaker is available on Napster, a single click will let the user send the song to his or her PC to be loaded on the phone later.

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Although it has been slow to take off, the cell phone/music business is definitely picking up steam. Nokia plans to sell 80 million music-playing phones by year end, with Sony Ericsson reporting sales of 15 million Walkman phones over the last 14 months. So far, it appears that most music phone owners are using their computers to get music on to their phones, with Sprint Nextel reporting just over 8 million downloads at $2.50 each over the past year.

Cingular's decision to enter the music download fray may spell the end of its relationship with Apple. Cingular is currently the sole outlet for Motorola's iTunes phones. One of the longest-running rumors in the Apple sphere suggests that Apple will launch its own cellular service, probably as a MVNO (mobile virtual network operator) using Sprint Nextel's network.

Douglas McIntyre takes stock:

Cingular can add itself to a long line of companies that want a piece of the market that is dominated by Apple, Computer Inc.'s (NASDAQ:AAPL) 60 million iPods. The largest threat may come from the new Microsoft Corp.'s (NASDAQ:MSFT) Zune, simply because the big software company can put almost unlimited marketing money behind the product.

Oddly, Cingular also has 60 million subscribers. Obviously almost none of them use the company's phones for music downloads, but Cingular does have the option of offering downloads to both the phone and to AT&T's new home entertainment set-top boxes. A "double play" as it were.

Apple may keep its strangle-hold on the music download market, but it has never been faced by such a large number of well-heeled competitors. If Apple wants to keep its share, it may come at the price of reduced fees for downloads. If so, it is margins that may suffer instead of iPod count.

George Scriban scribbled this:

This reads, for now, like not much more than an extra bit of distribution for Napster and Yahoo! Music; they're adding a few devices that Cingular resells to their list of supported players. That alone is not a huge win for the subscription services. Their larger problem is convincing people of the value of the model, especially when it precludes using an iPod as your player. Part of the problem with that messaging is the platform, Windows Media, and PlaysForSure, which has acquired a reputation for not being quite such a sure thing. Between momentum and bad press, the Apple triad of iPod, iTunes, and iTunes Store has rolled over the Windows Media and PlaysForSure ecosystem to such an extent that even Microsoft's abandoned it with Zune.

Leaving that aside, does this point to a carrier- and phone-maker threat to Apple's dominance of digital music? After all, Sprint has sold 8 million tracks in the last 12 months, and Nokia plans to put 80 million music-capable phones in customers' hands in the next year. Well, Apple sold 1MM songs in its first five days of existence (which, incidentally, predates the iPod and the Windows version of iTunes). Since then, they've sold over 1.5BB songs and 45MM videos. The epicenter of digital music isn't shifting to Kansas City (or Helsinki) any time soon.The mainstream of the portable (if not connected portable, or mobile) music business is Apple ... I see Apple as being able to bide their time.

But Carlo Longino isn't so sure:

The whole mobile-phone-vs.-iPod battle has been around for a while, and it seems inevitable that standalone music players will eventually be rendered irrelevant by mobile phones with music functionality. Such phones already outsell iPods and other MP3 players by a wide margin; the challenge for handset manufacturers and mobile operators is to get people to use them. This won't happen at first by trying to sell them overpriced downloads through the handset: Apple has continually ignored the calls for it to add some sort of similar functionality to the iPod, and it doesn't appear to be hurting sales too badly.