iPods sold at a brisk pace over the 2006 holiday season, which would seem to end the recent iPod sales slump. However, Tomi Ahonen aims to blow away any speculation that the iPod is still holding on to the music player throne. The barrage of evidence from Asian, European and UK studies he presents is pretty compelling. In a nutshell, he says that while iPod sales grew 45% that music phone growth has boomed to 243%, which means that though iPod sales are growing, the iPod market share has been long overtaken by music phones and is shrinking by comparison. (SonyEricsson alone shipped 60 million musicphones compared to Apple’s 46 million iPods).

Now, you’re thinking, “but just because people own a music-capable phone, a so called music phone, do people actually use them for listening/buying music?” Well, Ahonen says yes, and backs it up with some interesting European and Asian studies. The UK study he sites says that 80% of musicphone owners are satisfied or very satisfied with them. Thus Ahonen’s argument goes: the iPod is so totally over.

He’s quick to dismiss the iPod and usher in the music phone era, but I don’t think he’s really discussing the US side of the picture…
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“Cool, no hard hard keys!” versus “Are you kidding? No keyboard?”

First, I’m not deluded enough to think the iPhone is the holy grail of devices. They have a lot in their favor in the US, but they don’t have a smooth ride like they did with the iPod.

If you read the US blogs and tech papers, the iPhone is best thing since the personal modem. Glowing headlines like Apple Waves its Wand at the Phone, where David Pogue equates Apple to a fairy godmother, to “It’s Expected, but it’s Stunning” from the SF Chronicle.

But if you read what the Europeans and Asians are saying, this is cool, but not worth all the hype. Russell Buckley even says it’s just a music phone. Then there’s the LA Times story: “In Japan, Barely a Ripple”, which is saying that all these features (plus mobile payments) have been available in Japan for 2+ years already. (But come on, they haven’t thrown out cumbersome soft keys in exchange for full-face, multi-touch screens, have they?)

So, what is it? Is it just a music phone?
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The following was my response since I couldn’t let Jared have all the fun. This question was asked a few days ago on the Adaptive Path blog.

It’s a broad question, but I think it’s really about whether Apple can launch a successful music phone. The iPod is the perfect music player and people are cheering Apple in hopes to get the perfect phone.

The current industry model of carriers and OEMs partnering to create a compelling music phone has had pretty limited success — for example, even though the Motorola ROKR partnered with Cingular to bring Apple’s iTunes and was marketed in unprecedented ways it was what basically a flop by Motorola’s standards because it failed on it’s primary promise to be a music phone. (Engadget reported that 1 in 6 ROKRs got returned). That carrier/OEM dynamic is possibly what’s at stake if Apple succeeds.

Consider this: with ringtone sales on the decline (which is a first in the US), carriers are the ones who stand to lose on the R&D spent developing a music phone offering (since they won’t get paid from data and music sales if everybody’s side-loading their music ala the iPod method). It’s the handset manufacturers (OEMs) that serve the carriers, and these OEMs are the ones who stand to gain from a hot handset that could deliver a compelling music experience.
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