By Nathan Layne
HONG KONG (Reuters) - Perhaps the biggest threat to Apple Computer Inc.'s (AAPL.O: Quote, Profile, Research, Stock Buzz) iPod and the portable music player industry is a device already nestling in a billion pockets: the mobile phone.
Sales of cellphones that can store and play back music are climbing, raising hopes among handset producers like Sony Ericsson (6758.T: Quote, Profile, Research, Stock Buzz) (ERICb.ST: Quote, Profile, Research, Stock Buzz) and Motorola Inc. (MOT.N: Quote, Profile, Research, Stock Buzz) that it will be their next growth driver.
Music phones may never kill off the market for the stand-alone music players of Apple, Sony, Samsung Electronics Co. Ltd. (005930.KS: Quote, Profile, Research, Stock Buzz), Reigncom Ltd. (060570.KQ: Quote, Profile, Research, Stock Buzz) and others, but they could dent the market's potential.
"You have the ability to talk, take pictures and listen to music in one device. The convenience factor is big," said Simon Leung, senior vice president of Motorola Asia, at the Reuters Global Technology, Media and Telecoms Summit in Hong Kong.
Simpler music devices with flash memory chips that store up to a thousand songs are the most vulnerable, analysts say.
"The music phone is not going to significantly impact the high-end, high-capacity hard disk market but it will certainly have a major impact on the low-end flash market," said Peter King of Strategy Analytics.
King estimates sales of phones equipped with MP3 music players will balloon to 796 million in 2010, accounting for three-quarters of all handsets sold, from 94 million this year.
Over the same period, the market for stand-alone digital music players, should triple to 176 million units from 58 million, which while still strong, would be slower than the break-neck expansion of recent years. Continued...
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