Music industry hopes upgrades boost mobile sector

By Antony Bruno

DENVER (Billboard) - Perhaps no single device has had more impact on mobile music than Apple's iPhone. While only 6.7 percent of overall mobile customers use their phone to listen to music, rising to 27.9 percent for smartphone users, a full 74.1 percent of iPhone owners reported using the device as an MP3 player, according to M:Metrics.

The majority of this music, however, is transferred from the computer, rather than purchased through the phone and downloaded wirelessly. That may change this summer once Apple unveils what many expect will be a new version of the iconic device, featuring access to high-speed third-generation (3G) wireless networks.

The company has not made an official announcement, but signs point to an early June release. Apple has stopped restocking retailers with the current iPhone version, which analysts say is a sure sign that a new model is imminent. Apple's Worldwide Developers Conference is scheduled for June 9, and CEO Steve Jobs will deliver the keynote address.

Existing iPhone models connect to an older, slower wireless network but compensate with access to high-speed Wi-Fi Internet networks. Those using the iPhone to download music from iTunes, for instance, must use this Wi-Fi connection. While certainly faster than cellular networks, Wi-Fi does not offer nearly the same range of coverage.

Apple has sold more than 5 million iPhones worldwide, but many tech-savvy buyers, particularly in Europe, have been holding out for a 3G version. Upgrading the iPhone to 3G is considered crucial if Apple is to meet its stated goal of selling 10 million iPhones this year.

SMARTPHONES GET SMARTER

Even if Apple manages to reach its goal, the iPhone would still represent only about 1 percent of all mobile phones available. For the music industry, as significant as the iPhone mobile music usage figures are, the greater significance is how they inspire other device manufacturers to reach for similar levels. The company with the most to lose from the iPhone's momentum is Research in Motion, maker of the popular BlackBerry.

In the United States, RIM leads the smartphone market with a 40 percent share, but Apple is close behind at 28 percent, according to research group Canalys. Apple has begun incorporating support for Microsoft-based corporate e-mail applications into the iPhone, which is considered a direct attack on the BlackBerry.