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Mobile phone maker Sony Ericsson 
has announced plans for a music download service that will kick off by showcasing new and up-and-coming artists, and will initially work with its Walkman line of cellular handsets.
Aimed at the teen market, M-Buzz is being offered in conjunction with Sony/ATV Music Publishing and an enhanced version of its PlayNow service, which charges users to download ringtones. M-Buzz also will offer videos, artist biographies and other content.
Artists on M-Buzz will include Kish Mauve, Embassy, Dirty Perfect, Iggy, The Head Set, Bobby Kray, Anjulie, Lights and Monte*Rosa. The service is set to go live on Oct. 2.
High-End Handsets
Mobile phone makers see music capabilities as one of the ways they can keep selling expensive new, multi-featured phones despite the trend toward lower-cost phones. Towards that end, handset maker Nokia (NYSE: NOK) announced plans last month to buy digital music distributor Loudeye for US$60 million.
Sony Ericsson may have the advantage with its Walkman brand. "There are quality handsets that support 
music playing capability, but in a lot of instances owners probably aren't aware of that capability," Nitesh Patel, senior analyst, Strategy Analytics, told TechNewsWorld. "But if a user has a Walkman phone then I think it's pretty intuitive that their phone can be used for playing music because that's what the Walkman brand is for."
Sony Ericsson is hoping M-Buzz will help generate demand for the high-end Walkman phones, which currently sell from the mid $200s to the high $600s. Initially the only two Walkman phones that will be compatible with the service will be the W850 and the W950. These are scheduled to ship in the European, Asian and Latin American markets during the second half of 2006. There was no immediate word of when they would ship in the U.S.
Market Segmentation
Walkman phones accounted for 20-25 percent of Sony Ericsson's handset sales this past quarter, according to Patel. That's a substantial portion for a handset that was only introduced last year, he said.
Sony Ericsson's net revenue was up 41 percent for the second quarter and net profit was up 91 percent, with 15.7 million total phones shipped. One-quarter of those were Walkman phones; so far 10 million Walkman phones have been shipped since they debuted in early 2005. The devices have integrated MP3 players and in some cases FM radios and headsets. One model has memory that expands to 2 GB.
While both demand and technology for handsets with music capabilities are increasing, the market is also segmenting. Right now the technology is in the higher end handsets, but it will eventually be bleeding down into the low-cost handsets. That, however, may not be for three or four years.
"Certainly today at the price points that these two phones are going for, the teen market may struggle to get hold of the handsets to play the devices, but conversely if Sony Ericsson can use the content to try and attract kids into buying its product to pay the premium, then that's one of their strategies behind their phones," noted Patel.
"Devices like Sony's PSP and other multimedia gaming terminals and portable media players like the iPod have shown that if kids want something they can definitely find the resources to buy it," he said. "It's all about making the devices appealing enough so that they can compete with the likes of the iPod and people will spend the extra money on that rather than on an iPod."
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