Hard Drives in Cellular Handsets Could Spell the Beginning of the End for Portable MP3 Players, Says ABI Research

Business Wire, May 4, 2006

OYSTER BAY, N.Y. -- Mobile phones offering generous data storage, enabled by small hard drives with ever-greater capacities, may soon allow the cellular handset to rival or surpass the portable MP3 player as the mass market mobile music device of choice.

Ten years ago, who would have imagined a hard drive in a cellular handset? But as the mobile phone becomes a multimedia entertainment and computing device, it has incorporated high-capacity storage similar to that of a PC. Samsung's SPH-V5400 was one of the first handsets to include hard drive technology, offering 1.5 GB of storage back in 2004; since then we have seen Nokia's N91 with 4 GB, and most recently Samsung's SGH-i310 with 8 GB.

"As the cellular handset becomes the one device that the world carries, the standalone MP3 player may well be left behind," says Alan Varghese, ABI Research's principal analyst of wireless semiconductor research. "What's important to many users is having one device that handles mobile music as well as the other functions--phone calls, digital photography, email, web browsing--now performed by mobile phones.

At present, portable MP3 players still lead in their memory capabilities: high-end devices can hold as much as 30 or 60 GB. But Varghese believes there is a point of diminishing returns beyond which a user doesn't care whether the device can store 2000 songs or 7500. MP3 player vendors may try to defend themselves by offering even greater disk space, but over time they may still lose market share.

Mobile operators are already setting up iTunes-like stores of their own to serve a public equipped with MP3-capable handsets. Additionally, given that most MP3 players are stocked primarily with songs from consumers' own music collections, rather than only those downloaded from an online music store, high-capacity MP3 handsets provide users with the flexibility of listening to those tracks on a device that's almost always with them.

The latest update to ABI Research's subscription Wireless Semiconductors Research Service explores hard drives in cellular handsets as well as many other topics. This Service includes a variety of research reports, user-searchable forecast and industry databases, periodic market updates, ABI Insights and analyst inquiry time. It examines the technology and the markets for cellphone ICs such as the power amplifier, RF transceiver, baseband, applications processor, power management, camera module and newer modules such as Wi-Fi and GPS. Finally, it focuses on the deployment of 3G cellular and HSDPA worldwide.

Founded in 1990 and headquartered in New York, ABI Research maintains global operations that support annual research programs, intelligence services and market reports in wireless, automotive, semiconductors, broadband, and energy. For more information please visit www.abiresearch.com, or call 1.516.624.2500.