Music On Mobile Phones Gets Tasty
When Verizon first launched their VCast wireless music store, we had some critical observations on the expensive pricing. How would VZW be successful charging $2 a download in a market Apple had defined as $1 a shot? While acknowledging that there may be a mobility premium, we felt that they had over-estimated it, and also were proposing music on phones that didn’t measure up to the iPod experience. Even worse were the initial handsets from the telcos (Uhh, ROKR anyone?). But there is value in combining a music player into something that we already carry. A product/service that offered a good music player, integrated in a phone, with reasonable prices for music, and that worked as a integrated system would be a runaway hit, and a threat to Apple (unless, of course, it came from Apple).
Enter the “Chocolate Phone” from LG, now being sold by Verizon Wireless. The Chocolate model has been a huge success in Asia for a while, and sold 1.2 million units in the second quarter for LG, with sales expected to double in Q3. If you remember your SATs, Chocolate is to LG as
ROKR RAZR is to Motorola. VZW is pricing the phone at a reachable $150 – that’s expensive for mass market phone prices, but not a bad deal for a good MP3 player. VZW is also offering a new pricing structure for VCast music which includes elimination of the required $15/mo EV-DO package, the ability to play MP3s as well as VCast downloads, and up to 2GB removable memory. I believe the first credible volley has been shot across the bow of Apple. Your move, Mr. Jobs.
Update: Looking deeper into the VZW website, I’ve learned that the drop in charges is not as good as VZW would have us believe. Previously, VZW required the purchase of the $15/mo VPak for unlimited browsing and access to the VCast store, but now if you don’t have a VPak, all browsing, previewing, purchasing, music alerts, and downloading will be charged “airtime” fees. That’s like a retail store charging you by the minute just for being in the store. Then you still have to pay twice the going rate for the songs. The LG device is great, but the VCast pricing still needs some work.