Markets: PSP, iPod and the Mobile Phone at Simon’s Blog

Markets: PSP, iPod and the Mobile Phone

Many people haven’t yet realised that mobile phones are big news when it comes to portable video, photos, games, messaging and playing MP3s. This is especially true in the US where, even amongst the usually clued-in geek crowd, cries of, “People just want to make calls on their phones!” on popular web-sites are not uncommon. “Who the hell wants to use their phone for music/video/games?” they say; continuing with their certain knowledge that, “The market has (already) spoken” on this topic. Well, yes. The market has spoken. And it’s given a resounding thumbs-down to devices like the PSP and the iPod; at least compared to mobile phones.

The fact is that many people in wealthy countries carry a mobile phone with them everywhere they go. And almost nobody carries a PSP or an iPod. The figure below shows the relative rates of sales of these devices. The PSP and the iPod â€“ which are widely held to be super-popular, super-desirable devices â€“ are simply nowhere compared to mobile phones.

Relative market sizes for the PSP, iPod and the mobile phone

In the future, content is going to gravitate to where the volume is. Today, the markets for these devices â€“ phones, PSPs and iPods â€“ are all increasing. But how about tomorrow? The days of portable devices that aren’t mobile phones are looking numbered to meâ€¦

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Comments

Joseph Scott wrote:

I’d agree that there are likely many more mobile phones sold in a year than iPods. What I’d wonder about though is the feature sets of those phones. There are a lot phones out that there that don’t really do that much. The phones that do have cool features and storage capabilities often cost $300 or more. So I’d be curious to see a version of this graph where the mobile phone column was limited to more alike devices (plays MP3s, larger storage support, etc). As it stands right now the graph isn’t even trying to be apples to apples.

Posted 29 Oct 2005 at 5:11 am ¶
simon wrote:

You make a valid point, Joseph; although it’s difficult to know how to break the numbers down. Let’s take MP3 playing capabilities: I’d estimate that today, perhaps 20-30% of new handsets have music playing capability. However, you need to look at the trends. The major phone companies are expecting that up to 80% of new models they make from now will have music players built in (just as most new phones currently have cameras built in). So, rather quickly, we’re going to reach a situation where there will tens times as many MP3 phones in the market as there are iPods. If you look at games playing capabilities, then we have a few million PSPs in the market, compared to over 700 million Java-enabled mobile handsets in the market.

Posted 29 Oct 2005 at 3:07 pm ¶
Joseph Scott wrote:

I suspect there is another layer that is still making this a difficult comparison. Lets take the MP3 capability as a example. Just because a phone has the ability to play MP3s doesn’t neccessarily make it much competition for an iPod. If the phone is limited to 32 meg of memory you won’t be getting too many songs on there. Even the phone supports removable media, they still won’t be able to come even close to hard drive based iPods.

As for games, well I doubt there are many Java based mobile phone cames that could compare with PSP titled games. Plus the PSP has builtin wifi, for internet gaming with out a per minute connection fee.

I should say that I don’t wholly disagree with folks like you and Russell Beattie about mobile becoming a huge market. I don’t buy the idea that the PCs of the world are going to dry up in the wake of the all powerful mobile market though. There are still far too many limitations for mobile devices, not the least of which is the seemingly bizarre decisions made by mobile companies, especially in the US.

The limitations for developing apps for these devices combined with an expensive pricing model for connectivity still places these as second class citizens in the online world.

Don’t even get my started on the problems with syncing these things.

Posted 30 Oct 2005 at 8:12 am ¶
simon wrote:

I agree with you that 32MB storage is not enough for a music playing phone. However, the price of removable memory cards continues to fall: a 1GB memory card for a mobile phone is currently just a few tens of dollars. Phone manufactuers are starting to build hard-drives into phones. So, I’m not sure I buy the argument that storage is going to be a competitive advantage for the iPod in the coming year or two.

As for games, today the market for Java games on mobile phones is about three times the size the market for PSP games in terms of revenues (annual PSP game revenues are around $0.5B, compared to around $1.5B for mobile Java games). Now, it may be that the rate of growth of PSP games sales is much faster than the rate of growth of Java games sales: I suspect it is. But, there’s seems little doubt that the market for Java games on mobiles is evolving into a multi-billion dollar market as the capabilities of the devices increases.

And if you look at numbers of games shipped, the story is even more different. Worldwide, about 12 million PSP games have been sold so far in total since the console was launched. This compares to an estimated 20 million Java games for mobile phones being downloaded *every month*.

The bottom line is: the market says that *many* more people are interested in Java games on mobile phones, than are interested in PSP games.

I agree with you about PCs continuing to be strong, and that currently, mobile phones are very much second-class devices on the network. But not many people would bet against available mobile bandwidth increasing and becoming much cheaper over time.

Posted 30 Oct 2005 at 5:09 pm ¶

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