Market Insight

Nokia, BlackBerry & Samsung attempt to differentiate their smartphones with new music services

February 01, 2013

Jack Kent Jack Kent Director, Media and Advertising

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Mobile handset makers Samsung, Nokia and BlackBerry update their music strategy:

  • Nokia has introduced Nokia Music+, a paid tier of its music service launched at the end of 2011. The basic service, available free to all Nokia Lumia handset owners in 29 countries, offers curated and interactive radio with a maximum of 6 song skips an hour and offline caching of up to four 'stations'. For $3.99/euro 3.99/GBP 3.99 the new Nokia Music+ tier will provide unlimited skips and caching, higher quality audio,song lyrics, and cross-platform access via an HTML5 browser-based service.
  • BlackBerry (following the smartphone manufacturer's recent re-brand from RIM) has consolidated its entertainment offerings into the newly branded BlackBerry World store (replacing the old BlackBerry App World), which now offers music (powered by 7Digital), TV shows and movies (powered by Rovi). The store launched in US, UK and Canada; BlackBerry plans to expand the store's international footprint in the future.
  • Samsung plans to expand its Music Hub subscription service to other devices and platforms. Launched in summer of 2012 on the back of Samsung's acquisition of mSpot and to coincide with the 2012 flagship handset the Galaxy S3, the existing service offers an on-demand access subscription, interactive radio and a recommendation service. It also allows users to integrate their existing music library with that of the service. In the US, the offer is priced at $9.99. The service is also available in Europe.

Both Samsung and Nokia risk delivering undifferentiated smartphones because both rely on smartphone operating systems that other handset makers use too. For example, Samsung relies on Google's Android for most of its smartphones which is also offered by Sony, LG, HTC, ZTE, and Motorola amongst others. Similarly, Nokia has chosen to back Microsoft Windows Phone exclusively for its smartphones but Huawei, Samsung and HTC also offer Windows Phone smartphone.

New music services will not be sufficient to solve this problem. Both handset manufacturers may struggle to maintain the identity of their devices through own-brand media offerings in the face of incumbent OS-specific services such as Google Play or Microsoft's Xbox Music. Instead, launching native music services is best used as a way to boost consumer engagement with handset brands and to encourage loyalty as consumers move through the upgrade cycle. Launching such music services to drive customer acquisition and new handset sales will be less effective because of the wide range of existing music brands available on all of the leading smartphones.

For BlackBerry the challenge is different. There are few third party music offerings available on the brand new BlackBerry 10 OS. Therefore, the company needed to offer its own rich music and video store, because otherwise BlackBerry 10 smartphones would not be close to matching the media offerings of their Android, iPhone and Windows Phone rivals. In essence, the music store is a hygiene factor for BlackBerry. 

IHS Screen Digest believes that all three handset manufacturers will find it hard to complete with the plethora of competing music access offers available on Samsung and Nokia smartphones. Samsung has hinted that the initial uptake for its service has been below its expectations; availability on more devices would bring the Music Hub's feature set closer to that offered by competition at the same price point.

Nokia's Music+ will have to compete with not only Spotify, Deezer, Rdio, Pandora, Slacker and WiMP (to name a few), but also Microsoft's music subscription service Xbox Music, which  is pre-installed on Windows Phone 8 handsets (including Nokia's Lumia models). Nokia hopes that its lower price point will attract consumers who find the cross-platform tiers of the competing services too expensive. However, with relatively few additional features on top of its free Nokia Music offer, the Music+ offer will likely provide too little incentive for those price-sensitive consumers to pay any extra at all. As such, Nokia's primary music strategy should remain focused on its free music offer, which provides a level of differentiation in both the Windows Phone and wider smartphone ecosystem. In addition, this approach will help it attract and retain customers with its easy to use, no registration and advert-free service.

The new services from Samsung and BlackBerry are a boost for UK-based digital music company 7Digital which is a partner for both services. The presence of 7Digital illustrates the need for OEMs to look to outside parties even as they try to promote their own-brand services.

A number of smartphone OEMs have looked to provide their own rich content services with varying degrees of success: Sony is more tightly integrating its content services into its smartphone proposition; following a patchy record of investment in content companies, HTC has scaled back its own media plans; Samsung's content offers include video, games and apps alongside Music Hub.

Providing a range of quality content services, whether built in-house or from third-parties, is vital to a smartphone platform's success. But, outside Apple and iTunes, it has yet to be proven that an OEM-provided service gives a device manufacturer a significant edge over a prolonged period in multiple markets. For Nokia and BlackBerry, their own-brand services may help fill the gaps in the smaller Windows Phone and BlackBerry 10 ecosystems as they look to claw back market share from Apple and Google. The potential for Samsung's service to work across other devices will help it match the features provided by other players and retain a role in the Android content ecosystem outside Google. But so far none of the services offered by smartphone OEMs offers enough differentiation to greatly disrupt the market.

IHS provides more detailed analysis of smartphone OEM content strategies in its recent report Smartphone OEM Content Strategy: A Necessary Evil.

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