Nokia To Drop Music Service As Consumers Dump Entry Level Phones

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Nokia whose sales of phones are struggling as consumers replace entry level phones with Smartphones, is set to drop their free music downloads service in Australia according to sources.

Nokia will continue to sell phones with 12-month subscription to free music downloads in China, India and Indonesia and with 6-month subscriptions in Brazil, Turkey and South Africa.

New research shows that Nokia who are struggling with their N8 Smartphone in Australia is set to be hit hard in 2011 as consumers move to Android based Smartphones Vs Sybian based devices.

Phone manufacturers in China and Taiwan claim that demand for entry- to mid-level feature phones and even multimedia models has been sliding at a rapid pace in the global market recently, pushing down the ASP (average selling price) of handsets and discouraging handset makers from building up IC inventories.
 according to sources at Taiwan’s IC design houses.

According to Digitimes IC vendors originally believed that the focus on sales of smartphones and high-end handsets during the Christmas holiday season and off-season effects in other countries and other emerging markets were the main reasons for the weak performance of the entry- and mid-level feature phones.

However, IC-design houses have now found that the current market situation is worse than thought as vendors are still reluctant to manufacture entry level phones where Nokia currently dominate.

The production value of chips for entry- and mid-level handsets is falling sharply now that OEM makers and brand handset vendors will not build up inventories until they have received orders, the sources indicated.

The fall in demand for entry level phones and the dropping of their free music service is set to have an impact say analysts at DigiTimes.

Nokia unveiled their music service in late 2008 in Britain and then later in Australia.

 

 

According to a Reuters story  the reason behind the lackluster performance include use of older supporting handsets for the product at its launch, digital rights management (DRM) software that tied downloaded music to the device and a difficult to understand product offering.

“The markets clearly want a DRM-free music service,” said a spokesman for Nokia, adding the firm continues to offer DRM-free tracks through its music store in 38 countries.

DRM software limits sharing of songs between different devices.

Consumers with the free music bundle in the 27 countries where the sale of the service have stopped will continue to have access until their subscriptions run out.

 

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