Mark Mulligan[Posted by Mark Mulligan]

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The UK’s Carphone Warehouse have just reduced the retail price of the Nokia Comes With Music 5310 handset by £45 to just over £82.  For a consumer that means unlimited music that they get to own permanently for about 22 pence a day.  That is undeniably good value.  However the fact that CPW are having to discount the offering to such a degree just a few months since launch suggests that consumers just aren’t getting sold on the idea. 

Even though CPW’s need to clear the decks ahead of the touch-screen 5800 (the successor CWM device) plays a role, it appears that CWM hasn’t been a ‘slam dunk’ in its thus far short life.  Forrester actually predicted that CWM would have a slow start (clients can read the report here), not because the value proposition isn’t compelling (it is) but because it’s a new and alien concept to many.  Consumer education will take time and will ultimately depend upon organic, virally driven growth e.g. kids seeing their friends with the offering and realizing the value.   

But we also explained that Nokia’s channel partner strategy will be a key factor.  The bottom line is that Nokia hasn’t managed, yet, to get leading operators on board, largely because CWM is inherently competitive with extant operator music offerings.

Nokia will need to navigate through the channel partners’ concerns, and not just wait / hope for CWM to become so popular that operators simply couldn’t not take the devices.

CWM, and offerings like it, represent a really important strand of the future of the music industry because they focus on monetizing consumption, but if Nokia doesn’t adequately address the value chain issues, CWM will ultimately fail to fulfill its great, long term potential.

Forrester will be publishing its latest European music forecasts soon.  Watch this space for more details.