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    HomeMobile EuropeTime to play your cards right?

    Time to play your cards right?

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    With the major handset manufacturers lining up behind their preferred storage devices, Tony Dennis asks whether extra memory can boost mobile content sales?

    The lure of selling premium content to the largely untapped market of mobile handset users is driving interest in memory cards and handset storage in general. We’ve already seen the first music album created specifically for mobile phones from Robbie Williams (EMI/Carphone Warehouse) and the first memory card movie — The Shawshank Redemption (Rok). Furthermore, both Samsung and Nokia have introduced handsets that sport mini hard disks. While this sector is already showing great potential, presently it is beset with incompatibilities.

    One of the first companies to see the advantage in selling memory cards just for mobile phones was UK-based Catalus. The company started out three years ago, and currently concentrates on putting content on MMC cards. “The MMC card was chosen because of Nokia’s dominant position in the handset sector which in turn makes it the type of card that most handsets will accept. If Nokia moves to a different format then others will follow suit,” explained David Flack, director of sales and marketing with Catalus.

    Flack claims the market currently splits in two between retail and online sales. Online purchasers are more technically savvy and tend to purchase higher capacity cards such as 256MB and 512MB whereas the typical High Street customer selects a 128MB card. “The High Street tends to be price driven,” Flack added. “Tesco [the UK retail giant] is our biggest customer, for example.” Whilst the UK is Catalus’ biggest market, it sells into the Spanish, Portuguese and Italian markets through catalogues.

    Significantly, Catalus has started to preload memory cards with content. “The intention is to raise awareness among consumers that their handset contains a removable memory card. Providing mobile content such as ring tones makes that more obvious,” Flack argued. “We will soon be putting other types of content on cards.”

    By contrast, Michael Tinker, CEO with WebTV Europe, thinks that the mini-SD card will become the favoured format and “there will be a large number of users if we address that format.” One reason why Tinker dismisses the rival MMC cards concerns Nokia’s habit of locating those cards underneath the handset’s battery. “No-one’s going to pull out the battery to insert a card. That’s ridiculous,” Tinker suggested. That’s why he thinks the market will lie with handsets where the memory card is ‘hot swappable.’ That’s where the card can be changed without powering the handset down.

    The situation is complicated by Nokia’s stance on memory cards. It’s been a staunch supporter of MMC cards but back in September 2004 it announced plans to make handsets using the rival SD format commercially available in Q3-Q4 2005, according to Timo Poikolainen, a vp for technology marketing with Nokia. The reason why it changed its mind was that — as members of the SD Association pointed out last year [2004] — SD cards can be inserted into a variety of appliances such as TV sets sold by the likes of Panasonic and Sharp. By contrast, “Nokia doesn’t really have any experience in the consumer electronics sector,” claimed SD Association member, Minoru Yoshida from Toshiba. Yet Nokia won’t abandon MMC completely. “On the contrary, MMC has certain advantages over SD, so we will continue to support it in many mobile devices,” Poikolainen said.

    To confuse matters even more, in April Nokia announced the N91 — a handset with a 4GB hard disk. There’s considerable dispute over the suitability — and even the necessity — for hard disks in mobile phones. Samsung was the first to launch a hard disk enabled smart phone back in October 2004 — the SPH-V5400 (a CDMA handset). Sceptics point out that hard disks are liable to damage when the handset is dropped. This can lead to loss of data or even disk failure. They’re noisy and vulnerable to vibration, too.

    Richard Dorman, a marketing manager with Sony Ericsson argued that consumers are accustomed to dropping their phones and won’t be aware that dropping a hard disk can cause loss of data. Which is one reason why his company chose to put a 512 MB memory card rather than a hard disk in the W800 Walkman handset. There’s also the question of handset battery life. Hard disks consume energy in order to start up (spin their internal disks). By contrast, the data held on a memory card not only consumes less power but it can also be read quicker. That means the handset’s processor does less work and therefore once again consumes less power.

    Rex Sabio, a technical specialist with card manufacturer, Sandisk, also cast doubt on the effectiveness of hard disk enabled handsets. He claims that  Samsung appears to have quietly dropped the SPH-V5400 in its native Korean market. Certainly no GSM equivalent product has been offered in Europe.

    Price advantage

    The great advantage that mini hard disks presently enjoys is on price. A 4GB drive is expected to cost handset manufacturers around $90. That’s eight times the capacity of the Walkman phone with its 512MB memory card. Plus 4GB memory cards won’t even become available until Q1 2006 according to most suppliers.

    By contrast, $90 currently buys a 1GB memory card. But then memory cards have a habit of dropping rapidly in price. As, David Flack from Catalus, observed, “As sure as eggs are eggs, the price of memory is sure to fall as soon as a higher capacity [card] becomes available.” However,  hard disks could well maintain their price advantage. Hitachi has already announced it can get 30Gb storage space onto a one inch format (suitable for mobile phones).

    Some content suppliers are also beginning to question the necessity for higher storage capacities. Jonathan Kendrick, CEO with Rok Entertainment, explained that his company can already squeeze a full length feature film onto a single 64 MB MMC card. Yet one of a memory card’s main benefits — its portability — could cause opposition from network operators. Graham Baines, md with content provider, Fonedream, argues that memory cards reach a much broader market demographic. “While all ages are happy to text into reality TV shows — content downloading doesn’t appeal to the older generation,” he says. By contrast memory cards offer ease of use and “require no understanding of WAP settings.”

    Being effectively cut out of the loop won’t appeal to network operators. However, Rok has an ingenious answer to this problem. Its videos are protected by its own DRM (Digital Rights Management) technology and unlocking the content can be achieved by reverse SMS billing. Rok can even place a whole album of music on a card and allow consumers to unlock just the one track they like. Other content providers argue that cards are addressing a different kind of music purchaser, anyway. Youngsters will be attracted to download tracks which are time critical (like Chart hits) and will therefore still be willing to download such items from an operator’s portal.
    There’s another obvious alternative to memory cards — enlarging the memory held on a SIM or USIM card. SIM cards currently offer just 1MB of memory which is insufficient for storing complete photo albums in cameraphones, for example. Plus users will have an increasing need to store their own content including items such as MMS messages, photos, video clips, MP3 files and Java games. Another alternative, increasing a handset’s embedded memory, is inflexible and presents obstacles to consumers when they upgrade handsets.

    Consequently a joint venture between M-Systems and Sandisk has created a USIM card with built-in 128MB of  Flash memory called the MegaSIM. A further partnership between M-Systems and Oberthur Card Systems has lead to the creation of the GIGAntIC (128MB) card which has already gained endorsement from Orange. The chief benefit here is that only 20 per cent of mobile phones have a memory card slot whereas 100 per cent have a SIM card slot. Plus network operators directly purchase around 90 per cent of all handsets, so supplying such cards to consumers is relatively simple.

    The biggest advantage of Flash memory enabled SIMs over cards is that the operator can own the content and services on the SIM card or USIM. Currently the amount of onboard Flash memory that can be offered varies between 16MB and 128MB with higher capacities promised. Another key attraction is end-user convenience. The data can easily be moved to a new phone in a standardised way during upgrades without losing pictures, tunes or other content.

    Conclusion

    Content providers like Fonedream predict that over the next few years the mobile content market could expand 100 times from the 3 billion Euros it was calculated to be worth in 2003 (Analysis Research figures). Such providers are completely device agnostic, loading their content onto any storage platform.

    Yet many leading industry players see the mobile operators fighting a losing battle by trying to restrict content provision to their portals or SIMs rather than memory cards. These observers point to AOL/Compuserve’s previous failed attempt to restrict content over the fixed Internet in a similar way. So retailing content on memory cards will eventually prove popular. Yet it’ll remain a restricted market until a single card format gains support from the majority of handset vendors.