Mobile phone groups take on iPhone
The mobile phone industry will on Thursday launch a challenge to Apple's iPhone, by unveiling a low-cost, flat-rate music service that can be accessed on most handsets in Europe and Asia. — The MusicStation service has backing from the handset manufacturers Nokia …
Context & Ripple Effects
The handset industry has been converging on an answer to Apple since the iPhone was unveiled: a week ago the WSJ catalogued rivals' responses, and this launch turns that into a coordinated counterstrike. MusicStation, backed by Nokia and other handset manufacturers, offers a low-cost flat-rate music subscription usable on most handsets across Europe and Asia — directly attacking the per-track model Apple built with iTunes, which Sprint had already tried to chip at with its own challenge to iTunes back in 2005.
The strategic logic is distribution: where Apple ties music to one premium device, the manufacturers can push a single service through their entire combined handset base, as part of the broader wave of rivals answering the iPhone before it reaches shelves.
First-order effects
- Apple's iPhone launches into a market where European and Asian users already have a flat-rate music option on most handsets, weakening the device's music differentiation outside the US.
- Nokia and the backing handset makers turn their installed bases into a subscription funnel, competing on breadth of compatible phones rather than on any single flagship.
Second-order effects
- Carriers and labels face pricing pressure to move from per-track sales toward bundled flat-rate plans, shifting music revenue conversations from unit economics to monthly subscriptions.
- Any manufacturer without a service layer — or dependent on carrier goodwill for distribution — is pushed to partner or build one to avoid being commoditized against Nokia's bundled offer.
Third-order effects
- If the pattern holds, handset competition reorganizes around service platforms attached to device portfolios, making music (and later other content) a lock-in layer rather than a device feature — a test of whether collective industry scale beats a single integrated vendor.
- The structure also hands operators and handset consortia gatekeeper leverage over how music reaches phones, prefiguring the platform-control fights that follow wherever one company controls device plus store.
The trend: The mobile industry is responding to Apple's integrated device-plus-store model by bundling flat-rate services across shared handset portfolios, moving competition from hardware specs to service platforms.