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Next Generation Perspective Vol. 1, Issue 11Product Type: Market Research ReportPublished by: Pyramid Research Published: April 2007 Product Code: R8-563 Description EVENT SPOTLIGHTSprint has dropped the price of downloads at its Music Store, the result of pressure on all MNOs to compete with iTunes on a per-track pricing model. The force that is warping the mobile communications industry to its will: Apple’s iTunes. Table of Contents Last week Sprint announced a strategic U-turn: All OTA downloads in the US as of early April 2007 will be sold at US$0.99. Why deviate so sharply from a business model that was working and actually generating revenue from mobile music sales?There are a variety of reasons for Sprint’s move: The $0.99 charged by iTunes determines consumer expectations, OTA downloading is no longer a novelty worthy of a premium, and sideloading is becoming the norm. What is particularly noteworthy is the lack of a transitional stage: Sprint’s lower mobile music prices were widely anticipated, but many observers assumed that the company would move to an interim level and retain a premium for the convenience of OTA. This is a radical step and one that will be hard to reverse for Sprint. Sprint’s fine print indicates that the $0.99 price is available only to subscribers which purchase a Sprint Power Vision data plan. As for fixed operators pushing triple-plays, the same motivation applies to the bundling of mobile data services: increased data ARPS, recurring revenue streams, and the ability for more profitable elements of the bundle to subsidize less lucrative ones. |
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