The mobile handset hardware business and the music business don't have much in common, but it's increasingly apparent that they're going to have to work together somehow. In a discussion about the emerging mobile music industry at today's Digital NARM conference, two representatives from handset vendors noted that they've had to acquire startup companies in order to create their mobile music businesses, increasingly seen as music's next great frontier.
Nokia's Trevor Madigan pointed to the company's 2006 acquisition of music aggregator Loudeye and its OD2 distribution unit for $60 million as an example of buying rather than building technology in order to enter a difficult space far from its core competency.
"We're becoming a services business," he said. Similarly, Motorola's Dave Ulmer (pictured) said the company's little-noted January 2008 purchase of Sinagpore-based music store operator Soundbuzz for an undisclosed amount has allowed it to build the largest mobile music retailer in southeast Asia.
For mobile handset companies that will need to incorporate music sales to retain customers in the coming years, the only route to the music market will be via acquisitions. The emergence of handset operators as potential buyers could be good news for venture-backed mobile music startups such as Melodeo Inc., which raised $7.9 million from Ignition Partners and Voyager Capital in September, and Catalyst Mobile Inc., which took $14.5 million in two rounds from Sofinnova Ventures and DCM. -- Paul Bonanos
See August 2006 post on Nokia and Loudeye/OD2 from Tech Confidential
See January 2008 post on Motorola and Soundbuzz from Mashable
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