August 16, 2006, 12:00 AM

New ringtone version wins over consumers, study says

Realtones now account for more than 75% of consumer spending on ringtones, which include realtone, mono and polyphonic. Such spending is part of a whole new world U.S. e-retailers are just beginning to explore: m-commerce.

Realtones now account for more than 75% of consumer spending on ringtones, which are used to personalize individuals’ mobile phones, according to a new study by Telephia Inc., a mobile communications industry research firm. Realtones are the latest advance in ringtone technology; they enable sound quality akin to the actual source, such as a film or CD, and are more robust and nuanced than realtones’ two predecessors, mono and polyphonic, mobile technology experts say.

According to Telephia, the number of mobile consumers purchasing any type of ringtone increased to more than 24.6 million in Q2 2006. While the overall market is growing, mono and polyphonic ringtones are losing market share to realtones and ringback tones, which replace the ringing typically heard by callers prior to an answer or voice mail greeting with music or other audio content.

“It’s no surprise that mono and polyphonic ringtones have fallen out of favor with mobile consumers as realtones are a far superior format, much like how CDs replaced cassette tapes. This is all part of the broader shift toward consumers expecting their mobile devices to deliver a high-quality portable music experience,” says Kanishka Agarwal, vice president of new products at Telephia.

Sales of such digital content, which also includes wallpapers and games, represent the biggest chunk of the fledgling U.S. mobile commerce market. M-commerce involves digital content or tangible merchandise being searched for, selected and purchased via mobile phone. Wireless telecommunications carriers have begun adding shopping portals to their user interfaces. Mobile phone users access the shopping areas, which enables them to link to m-commerce sites-either wireless carrier-based versions of sites or Internet-based mobile-enabled sites-of retailers that have agreements with the carriers. In addition to carrier-based shopping portals, mobile phone users with phones that include mobile web browsers, sometimes called mini-browsers, can shop via the Internet directly at retailers’ mobile-enabled sites, bypassing carriers’ shopping portals.

While m-commerce is in its infancy in the United States, it has become commonplace in countries around the globe. The Japanese, for example, last year spent about $6.3 billion U.S. on retail goods via mobile phone-10.5% of total e-commerce sales, according to the government’s annual “Information and Communications in Japan” report.

Still, why should U.S. retailers get into m-commerce if their web-based sales are growing and they’re in the black?

“15, even 10, years ago most retailers didn’t consider the Internet as a sales channel. But people’s lifestyles evolved and now the Internet is an integral part of their routine, which includes shopping online. Today use of the mobile platform for data and other services is growing even faster than the numbers for Internet use years ago,” says Levi Shapiro, director at Telephia. “Most major retailers by now realize they are part of the lives of their consumers. To exclude a major platform that virtually all of their consumers are connected to seems shortsighted.”

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