Business Matters: If Big Radio Had Pandora's Royalty Rate, It Would Owe Billions
Business Matters: If Big Radio Had Pandora's Royalty Rate, It Would Owe Billions

A day after Apple unveiled the iPhone 5, Hewlett-Packard CEO Meg Whitman said in an interview with Fox Business that HP is getting back into the smartphone business. And if history is any precedent, it means HP will need a new digital music strategy.

"We are working on this…we did take a detour in the smartphone [category] and we need to get it right this time," Whitman said in the televised interview. The detour was a reference to HP's acquisition of Palm in 2010 (before Whitman arrived as CEO). That acquisition failed to get HP traction in the smartphone and tablet markets and Palm's WebOS operating system lags far behind Apple's iPhone and various manufacturers' Android devices.

HP is primarily a PC manufacturer. It had a 15.5% share of the world's PC market last year, according to I.D.C. But HP needs to introduce successful mobile products, too. As Whitman later added, HP "ultimately has to offer a smartphone because in many countries in the world that is your first computing device."

There is ample evidence that music is necessary for success is the smartphone. Here's a short list:

  • Exhibit A: HP acquired Seattle-based technology company Melodio in 2010. Melodeo's nuTsie service allowed users to scan their iTunes library and remotely access their music library from a mobile device.
  • Exhibit B: The Apple iPhone, with iTunes and the best selection of music apps, is the best portable music device on the market. Apple has added to iTunes its iCloud storage service and the ability to synchronize purchases to other iOS devices.
  • Exhibit C: Google and Amazon have also integrated music, cloud storage and mobility into their mobile offerings (Google's Android operating system, Amazon's Kindle Fire powered by Android).
  • Exhibit D: Smartphone manufacturer HTC owns 25% of Beats Electronics, which owns 100% of music subscription service Mog. Billboard.biz has confirmed HTC and Beats are in very early discussions about Beats-branded smartphone, and Beats is widely expected to somehow integrate Mog into its product offering.

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  • Exhibit E: Cricket Wireless has over 600,000 subscribers to its Muve Music subscription service. Muve Music is now part of all Android plans, and Cricket plans to license the service to carriers outside the U.S.
  • Exhibit F: Nokia just launched Nokia Music, a value-added service available to owners of two of its Lumia handsets. Nokia Music offers over 150 curated playlists, access to a download store and a gig finder that helps people find concerts in their area.
  • Exhibit G: BlackBerry's latest digital music play is BBM Music. The service allows users to select 50 songs from its catalog of millions while being able to access their friends' songs, too.

Nokia Music Comes To U.S.

HP will need a new music strategy to go along with its new smartphone business. Exhibits A though G (and there are plenty more) make it clear that music is a key differentiator in the smartphone and mobile business. HP will have to step up its game because its competitors have stepped up their games.

But HP does not necessarily have to buy its way into a new digital music strategy. It used white-label service 7digital to power the music downloads for its defunct TouchPad tablet, for example, and BBM Music is powered by white-label service Omnifone.

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