In a study released on thursday, ABI Research claims that cell phones with hard disks could severely hurt MP3 player sales. As the memory capacity of cell phones (in storage of MP3 files and songs) increases, the demand for MP3 players will decrease.
An example of a phone with hard drive is the Samsung SPH-V5400 that comes with a 1.5GB hard drive. Nokia N91 is expected to be released with a hard drive capacity of 4GB while Samsung SGH-i310 has 8GB capacity.
Alan Varghese, ABI Research's principal analyst quotes, "As the cellular handset becomes the one device that the world carries, the standalone MP3 player may well be left behind. What's important to many users is having one device that handles mobile music as well as the other functions-phone calls, digital photography, email, web browsing-now performed by cell phones."
At the moment, the 8 or 4GB storage capacity we see in the above cell phone models does not pose a big threat to MP3 players because they come with capacities ranging from 30-60GB. However, Varghese believes there will come a point when consumers do not care whether the phone can store 2000 songs or 5000 songs. This point is called the margin of diminishing returns.
What's more, most people carry around their cell phone, and not their MP3 player. So why not have just one device (the cell phone), equipped with an MP3 player, rather than carrying around a standalone MP3 player?