Our take...
Nokia's CWM is an innovative idea and since its announcement in Q4 2007, the mobile music market has seen a lot of movement. As stated previously however, Screen Digest does not believe that Nokia competes with Apple in the digital music space with this offer, even though both companies are, in effect, using music to promote device sales. However, the 5310 is a lower specification handset than Apple's iPhone and the inclusion of free music tied to the device would likely appeal more to the youth market who are unwilling to pay for music than the older market seeking higher quality service. The 5310 has been a popular handset with 10m devices sold in a year. Since the initial CWM handset announcement in September, the price of the 5310 pre-pay handset has fluctuated between £49 and £80 with the Carphone Warehouse. It is currently listed at the highest price, £79.95 with the purchase of £10 credit. Increasing the cost by 60 per cent makes the handset a fairly expensive proposition, particularly given the low functionality of the device. The high cost handset is unlikely to appeal to the youth market directly given that they tend to get their music free anyway. However, the inclusion of CWM on the handset increases its gifting potential with parents, unaware of or trying to discourage their children from illegal downloading, following Nokia's planned marketing push around the Christmas period

Interestingly, the Carphone Warehouse has stated that the handset will also be offered for free on contracts over £40. Nokia's CWM offer is currently not offered OTA since the 5310 is not 3G enabled and therefore music downloads exclude operator data charges. This reduces the operator's incentive to take on the handsets - not only does the unlimited music compete with their own content offerings, but the lack of data charges reduces their ARPU. Without Nokia announcing any deals itself with operators, Screen Digest believes that the operator deals necessary for the music handsets to be bundled into voice tariffs may have been struck with Carphone Warehouse directly rather than with Nokia. Although Nokia has never seemed particularly concerned with launching services in spite of operator resistance, the handset manufacturer needs to get the operators on board to increase CWM's addressable market. The possibility to download OTA, which the company has said will be made available (although not at launch), will likely increase the service appeal to the operators.

Another interesting aspect of the service is the access to permanent downloads. Although the downloads are permanent, they are restricted to Nokia handsets and more specifically, after the restoration period cannot be transferred to new devices. Without a standalone subscription service to follow the CWM offer, users need to purchase a new Nokia handset to continue with the service. Sony Ericsson's competing service 'PlayNow Plus' does not allow users to keep all music downloaded, but rather a limited selection. However, these tracks can be transferred to any device. Also, users can continue with subscription after the end of the bundled service period without having to buy a new handset. As such, Nokia's CWM would seem a more restrictive service and this approach could prove off putting for users.