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Digital device usage: IDC runs the numbers

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One of the nuttiest things about today’s strange digital world is that when legitimately interesting data actually comes to light, nobody cares. Earlier this week, for example, the very smart folks over at IDC, the Framingham, Mass.-based research firm with a practice in mobile communications, released a neat piece of research on worldwide digital device usage.

This study did not get the media traction it deserves. That's too bad because there are some bright lights for network operators to look forward to during these dark days.

First of all, the sheer scale of the digital supply chain is beginning to reach the epic proportions that have been predicted for well over a decade. IDC reported that 257 million PC systems and 1.1 billion phones were shipped worldwide in 2007. If I can paraphrase Dr. Evil of “Austin Powers” fame, that’s “One billion phones!”

All those phones equal a whole lot of spending by consumers. The worldwide spend for these digital items was $318 billion, which in turn was a third of the nearly $1 trillion in total information and communications dollars spent during the same period. Perhaps more interesting, IDC predicts shipments will jump another 10 percent for 2008.

Even if we assume that IDC offers us optimistic numbers to keep some of its mainline research clients happy, this is still some serious worldwide spending on digital thingums. At this pace, within the next five years there will be roughly 5 billion phones in the world and more than 1 billion computers. Even more impressive, assuming annual sales level off at, say, 1.5 billion phones a year, roughly 20 percent of that install base will be getting a new unit each year. That’s real upgrade power.

And suddenly the digital content business that runs on the back of these phones becomes downright attractive. If in 2012 U2 sells a single digital song for ten cents per download, and assuming the cost to deliver that song over a cell phone network was down near a nickel -- not unrealistic given deployment and compression predictions -- and assuming 500 million people buy that song on their phones, somebody somewhere just made $25 million. That is not such bad business, now is it?

Jonathan Blum is the author of Blumsday, a daily technology blog and e-newsletter.

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