Expectation for mobile music services remains strong, according to Informa Telecom.
Analysts there expect that global revenues for portable audio and video players in 2005 (not including mobile handsets) will climb to $6.8 billion this year - that's 71 per cent up on 2004's results.
Looking further forward, the analysts also predict that total portable-player revenues will increase to $16.1 billion in 2010.
Audio-only players will occupy over three quarters of total revenues and more than 90 per cent of total unit sales.
Positive prognosis for music handsets
Informa forecasts that music-enabled handset sales will increase to 478 million in 2010 compared with 76 million in 2005.
The firm's 'Portable Music and Video' report suggests that the inclusion of MP3 playback in mobile handsets will begin to impact on the sales of flash-memory devices towards the end of the forecast period.
Report author Simon Dyson said: "If a mobile handset can offer the same music playback functions as a smaller-memory flash player then some consumers will simply choose to use their phone as a portable player. It's unlikely that higher-capacity players will be affected."
However, the limited quantity if video content and higher product prices appears likely to "limit consumer penetration of video-enabled portable devices during this forecast period", they said.
Analyst denies profit promise
Meanwhile, a Reuters report predicts that far from becoming a cash cow for the mobile network operators, mobile music profits will be lean.
While some mobile operators hope to market their own music download services that rely on their own network, analysts aren't convinced such moves will generate major profits.
"There's very little room for profits from the full over-the-air download market," Yankee Group analyst Linda Barrabee told Reuters. She believes music industry firms will see most benefit from such services.
The analyst pointed at Apple's market-defining price per track, arguing that music buyers are unlikely to choose to pay much higher prices simply to be able to download them straight to their mobile.
Mobile music subscription packages may work, she speculated, but in order to draw profits from such services providers will have to add value to their music products, the report said.