IPod faces competition as MP3 player sales boom

Portable flash players to shake up the market

James Sherwood, vnunet.com 23 Sep 2004

Sales of MP3 players are rocketing, fuelled by falling unit prices, integration of MP3 support into a wider range of devices and the creation of legal music download websites.

According to the latest market research from IDC, MP3 device sales will enjoy a 20 per cent compound annual growth rate over the next five years and clock up revenues of $58bn by 2008.

The analyst firm's report, Worldwide Compressed Audio Player Forecast 2004-2008, notes that consumer interest in MP3s exploded in 2003 with the arrival of portable flash players that offer a cheaper alternative to hard-disk storage devices, such as the iPod.

Apple, which has been a portable jukebox market leader since introducing the iPod in late 2001 and the iPod mini in early 2004, will see new competition from vendors offering devices based on 1.0in and smaller hard drive form factors, the report predicted.

And according to Reuters, Sony is considering supporting the MP3 format on its flash memory storage players.

Sony's portable music players are currently designed around the firm's own Atrac music format, and the move is likely to give the electronics giant a better footing in the fierce MP3 portable music player market.

Susan Kevorkian, IDC consumer markets senior analyst, said in a statement: "MP3 players are coming into the mainstream as portable flash player prices fall and capacities rise, the iPod mini and other small form factor portable jukeboxes come to market, and more and more devices, including DVD players and gaming devices, support compressed audio as a secondary feature."

The creation of pay-per-download sites was identified as a bold attempt by many music organisations to combat illegal music downloads by providing an "exciting new source of music content for consumers".

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