September 23, 2004

digital audio players

Sales of portable digital audio players like Apple Computer Inc.'s trendy iPod are booming and are expected to generate $58 billion in revenue worldwide by 2008, according to a research report released Tuesday.

Sales of portable digital audio players like Apple Computer Inc.'s trendy iPod are booming and are expected to generate $58 billion in revenue worldwide by 2008, according to a research report released Tuesday.

The report, from research firm IDC of Framingham, Mass., is another indication of how portable MP3 players -- introduced in late 1998 -- have evolved from a niche technology gadget into a mainstream consumer device, said Susan Kevorkian, an IDC senior analyst.

Apple Computer has captured more than 50 percent of the digital player market with its iPods. These use small internal hard drives to store thousands of songs. But the Cupertino computer-maker may have to adjust its focus because prices for digital audio players that use flash-memory cards are falling, Kevorkian said.

"Although Apple will continue to have a leading position in the portable jukebox market, they may eventually offer a flash-based iPod branded player as well,'' she said.

The report said revenue from digital audio players is expected to reach $7 billion by the end of 2004, up from $4.4 billion in 2003. The category also includes portable CD players that are designed to play CDs with songs recorded in the compressed MP3 audio format.

By the end of June, Apple Computer had sold more than 3.7 million iPod and iPod Mini players since they were introduced in 2001.

Apple has been most successful in North America, where it has tied marketing of the iPod to its online iTunes Music Store.

However, Kevorkian said, smaller-capacity flash-based MP3 players remain more popular overseas, particularly in regions of Asia where "they are used more as a fashion accessory.'' More 22 million flash players are expected to be sold worldwide by the end of 2004, compared with a projected 8 million hard- drive players.

Kevorkian also said declining wholesale costs of flash-memory cards should bring average sales prices of flash-based MP3 players down from $117 in 2003 to $98 in 2008. Meanwhile, average prices of hard-drive players should decline from $304 last year to $171 in 2008.

More than 20 million combination CD-MP3 players will be sold this year, but that number is expected to rise only modestly in the next few years.

However, Kevorkian said, regular CD players won't disappear quickly because the CD remains the core distribution medium for the recording industry, "and we don't expect that to change overnight.''

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Posted by Craig at September 23, 2004 07:52 PM