Apple's iPod stokes MP3 player market 'boom'

Flash to dominate unit shipments, HDD to lead revenues

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Apple's decision to release a Flash-based digital music player, the iPod Shuffle, was tacitly vindicated today by market watcher iSuppli. Its statistics suggest that solid-state players will continue to outsell hard drive-based units through to 2009.

Between now and then, overall MP3 player shipments will almost quadruple, from 36.8m units to 132m, the researcher notes in a new report, Portable MP3 Players: Booming Market Looks for New Twist.

In 2004, some 27m Flash players shipped, almost three times more than the 9.8m HDD-based units released into the marketplace. Come 2009, however, the proportions will have fallen closer to parity: 75.8m Flash players to 56.2m HDD-based units, iSuppli said.

The two categories will show compound annual growth rates of 22.9 per cent and 41.8 per cent, respectively. HDD shipments will show continuous, linear growth through over the next four years or so, while Flash's growth will quickly slow.

That said, it's clear from the price differential between Flash and HDD players that Apple was right to establish itself in the HDD space first. Flash may lead in unit shipments, but it's hard drive player sales that are really driving revenue growth.

iSuppli said Apple was largely responsible for the explosion in shipments during 2004 - as much because of the competition it inspired as its own sales efforts. Player shipments jumped 116.5 per cent between 2004 and 2003, the researcher said. Growth is likely to be a more sedate 57 per cent this year, with 57.7m units shipping globally.

Apple's example suggests that devices that try to offer a broad range of features - music, video, radio, recording etc. - are likely to fare less well than products with a more basic, yet simple to use feature set.

Higher player sales means, of course, more audio processor chips and Flash memory will ship, and iSuppli said MP3 semiconductor sales will rise from $319m in 2004 to $1.07bn in 2009. ®

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