Apple share of MP3 player market to shrink... sort of

The Nano effect

So what's changed in the picture since we looked at it nine months ago? Then, Steve Jobs said: "We're really serious about this [iPod Shuffle]. We'd like to go after the remaining mainstream Flash market."

And now he's knocking on their door. The mountainous irony though is that this next decimation of the MP3 makers has come about with the aid of one of their own. Samsung has sold Apple 40 per cent of its flash memory output for the iPod Shuffle and Nano. Samsung produces about 60 per cent of the world's NAND Flash memory. It also has a nice line in... er... MP3 players.

You can bet Apple got a good deal on cornering a quarter of all Flash chips being made. Quite where this puts the desire of Samsung's desire to be number one in MP3 players by 2007 isn't obvious. Perhaps it could be inside the number-one player instead?

But wait, people say. Surely, with HMV and Virgin launching download sites, and Napster able to claim thousands of people using its subscriber service, isn't everything moving towards a time when the iPod won't be dominant, when other companies can move in and get a slice of the downloading/subscribing action?

Well, I just checked with Google, and the phrase "ipod killer" comes up 265,000 times, while Apple + "death knell" gets 102,000 results. Apparently Apple has been declared 'dead' 46 times since April 1995; the most recent, amazingly, being May of this year, though it was by the Melbourne Age, and, you know, Melbourners...

Have you tried the HMV site? Have you tried reading its FAQ? We've noted how awful it is (here's a screen-reader-unfriendly GIF image).

But note some more: the DRM is more restrictive than Apple's iTunes (play on three PCs vs five computers, burn five copies of a track (on downloaded tracks; not at all for subscriptions) vs unlimited (but a limit of seven for a set of the same downloaded songs; and transfer songs to up to two players, vs any number. That's no way to win a war.

What we're seeing is a company achieving dominance of an emerging market. Apple announced this month that it has 80 per cent of the music download market in the UK. It's got the majority of the MP3 player market. When even your rivals realise they'll do better selling you parts than competing with your players, you can say you're in charge.

And here's another thing: with Samsung set to ship chips able to store 2GB each next year, you can bet on two things: Apple lining up to be a customer; and the higher-end iPods gradually going Flash too, and perhaps shrinking in line.

Which leads to a final thought. Interesting things happen when technology gets so small it effectively disappears, because it can become ubiquitous. Think of transistors, electric motors, LEDs. The iPod Nano isn't quite at that level yet, but all its rivals now have a big headache. They'll put out the press releases touting the apparent rise in their market share - I'm sure Creative is getting ready - but their problems are only getting bigger. ®


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