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Olympus quits MP3 player market

'Freezing' a non-core operation

Apple has claimed another major scalp in the Digital Music Wars. Olympus, maker of the m:robe media player, has said it is pulling out of the market.

Olympus admitted its presence in the market is weak, even though the business is a highly attractive one, according to a presentation given yesterday to outline its new strategy.

In the face of stiff competition, it will "freeze" its portable digital music player operation, said Masaharu Ohkubo, President of Olympus' imaging division - essentially the company will stop making them. It is similarly quitting the MO storage device arena, Ohkubo said.

In August, D&M Holdings, Japanese owner of the Denon and Marantz hi-fi brands, sold off its Rio MP3 player business' assets to audio chip maker SigmaTel, then quit the market. As Diamon Multimedia, Rio had been in the MP3 player market since its earliest days.

Olympus said it will focus its digital camera business more on high-end SLR devices and away from consumer-oriented compact cameras, the company said. Digital SLRs currently account for three per cent of Olympus' imaging division's product mix, but it wants to see that rise to 20 per cent and 30 per cent, respectively, in three and five years' time. By then, compact digital cameras will account for just 40 per cent of the division's product mix.

The decision to drop m:robe follows the announcement of H1 FY2006 figures and revised forecasts for the full year to 31 March 2006. Olympus recorded H1 net income of ¥2.2bn ($18.72m) - down from ¥6.7bn ($57m) in the year-ago period - on sales of ¥476.3bn ($4.05bn), up from H1 FY2005's ¥308.7bn ($2.63bn).

For the full fiscal year, Olympus said it now expects sales of ¥970bn ($8.25bn), down from the ¥1070bn ($9.1bn) previously forecast, but still 19.2 per cent up on last year's ¥813.5bn ($6.92bn). It now expects to report a net income of ¥27bn ($229.71m), an improvement on the ¥11.8bn ($100.39m) it lost last year. ®

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