By Rich Menta - MP3newswire

It looks like Santa will be sporting an mp3 player as he makes his yearly trek on Christmas Eve. As far as mp3 manufacturers are concerned, it’s been a good year.

According to Jupiter Research, mp3 player sales have doubled for 2003, selling 3.5 million units.

Furthermore, the company predicts demand will grow by around 50% for the next three years. By 2006 the installed base of digital music players will top the 25 million mark, a boon also to those companies selling digital music downloads online.

"They’re not quite this season’s DVD player, but portable music players, combined with online music stores and services, will be a strong holiday shopping combination," said Jupiter Research Director David Card. "Judging from the survey responses, online retailers should promote factors such as beating the crowds, convenient shipping and competitive pricing to lure these shoppers.

The survey also showed that these shoppers were less worried about credit card security than average, but more concerned about late arrivals and returns," added Card.

Jupiter’s new report "Portable Music Device Forecast, 2002 - 2008" came up with several other conclusions.

By 2004, MP3 portables that utilize hard drives like the Apple iPod will outsell smaller, but lower capacity, flash memory based portables.

Because of their low weight and high price, mp3 portables are inexpensive to ship, which means the sales tax saved by purchasing online is significant. Jupiter found that close to 60% of shoppers who purchase a player this holiday season will do so online, also seeking convenience and the ability to ship direct.

No one is happier about this news than Apple, whose iPod digital music player is far and away the best selling portable on the market, claiming close to half of all digital player sales. As for the iTunes download service so finely mated to the iPod, Apple announced Monday that iTunes hit the 25 million mark in terms of songs sold. Apple continues to dominate the market it is a key player in sparking.

But strong competition is around the corner. AOL, MusicMatch, Napster and RealNetworks all have stores. Dell has come out with a service/player mating as does Apple, and Gateway announced they will have one also by next year. Throw in Wallmart, Microsoft and MTV who also join the fray for 2004 and you have a vibrant competition looking to capitalize on a new market.

The concern is that there are too many services and offerings, more than the predicted sales increases can accomodate. If Apple can hold onto its 50% share for the next two years - an extremely challenging task as competitors get better - then you’ll see many of the services fade. Prices will drop over time too, good for consumers, but guarenteed to thin the profit margins of providers.

For now, though, this is a trumpet call to those manufacturers who have commited to this space.

This entry was posted on Tuesday, December 16th, 2003 at 2:32 pm and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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