MP3-player demand to spike in 2009

IDC report predicts an industry with $145.4 billion in revenue in four years.

Michael Singer Staff Writer, CNET News.com
Michael Singer
2 min read
Demand for portable MP3 players is booming and expected to hit record levels in the next four years, according to an IDC report published on Thursday.

Led by devices such as the Apple iPod, the analyst firm predicts, shipments of MP3 flash memory music players will surge to nearly 124 million units in 2009. That is a 370-percent increase from the 26.4 million units shipped worldwide in 2004.

The report also explored the revenue potential of three other portable devices that play back compressed audio: DVD players, mobile phones such as the Motorola Rokr and gaming devices such as Sony's PSP. This category of "other" portable play-back devices is expected to exceed 700 million units shipped with an estimated $114 billion in revenue in 2009, IDC said.

Combined with the MP3 player category, all compressed audio players are expected to reach 945.5 million units shipped and $145.4 billion in revenue worldwide by 2009.

In addition to the coolness factor of designs from Apple, as well as the new bean-shaped Sony Walkman player and Creative Technology's Zen Vision music-and-video player, IDC pointed to other factors, such as cost and memory capacity, that will contribute to a rise in MP3 player demand.

In the last year, the cost of flash memory has fallen 56 percent to about $50 for a card with 512MB capacity, according to semiconductor research firm iSuppli. The firm projects the price will fall an additional 47 percent by next year and another 33 percent by 2007.

Memory capacity is also improving. Samsung plans to begin mass-producing 16GB flash-memory chips by the end of next year and has pointed to a 32GB prototype on the horizon. IDC predicts capacity for portable flash players will increase from 1GB in 2004 to 8GB in 2006 and 16GB by late 2007.

Despite higher capacities, hard drive-based players are expected to remain priced far above $200 for the next four years, IDC said.

Video support for music-video playback also is expected to drive demand for portable flash-players and hard drive-based portable jukeboxes, IDC said.

Analysts said they expect paid online media services to lead the charge with downloads. Main players are expected to be Apple's iTunes, Napster's subscription service, Yahoo Music and Microsoft, which announced a deal with RealNetworks this week to promote the Rhapsody subscription music service via the MSN Web business.