Gateway gets into portable music

The PC maker releases its first portable music player as it continues its expansion into the realm of consumer electronics.

Culture
Gateway released its first portable music player on Tuesday as it continues to expand into consumer electronics.

The Gateway Digital Music Player combines three functions in one, according to Rick Griencewic, director of digital audio at Gateway. It can play MP3 files, it can be used as a portable storage device for shuttling data between two PCs, and it can also function as a digital voice recorder.

The device can be plugged directly into a PC through a USB slot.

"You don't have a cable you can lose, which can generate a support call," Griencewic said.

Like Sony, Hewlett-Packard and to a lesser degree Apple Computer, Poway, Calif.-based Gateway plans to come out with a wide variety of branded household gizmos that can be used, and sold, with its PCs.

Overall, Gateway plans to release 50 products fitting into 15 different product categories this year. Internally, the company has formed groups to devise products for the audio, photography, video and home networking markets.

So far the strategy has produced at least one hit. Sales of plasma TVs helped the company reduce losses in the second quarter. However, Gateway had to delay the release of its first handheld from mid-July to mid-August to conduct more testing.

Other products include DVD recorders and LCD televisions.

Two versions of the music player are on tap for this month. On Tuesday, a version containing 128MB of storage capacity hit the market at a price of $129.99. A $169.99 version holding 256MB of memory is scheduled for release Aug. 14.

These initial players use flash memory to store data. Gateway is also looking at the possibility of coming out with music players with small hard drives, as well as with portable CD players.

"It takes a little bit longer to develop a hard-drive player," Griencewic said. "We saw this as an easy way to get on the scoreboard early."

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Flash player shipments should continue to rise, according to Susan Kevorkian, an analyst at IDC, because the cost per bit keeps declining. Manufacturers can now offer 256MB devices for less then $200.

"The price point (of Gateway's players) is very competitive," Kevorkian said. "The form factor and direct USB connectivity is very compelling."

One of the features that Griencewic predicted would resonate with the public is direct connectivity. Currently, the Creative Labs Nomad Muvo player accounts for nearly half of the third-party MP3 players sold on Gateway's Web site. It is also one of the few MP3 players that connects directly to PCs without a cord.

Although the new products mark Gateway's first foray into selling branded portable players, the company has sold music products before. In November 2000, Gateway came out with an MP3 player that connected to stereo systems.

However, the product, like similar jukeboxes from Compaq Computer and Dell, only stayed around for a brief period due to slow sales.

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