MP3 Player Market Set to Explode

The market for digital audio players is expected to nearly quadruple over the next four years, reaching 104 million units by 2009, according to research firm In-Stat. Over 27.8 million players were shipped last year alone.

A bigger selection of legitimate download sites and lower prices were cited as reasons for continuing growth in the market. Also cited were smaller disk drives and bigger Flash memory capacities, meaning units were becoming smaller yet able to hold the same or more music than their predecessors.

Revenue for digital audio players reached $4.6 billion in 2004, double that of the year previous. And revenues will continue to rise as 3 out of every 4 Americans still do not own a digital audio player - one-quarter of American survey respondents said they own one, up from 16 percent in 2001.

According to In-Stat research, Apple continued to lead all companies with just over 30 percent of the combined Flash and hard-disk based market. Apple's next three competitors -- Rio, iRiver and Creative -- had about one-third of the market combined.

In-Stat expects 1GB or larger Flash-based players to make up over 20 percent of all Flash-based MP3 player sales by year's end, and a significant portion of overall sales. This does not mean, however, that Flash-based players are expected to take over HDD-based players as the storage method of choice among manufacturers.

"I expect demand for both memory formats will always exist," In-Stat analyst Stephanie Guza told BetaNews. She expects music enthusiasts will always grativate toward HDD players, as they will be able to carry their entire music libraries with them.

"On the other hand, there will be a wide audience that is price-sensitive and does not require loads of memory space, especially first-time MP3 player buyers," said Guza. "I expect these customers will turn to lower-priced, Flash-based MP3 players."