December 10, 2003, 12:00 AM

Sales of portable music players heading toward critical mass, study says

Like VCRs in the early 1980s, U.S. shipments of MP3 portable digital music players are expected to grow at a rapid pace over the next few years and reach a critical mass of consumers by 2006, Jupiter Research reports.

Kurt Peters

Executive Editor

Like VCRs in the early 1980s, U.S. shipments of MP3 portable digital music players are expected to grow at a rapid pace over the next few years--nearly doubling to 3.5 million units this year over last year--and reach a critical mass of consumers by 2006, Jupiter Research says in a new report, “Portable Music Device Forecast, 2002-2008.”

Together with the fast growth of online music stores including Napster.com, Apple.com’s iTunes and offerings from Dell.com and BestBuy.com, portable digital music players will generate strong sales this holiday season as well as into the next several years, Jupiter says.

"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 David Card, Jupiter Research vice president and research director. He added a Jupiter October survey found that 60% of consumers in the market for a portable digital music player would shop online during this holiday season, presenting a new marketing opportunity for retailers. "Online retailers should promote factors such as beating the crowds, convenient shipping and competitive pricing to lure these shoppers,” Card said. He added that shoppers who expressed an interest in digital music players were “less worried about credit card security than average, but more concerned about late arrivals and returns.”

Jupiter estimates that U.S. sales of MP3 players--portable devices like Apple’s iPod that can store thousands of digital music tracks downloaded from the Internet--will grow to reach a critical mass of close to a fifth of households by 2006, creating a base for continued growth in the online music market. “Historically, any new device or medium that reaches a U.S. household penetration of 15-20% creates a critical mass of consumers for other products and services,” Jupiter says in its report. “Portable music players will reach that point in 2006, which should help spur additional digital music services.”

Shopping.com reports that the following MP3 players are the most popular in searches at its web site:
Apple iPod 40GB (MAC/PC - M9245LL/A)
Apple iPod 10GB (MAC/PC - M8976LL/A)
Sonic Blue Rio Cali Sport 128MB
Apple iPod 20GB (MAC/PC - M9244LL/A)
Sonic Blue Rio Karma 20GB
Sonic Blue Rio S35 128MB
Sonic Blue Rio Cali Sport 256MB
Sonic Blue Rio Chiba 256MB
Sonic Blue Rio S10 64MB
Archos AV340

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