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MP3 music to player manufacturers' ears

Do a simple search on the Internet for "MP3" and it's easy to understand why the music format is so popular.

More than 2.46 million Web pages such as www.mp3.com.tw are devoted to MP3 -- and many of those offer songs or audio clips free of charge.

It's music to the ears of Taiwan's 50-odd MP3 player makers, which make the slim, handheld devices that store and playback MP3 files.

But while the rise of a new music format has created a new market for hardware manufacturers, industry players say several problems must be worked out before MP3 devices soar up the charts.

Most MP3 players can store just 40 minutes of music. In addition, while many MP3 files can be found cheaply on the Internet, MP3 gadgets don't go for a song. Players retail generally between US$160 and US$190.

Still, these problems are expected to be solved in the years ahead, and when they are, MP3 hardware manufacturers stand to benefit.

The advantages of MP3 over existing music formats are many. First, songs can be downloaded over the Internet and stored on home computers.

In addition, MP3 players are extremely small and lightweight; portable devices are often slightly smaller than the average beeper. The magnetic cards used to store music data are downright Lilliputian, with some as tiny as 2x1cm in size.

Perhaps the biggest advantage to MP3 is that it offers skip-free, digital quality music. Because portable MP3 players read music from either storage cards or flash memory, they don't skip like CD players.

The MP3 music format is also highly compressed, especially when files are saved on CDs.

One exhibitor at the recent Taitronics exhibition displayed a normal CD that had 650 MB of capacity -- or roughly 210 songs.

But MP3's major downsides at the moment remain cost and capacity. Most players come with roughly 32 MB of internal flash memory, allowing for about 40 minutes of high quality music.

The limited memory capacity in turn means higher costs, with some MP3 players fetching as much as US$190 on the retail market.

Data storage cards don't offer much value, either.

Coin-sized 16 MB multimedia cards that hold just three of four songs go for about US$50. Cards with 32 MB of capacity -- the equivalent of eight or nine tunes -- cost as much as US$100.

To date, South Korea has been the world leader in MP3 manufacturing, as the nation also produces many of the vital components used in the music players.

Recently, however, Taiwan manufacturers have also tuned into the music trend, and some say they plan to compete with Korean makers on price.

"There are at least 50 companies in Taiwan currently trying to develop MP3 players," said James Hwang, manager at S&T Hitech, a distributor of microcontrollers and decoders.

"Probably 20 to 25 five have products, and 10 are in mass production."

Hwang said components are the key parts in the tiny music players. He estimates Taiwan manufacturers produce about 100,000 MP3 players monthly, with his firm supplying components for about half of that amount.

Later this year, components are likely to drop, especially if Winbond (華邦電子) joins the fray, said one industry source.

Once chips become cheaper, the remaining problem will be the flash memory, which is used as both the internal memory in portable MP3 players and in the construction of data storage cards.

MacPower Peripherals, which recently began distributing South Korean-made MP3 players in Taiwan, is avoiding the flash problem by selling a device with no internal memory.

Instead, the device is accompanied by two 16 MB, US$12 multimedia cards. The player retails locally for NT$3,000.

Other companies are waiting for flash memory prices to drop.

"There are only two companies that make this kind of flash: Toshiba and Samsung," said Jessica Hsieh, of Singapore-based ATL Multimedia.

"They've been at maximum production since last November and it's going to stay that way for most of this year. But towards the end of this year, there should be a price drop in flash."

ATL Multimedia claims to be the only Taiwanese company to design its own portable MP3 player, saying other firms just manufacture foreign designs.

In addition, ATL said it had few problem obtaining flash memory because it holds a seat on the board of Toshiba's largest Taiwan distributor.

Currently, ATL produces about 30,000 MP3 players per month. The company plans to pump up the volume to 90,000 units per month by mid-summer.

Hsieh said her company would eventually like to develop a variety of CD MP3 players.

One company that has already done that is Alpintex Industry Corp. Alpintex's third generation product, MPStar, could potentially replace CD players. The modem-sized device, which retails for between US$200 and US$230, can play laser discs in both MP3 and normal CD formats.

Like many of Taiwan's other new breed MP3 entrepreneurs, Alpintex has only been in the MP3 music business for about a year. The company plans to produce about 100,000 units this year.

Taiwan's DVD player manufacturers have also moved into MP3 territory.

MP3 compatibility is now standard on top of the line models from makers such as Esonic, Jeutech and Miracle Digitech.
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