Sun, Mar 20, 2005 - Page 11 News List

Samsung vows to take Apple's MP3 crown

CUT-THROAT Apple used to have the portable music business almost to itself, but the huge profits to be made have brought in formidable competitors

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Samsung Electronics Co, Asia's largest electronics maker by market value, plans to triple MP3 sales this year and unseat iPod-maker Apple Computer Inc as the world's top manufacturer of the portable music players by 2007.

The company plans to sell at least 5 million units this year from 1.7 million in 2004, Ahn Tai-ho, head of the Suwon, South Korea-based company's MP3 unit, said in Seoul today.

Samsung expects to sell about 1 million units in the first quarter and increase shipments to about 12 million next year, he said.

Samsung joins Sony Corp., and other electronics makers rushing to enter a market forecast to jump 50 percent to US$6.9 billion this year. Demand for the iPod, which can download and store thousands of digital songs in each machine, helped Apple more than quadruple its fiscal first-quarter profit this year.

"MP3s are basically one of the first things that young people buy nowadays" when they have the money, said Ahn, chief executive of Bluetek Co, which is 100 percent owned by Samsung Electronics. "This is the year we're really getting serious in MP3." In today's press conference the company unveiled six MP3 player models under its Yepp brand that will be introduced during the first half of the year. The models include the YH-J70, with a 30-gigabyte storage capacity.

Samsung will need to raise its market share to between 20 percent and 25 percent of global sales to be the industry's top producer, Ahn said. He said he expects Samsung, Sony and Apple to be the top-tier producers by 2007.

Sony last week announced in Las Vegas that it will sell a new line of flash memory-based MP3 players with up to 70 hours of battery life.

Still, Samsung's pretax profit margin for MP3s may fall to about 5 percent from about 10 percent now as competition intensifies and prices decline, Ahn said.

Samsung will focus its sales on MP3 players with flash- memory chips, which are smaller and can store fewer songs than the type that has hard disk drives, because of Apple's dominance in the market for HDD-type MP3s, Ahn said. Samsung plans to sell 4.2 million MP3 players with flash memory and about 800,000 with hard-disk drive in 2005, he said.

The company is the world's largest flash-memory maker.

The global market for MP3 players will probably rise to 35 million to 45 million units this year, from 20 million to 25 million units in 2004, he said. Next year, shipments may rise to 55 million units, he said.

Global MP3 shipments may fall short of industry predictions because some companies can procure parts cheaper by overstating projections, Ahn said.

El Segundo, California-based ISuppli Corp said last month that global MP3 shipments will rise to 58 million units this year from 37 million in 2004 and jump to 80 million in 2006. Sales will rise to $6.9 billion this year from $4.6 billion in 2004, according to ISuppli.

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