Mon, Jan 23, 2006 - Page 11 News List

Taiwan's MP3 player war is heating up

COMING AND GOING Some vendors are expected to pull out of the MP3 market during this year, but there are still plenty of eager new kids on the block

By Jason Tan  /  STAFF REPORTER

Models display BenQ's MP3 players in this file photo taken on Nov. 26, 2004. BenQ have recently announced their withdrawal from the competitive MP3 market.

TAIPEI TIMES FILE PHOTO

As a result of over-crowded market conditions and intense competition, a handful of MP3 player vendors are expected to be forced out of the industry this year, industry watchers said.

"The high-margin era of the MP3 player industry has gone with too many vendors moving into the market, which results in declining retailing prices and larger memory storage," said Marty Kung (龔俊光), senior industry analyst at the research firm Market Intelligence Center (市場情報中心).

According to Kung, the low entry barrier into the MP3 player market has attracted a bunch of hardware vendors who have jumped onto the bandwagon. However, consumers are still making their purchase decisions based on pricing and storage sizes.

"As international players such as Apple Computer Inc have fashionable products with larger memory selling at competitive prices, there is little room left for local players. We suspect some will drop out of the competition this year, just as happened in the past," he added.

His comments reflected the fact that BenQ Corp (明基), Taiwan's biggest mobile handset maker, was reported late last year to be unwilling to dedicate more resources to its MP3 player product line because it is withdrawing from the local market.

The Joybee series from BenQ were once the top-selling MP3 players in the local market.

"BenQ is most probably banking on the potential of upcoming handsets bundled with an MP3 player feature, which might replace current pure MP3 players with storage of 1GB and less," said a research note released by the Topology Research Institute (拓墣產業研究所).

It was a smart move for BenQ to avoid the stiff MP3 player competition, and instead devote more resources to the development and marketing of its new MP3 player handsets, said the Taipei-based research house.

"To outwit rivals in the MP3 player market, vendors not only need to come up with gadgets with unique designs and fashionable related peripherals, they should also bear in mind that offering online digital music platforms will be the key to bringing in extra revenue," it said.

This is especially true of the successful Apple iPod series and iTunes online music store, as local consumers have not escaped from the global iPod craze either.

On a Sunday morning last September, hordes of fans lined up as early as 9am in front of the Shin Kong Mitsukoshi Department Store (新光三越) in Taipei's Xinyi District, when Apple launched its iPod Nano.

All 100 units of the gadget were snapped up shortly after the sale began at 3:30pm.

The iPod economy continues to flourish with accessories made specifically for iPods including fashion cases, headphones, armbands, speaker systems and car integration kits.

The latest example was when the Chrysler Group announced early this month that starting this spring, most of the Chrysler, Jeep and Dodge vehicles to be introduced this year will come with an optional integration support for iPods through the car's audio system.

under pressure

The huge success of iPods has pressured other players' in the local market, including Taiwan's Micro-Star International Co (微星), Japan's Sony Corp, South Korea's MPIO and Singapore's Creative Technology Ltd.

But it seems that the tough MP3 player war has failed to deter newcomers from trying their luck, as both Kuro.com.tw (飛行網) and ViewSonic International Corp (優派) unveiled their first slew of MP3 players last month.

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