By Richard Menta 4/7/05
Brand awareness is a powerful thing and in the world of digital music players it is what keeps the Apple iPod chugging along with close to two-thirds of the market. In its continued survey of high school students called "Taking Stock With Teens" Piper Jaffray & Co. found that the iPod continues to be the overwhelming favorite among young adults.
Of the 518 students surveyed over half (56%) say they now own an iPod, up from 40% reported in the companys survey last fall. It shows that Apple had a very good Christmas this year.
Number 2 on this list was Sony with 14 percent, significant because that is a high jump for a company that the previous year wasn't even in the top five. iRiver followed in third place at 7 percent and fourth place goes to Rio at 5 percent.
But what is even more interesting is how the competition is lining up for place and show for future sales. Apple is again number one, but the winner for the number two position continues to be Sony.
According to the research 59 percent of the teens surveyed said they did not own a digital music portable. Of those looking to buy one soon, 15% said it will be a Sony. Next came the Rio and Dell brands at 3% each followed by Creative and iRiver at 1%.
This bodes well for the Sony brand, which has taken a beating in the digital player market due to several missteps. This is significant because Sony was an early entrant into this market, introducing their first digital music portable two years before Apple released the iPod (called the Sony Music Clip, it failed). They also built the first site to sell major label downloads online, a good three years before iTunes (it also failed).
Despite these setbacks, young consumers appear to be still drawn by the Sony name and reputation. The recent hype by the company's new PSP game unit, which plays digital music, has probably helped this. Sony has promised a significant committment into reclaiming this market, announcing several new devices in the last 30 days alone.
The losers in this scenario are Creative and iRiver who, like Sony, also have made sizeable investments in marketing dollars and new products. Both hold more than 1% of the market presently, so such a low projection for future sales is a serious step back for them. Creative is committing $100 million in marketing to promote their latest batch of portables. Their CEO Sim Wong Hoo says that his company has a goal of reaching 40 percent market share for MP3 players by the end of 2005. To do that he will need to boost that 1% awareness figure.
iRiver too has committed to new products and marketing muscle and will also have to be extra savvy with regards to how they promote themselves through the next several months. It is curious to me, though, how the brand can hold 7% of the market today, yet have a projection of only 1% of the teen market in the future?
It must be pointed out that Piper's survey size of 518 students is less than half of the number of respondents usually used in a national survey (about 1,300), so the error margin is significant. My suspicion is that the survey is slightly tilted and that both Creative and iRiver will grab quite a bit more than 1% of the market this summer and fall.
As for Sony will it grab that 15%? If you count the sales of Sony's new PSP game unit, which plays movie and song files, it may already have surpassed that. The inclusion/exclusion of that player is another factor that will skew the final results.
Piper Jaffray also surveyed paid digital music sites and not surprising iTunes came way ahead with 60% of students using the service. After iTunes comes Napster (9%), followed by MusicMatch (4%) and Real (3%).
iRiver H10 5GB Audio Jukebox is available on Amazon
Other MP3 stories:
Pew Internet Study on File Sharing and the Press
What Makes a Journalist? Thoughts on Apple and Think Secret
Can Free Broadcast TV Really Be Napsterized?