Rio Dies. Rio Carbon C Stillborn

By Richard Menta 8/28/05

As I perused the electronics isle at Target this weekend I saw only the more popular MP3 product brands. This included the entire Apple iPod line as well as dozens of accessories geared to it by several manufacturers from Belkin to Bose. Next to the iPods were portables from Sony, Philips and of course Rio. There were no players from iRiver or Creative Technologies. Nothing from Dell or Archos or Panasonic.

It was the Rio that stood out for me. The company that put the MP3 portable on the map is still a recognizable brand and while it was not the market leader anymore its name still kept it in the top four in sales.

The stillborn Rio Carbon C

Granted, with the iPod so dominant even second place garners under 10% of the market. Nonetheless, more people have bought Rio players in the last year than Sony or Philips models, which is why I was surprised that D&M Holdings (Denon and Marantz) was giving up on it so readily.

The Rio brand still has power and with estimates of huge growth in the MP3 player market over the next several years (with present owners replacing their existing players once or twice during that time) one would think D&M Holdings would nurture their investment. Even if they never get thw Rio back above 10% market share, a small percentage of a much larger market can still be quite profitable.

But then it is not only Apple's dominance that has influence on their decision to cut the company in pieces, sell its intellectual property off and bury the Rio brand and trademark. It is the determination of companies like Sony and others to pump hundreds of millions of dollars in marketing dollars to chip away at that dominance. D&M simply do not wish to spend that kind of money.

I question whether they really have to spend as much money as they already have their brand established in the MP3 world. As Rio players have always been very competitivly designed units if not downright excellent, their reputation certainly stood to keep the brand reasonably durable for the short term.

But the short term has witnessed the emergence of big marketing budgets from deep pocketed competitors to build their own brand awareness. Maybe most intimidating are the large marketing expenditures that have already failed like Olympus's MR-500i ads on the Super Bowl. The attitude these days is if you want to play against the iPod you have to pay. In the end D&M decided the risks were greater than the benefits and, un-willing to write a big check, figured they were only going to futher lose market share. They chose to pull the plug.

That's a shame to because what would have been their next player, the Rio Carbon C, looks like it could have held its own quite well against the iPod, at least for those who do not necessarily require an Apple logo on their digital music player. The Carbon was to offer 20 and 30GB drive models, a high res screen, theme support, scroll wheel, dock, remote, USB charging, mass-storage compliancy, line-in/FM recording, PlaysForSure, and a picture viewer

Engadget got the scoop on the now killed Carbon C. An insider sent them a copy of the 90 page user manual so we now know that the player's design was already finalized and ready to roll off the assembly line. Engadget sat on the manual for a couple of weeks, probably fearing legal action similar to the one Apple took out against Think Secret earlier this year. They released the information after D&M announced it would close the division.

I have reviewed most of the players that the Rio team created over the last seven years and none have failed to impress. This includes the player the Rio folk designed for Nike, which was the first made specifically for the gym.

But if there is one thing I have learned over the years I have edited MP3 Newswire - whose existence was inspired by the success of the first Rio (the PMP 300) during Christmas of 1998 - it is that change is inevitable in today's digital music world. I have seen the demise of DAP designers like iJam, i2Go, iPlayMP3, Sensory Science and Intel's Home Products division, which Intel shut down when their player the PocketConcert was the top selling MP3 portable. There will be more casualties over the next several years as makers spend a fortune to turn Apples near 70% market share to a still market leading 20% market share.

Creative Technologies, Rio's number one competitor several years back, announced earlier this year that they have allocated $100 million to market their players. Despite a strong line of portables they have so far made nary a dent in the iPod luster. Sony, Samsung, Toshiba, Philips, Matsushita, and other electronics giants are already committing significant resources to promote their digital devices. D&M decided their cards were not good enough and folded.

Premature? Maybe? Maybe not.


The U2 iPod is available on Amazon

Other MP3 stories:
The Net is the Independent Artist's Radio
CraftyTV: Free Streaming of Popular TV Shows