By Richard Menta 8/28/06
With all of the press Apple gets on the invincibility of the iPod over here in the states, it is a good sanity check to understand how well that icon of portable digital music performs in the countries that actually assemble these damn things. The answer is that the Apple iPod is number one, but not with as much control of the market as one would expect from a North American perspective.
According to Taiwanese marketing company GfK Marketing Services Apple tops the list with 8% of the market. Second place went to Korean electronics giant Samsung with a very close 7.8% of the market. Samsung also has aggressive plans to introduce several new video-enabled players, an effort that may propel them pass the iPod, which is yet to announce updates to the present generation iPods.
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These percentages are critical, because it means only a small percentage of DAP owners in Taiwan are locked into the iPod/iTunes scheme by Apple's DRM. That means they have a greater freedom in terms of the sources they utilize for paid downloads. Of course, with Microsoft's introduction of Zune, the PlaysForSure DRM scheme that many portables and services support may start to wane as a viable commercial codec. That's because MS is expected to introduce a new codec and updated music service that only their players will operate with.
Still, most of the music on digital music players - and that includes the iPod - are in the good ol' MP3 format and that lock-in factor in itself probably has limited power. Which brings up another point these statistics imply. Apple may control two-thirds of the North American market today, but that high figure is probably unsustainable with all the iPod competition out there. With DAP sales expected to grow ten-fold over the next several years, this is the new high-growth product for electronics manufacturers. They are jockying for market position today to set them up for healthy profits tomorrow and if the iPod has 25% share of a much bigger market five years from now they are still number one, still selling more players and still a big success.
That is why Microsoft is so high on Zune and will spend a fortune in marketing it. With only 10% of households with a DAP Apple's dominance comes relatively early in the game. Now whether MS can penetrate the MP3 market like thay penetrated the game market waits to be seen. Remember, Nintendo once dominated their market too.
A decade from now the Apple iPod may still be number one, but that might be with just 8% of the market like in Taiwan. As MP3 players go from the next hot toy to cheap mundane electronic product that can very realistically happen. Its' not a bad thing either as nothing is better for consumers than strong competition.
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