Digital Music Player Market Set to Double in 2004

LONDON (Reuters) – Gadget-loving music fans will buy more than 10 million digital music players in 2004, in one of the year’s biggest consumer buying crazes, a study showed on Wednesday.

The popularity of gadgets like Apple Computer’s iPod, which can store thousands of songs in a pocket-sized device, is propelling a spending spree in mobile music players not seen since the early years of the Sony Walkman.

According to London-based research firm Informa Media, consumers worldwide will buy 10.8 million next-generation players in 2004, from cheaper flash-memory units to players equipped with hard drives and massive memory, bringing the total installed base to 21.5 million units by the end of the year.

In the short term, the spending will have mixed effects as consumers fill the new devices with digital song versions from their CD collection and mine the Internet for free MP3 songs before buying music in any meaningful amount from download services.

“It’s great news for the actual manufacturers, but for the music companies at the moment it’s not going to be an instant boom,” said Simon Dyson, an analyst with Informa.

The piracy-ravaged music industry is banking on music download services such as Apple’s iTunes and Roxio Inc.’s Napster to restore music sales in the coming years.

With iPod, Apple stands to be the dominant force in the market for top-of-the-line, hard-drive-based players with a projected installed base of well over 5 million before year-end, Dyson said.

The rest of the market will consist of various rival manufacturers such as Creative Technology Ltd, Dell Inc. and Sony, he added.

While the market is in a period of red-hot growth, technology snags could knock many out of contention.

Several device manufacturers have designed products that play songs in select compression formats, meaning a song downloaded to Napster will not play on an iPod.

“Incompatibility between some downloads and the most popular portable players could become an issue in the very near future,” Dyson said.

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