Mp3 Player Industry Analysis

Table of Contents

1.0 EXECUTIVE SUMMARY 2

2.0 INDUSTRY FORECAST: OUTLOOK AND TRENDS IN DATA 2

3.0 PORTER'S FIVE FORCES ANALYSIS 3

COMPETITION IN THE MP3 PLAYER INDUSTRY 3

3.1. Rivalry Among Competing Sellers of MP3 Players 4

3.2 Threat of Potential New Entrants into the Manufacturer of MP3 Players 5

3.3 Firms in Other Industries Offering Substitute Products for MP3 Players 6

3.4 Suppliers of Materials, Parts, Components, or Other Resource Inputs for MP3 Players 7

3.5 Buyers of MP3 Players 7

4.0 DOMINANT ECONOMIC FEATURES 8

5.0 COMPETITOR ANALYSIS 9

Differentiation, price and innovation 9

Profitability 10

Other competitors 10

Conclusion 10

6.0 FORCES DRIVING INDUSTRY CHANGE 10

APPENDIX A 12

Figure 5.0 THE FIVE-FORCE MODEL OF COMPETITION 12

APPENDIX B 13

Hard drive based players 14

Table 5.1a 14

Table 5.1b 15

Flash based players 16

Table 5.2a 16

Table 5.2b 17

Table 5.3 18

Strategic Group Map 19

Ranking of MP3 players for 2005 19

APPENDIX C 20

SWOT Analysis - Apple versus the competition 20

Apple’s competitors 20

BIBLIOGRAPHY 21

1.0 EXECUTIVE SUMMARY

2.0 INDUSTRY FORECAST: OUTLOOK AND TRENDS IN DATA

The macro environment in which the MP3 player industry operated during 2005 was by large shaped by the individual MP3 companies recognizing and responding to unmet needs of a trend that was largely boosted by Apple: Their innovative response to creating a solution for music lovers and their busy lives. This sequence of events within the MP3 industry was the formation of a trend that had gained momentum in 2005 and was showing clear signs of a durable future ahead. There appeared to be great opportunities for a whole cross section of this industry and it would depend on which companies crafted and executed strategy that would best strengthen their sustainable competitive advantages within this rapidly evolving industry. MP3 companies needed to understand the environmental background that influenced their strategic thinking. It would have been imperative for them to get an understanding of what the outlook and trends in data were indicating.

It was not until the last quarter of 2001, when Apple first released its iPod that the industry was revolutionized. This spurred their competitors into developing their own versions of “iPod’s”. Sales in 2004 reached 28 million. By 2005 there were over a 100 manufacturers in the digital music player industry. The pace of technological innovation within the industry was driven hard by competitors trying to get a competitive advantage by developing units that were smaller, had larger memory capacity, longer battery life and easier user interface. Strategic partnerships were formed between MP3 player manufacturers and computer hardware vendors, with their products being integrated into the design of the MP3 players. The market emphasis on small and lightweight product encouraged hardware suppliers to develop smaller hardware components that allowed superior memory and design that often exceeded markets expectations.

Memory was an integral marketing tool, this spurred manufactures of hard drives and flash memory to align themselves with specific MP3 player manufacturers and offer their newest and most innovative memories to best capitalize on this fast emerging market.

Convergence between consumer electronic devices was an increasing trend. It became a growing market requirement to reduce the need to carry multiple devices if it could be integrated into one. Mobile phones that had digital cameras, MP3 players, all integrated into a PDA system were also increasing in popularity. There was a different level