August 20, 2005

Portable Media Players May Struggle to Find Market

SAN FRANCISCO -- If you build the portable media player, will they come?

Manufacturers keen to create the next iPod are starting to flood the market with a bevy of electronic devices that play movies, music and display photos.

Even Apple Computer Inc. CEO Steve Jobs, who has repeatedly pooh-poohed the notion of a video iPod, may be getting into the act, if speculation on Apple rumor Web sites is to be believed.

The iPod was a stunning, runaway success. But it's not clear the next wave of media players will have the same appeal.

Ranging from devices from Archos, Creative Technology, Epson and the Sony PSP and others, the players range in cost from about $200 to about $800. And, for the most part, they aren't small enough to drop in a pants pocket, analysts said, who question whether, in their current incarnation, they'll take off.

"In many ways, I do view portable media players as a technology in search of a market," said Van Baker, an analyst at industry research firm Gartner. "If I'm carrying music with me, chances are I want to carry something that's a little smaller than a personal music player."

Of course, digital music players are now as small as a pack of gum and range in size to as large as the dimensions of a deck of playing cards and easily slipped in pockets or clipped to belts and purses.

In a recent review of some of the devices, PC Magazine likened the current generation of personal music players to an eight-month-old baby: "It's generally enjoyable to have around, but it still doesn't really know what it is yet. And it's occasionally fussy and a bit heavy to carry everywhere."

Says NPD Group analyst Stephen Baker: "We haven't really given people a reason why they would want to own one yet."

He noted that there is a lack of infrastructure in place to easily download and manage movies and television shows, a problem that iPod solved for the music world.

"Downloading long videos is still not super easy to do and doesn't save you a heck of a lot of time over going to the video store, renting a video and playing it on your portable DVD player," NPD's Baker said. 

Even so, Web sites that traffic in rumors about forthcoming products from the notoriously tight-lipped Apple have been buzzing for more than a year about a video iPod.

What Jobs may have up his sleeve is a music video download service or the like that is seamlessly integrated into the iTunes online music store and the iTunes digital music jukebox software, analysts said.

If Jobs and company can pull that off -- delivering a way to buy and manage video content as easily as with iTunes -- then there may well be a market for personal media players, analysts said.

"If indeed someone could bring a service to market to go along with this device that was as drop-dead simple as the iPod iTunes interface, then perhaps there is a market," Gartner's Baker said.

That may be why, analysts said, Apple has waited this long before rolling out what could be called a video iPod, while it works out all the kinks. Wall Street analysts have already said the company could introduce such a device as soon as September.

And as with most gizmos in the consumer electronics market, price is always a key consideration. At about $800 for the Archos AV700 Mobile DVR with 100 gigabytes of storage, that might well be too pricey for many.

"I could buy the kid an iPod shuffle and a portable DVD player and still come out with money in my pocket," Gartner's Baker said.