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Rio Introduces First Challenge to Apple's IPod Mini

Posted on: Monday, 2 August 2004, 06:00 CDT

By MAY WONG

SAN JOSE, Calif. (AP) -- In the world of portable music players, the spotlight has lately been on Apple Computer Inc. (AAPL)'s top-selling iPod, but Rio Audio, the MP3 player pioneer, isn't idling in the shadows.

Rio, now owned by Digital Networks North America, Inc., debuted a player Monday that is expected to be the first of many to squarely compete against the popular 4-gigabyte iPod Mini.

The Rio Carbon, shaped like a slim wedge and weighing 3.2 ounces, uses Seagate Technology' (STX)s new 1-inch, 5-gigabyte hard drive, and touts up to 20 hours of playback time on a rechargeable battery. It will cost $249 and be available in late August, said Dan Torres, Rio's vice president of product marketing.

GoVideo, a DVD and VCR maker based in Scottsdale, Ariz., will enter the audio player market in September with a similar 5-gigabyte portable player as well as a 2.5-gigabyte model under a revived Rave-MP brand name.

Both the Rio and Rave-MP players will play songs encoded in the Windows Media Audio or MP3 formats. They will thus be locked out from songs purchased from online music providers that feature incompatible formats, such as Apple's market-leading iTunes Music Store, of which songs are transferable only to Apple iPods.

Still, the majority of consumers' digital music collections is in the generic MP3 format, and analysts say Rio and others can continue to capitalize on that market.

The new Rio and Rave-MP players will also be among the first to support Microsoft's new anti-piracy technology, dubbed Janus, that allows rented songs from online music subscription services to be used on portable devices.

"Rio has been around for a long time. They know what works and they know what customers are looking for," said Ben Bajarin, an industry analyst with Creative Strategies. "Right now in digital music, we still think it's anybody's game, and Rio has a really good chance of maintaining good market share."

The Rio Carbon MP3 player. Credit: Rio

Santa Clara-based Rio had lost its luster under the financial woes of its former owner and as competition from Apple and others stiffened. But the company threw itself back into the heated market last fall with a relatively successful line of players that ranged from low-capacity flash-based players to a large-capacity 20-gigabyte hard-drive player.

In May, Rio ranked second to Apple in the MP3 player market, holding a 14.6 percent share compared to Apple's 39.2 percent, according to the latest figures available from The NPD Group, which tracks sales at retail stores.

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