Strong Growth Forecast In Internet Audio Hardware

SCOTTSDALE, ARIZ.— Portable Internet audio players have been the best-selling Internet audio application to date, but other Internet audio products such as console-style hard-drive jukeboxes and MP3-equipped car stereos, cellular phones, and PDAs will drive future product sales, according to Cahners In-Stat Group.

The market research company, a unit of TWICE parent Cahners Business Information, forecasts worldwide portable unit shipments will grow from 2.4 million in 2000 to more than 9 million in 2005. The U.S. accounts for about 92 to 95 percent of worldwide sales, Cahners said.

In-Stat also said demand for new console-type digital music products, such as digital audio receivers and digital audio jukeboxes, has been low but will grow significantly through 2005.

"The increased use of the Internet has spurred the development of new digital audio business models and products," said senior analyst Mike Paxton. "From portable players to digital audio jukeboxes, today's audiophiles and digital music consumers have more choices than ever before,"

In-Stat has also found that:

• SONICblue, the marketer of Rio portable players, is forecast to be the 2001 world leader in portable digital music player unit shipments, followed by Creative Labs, D-Link, Nike, Intel, and Compaq. Significantly, RCA held second or third place in 2000, Paxton said.
• Brick-and-mortar retailers significantly increased their share of portable sales in 2001. In May 2000, In-Stat surveyed 901 U.S. and Canadian consumers and found that 38 percent owned a portable. Of those consumers, 58% said they had purchased theirs on-line, while only 32 percent cited retail.

In September 2001, a Cahners survey of manufacturers concluded that consumers were buying 70 percent of portables at retail, Paxton said.

The report can be purchased at www.instat.com/catalog/cat-mm.htm or by contacting Matthew Woods at 617.630.2139 (mwoods@instat.com).