MP3 Saves Portable Audio’s Aspirations

Arlington, Va.— Factory-level sales of compressed-music portables grew in 2004, to account for 59.2 percent of total dollar sales in battery-operated music portables, CEA statistics show.

The figures exclude voice recorders and home radios, but include headphone MP3 players, headphone CD players, headphone cassette players, headphone radios and boomboxes.

For the second consecutive year, MP3 portable growth was solely responsible for rising sales of music portables, CEA also found. Music-portable sales rose 27.4 percent to a factory-level $2.18 billion in 2004, while dollar sales of MP3-type headphone portables gained an astounding 204 percent to $1.29 billion. In contrast, MP3 portables sales in 2000 were a mere $80 million.

In an unusual departure for the electronics industry, MP3 dollar growth outpaced unit growth, which rose 135 percent to 7.13 million units in 2004, CEA found. Dollar growth, even higher at 204 percent, was attributed mainly to growing sales of hard-disk-drive (HDD) MP3 portables, which are priced higher than flash-memory models. In fact, HDD models outsold flash-memory models in units for the first time in 2004 and accounted for 67 percent of total MP3 headphone portable sales, CEA found.

For traditional portable categories, the picture is quite the opposite. Unit and dollar sales fell in boomboxes and in all headphone audio segments but MP3 headphone players, CEA found.

Combined dollar sales of headphone CD players, headphone cassette players and headset radios fell for the third consecutive year in 2004, when sales shrank 32% to $616.8 million. Boombox sales fell 27% in 2004 to a mere $270.1 million. In units, sales of non-MP3 headphone stereos (CD, cassette and radio) fell 17 percent to 20.3 million, while boombox unit sales fell 16 percent to 5.9 million.

Separately, 2004’s headphone-CD sales fell 20 percent in units to 13.4 million, and 35 percent in dollars to $491.9 million, CEA said. One headphone-CD segment, however, did post unit-sales growth. Unit sales of headphone CD players that play MP3- or WMA-encoded CDs rose 8.1 percent to 5.22 million units in 2004, to account for 39 percent of all headphone-CD unit sales. In 2003 and 2002, headphone MP3-CD players accounted for only 29 percent and 9 percent of headphone-CD unit sales, respectively.

Because of declining wholesale prices, dollars sales of headphone MP3-CD players slid 4 percent to $241 million even though MP3-equipped models accounted for a greater share of headphone CD sales. In 2004, MP3-CD models accounted for 49 percent of headphone-CD dollar sales, up from 33 percent in 2003.