NPD: MP3 Retail Growth Drops

By Amy Gilroy On Jul 3 2006 - 6:00am

MP3 player retail sales growth slowed in May to 22.8 percent after charting triple-digit gains of more than 200 percent earlier in the year, according to data from The NPD Group.

One analyst said the May results could indicate the beginning of slower growth for the digital audio players that are expected to lose share to music-enabled cellular phones during the next four years.

Nitin Gupta, analyst for the Boston-based Yankee Group, said, “I don't think this is temporary.” He estimates the installed base of MP3 players will reach saturation in 2007 and that music-enabled cellular phones will start cutting into sales of MP3 players late in 2007.

Susan Kevorkian, audio consumer markets program manager for IDC, San Mateo, Calif., sees the slower growth as temporary, noting that the second quarter is a slower season for MP3 players. “We expect to see a renewed push from Microsoft's Windows Media Technologies partners around PlaysForSure compatible service and devices in the second half.”

IDC predicts MP3 player growth in the United States will slow in 2009 or 2010 after peaking in 2008 at unit sales to dealers of 46.1 million units, up from 31.8 million in 2005.