U.S. Internet Portable Sales Seen At 2.4M Units In '00

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continue to rise through 2002, in part because of a growing selection of portables and growing consumer awareness of Internet music downloading, Cahners In-Stat projects.

In 2002, worldwide retail-level sales of Internet audio portables will hit $1.25 billion, up from last year's $126 million, according to the market research company, owned by TWICE parent Cahners Business Information. Worldwide unit sales will rise from 1999's 700,000 to 2.9 million units in 2000 and 6.9 million in 2002.

In the United States, unit sales will rise from last year's approximate 650,000 to about 2.4 million in 2000, 3.7-3.8 million in 2001, and 5.1-5.2 million in 2002. That year, retail-level dollar volume will hit $830 million, compared to 1999's approximate $113 million, the market research company said in a report on sale through www.instat.com.

By comparison, 1999 factory-level U.S. sales of cassette-, CD- and MD-based headphone portables was $1.02 billion, according to the Consumer Electronics Association.

In-Stat pointed out that more than 50 companies are manufacturing the portables, up from only five a year ago. Many of the companies have begun to steal market share from industry leader Diamond Multimedia, which accounted for more than half of all worldwide unit sales at the beginning of the year, said analyst Mike Paxton.

Consumer awareness has grown in large part because of the music industry's lawsuits against download site MP3.com and file-sharing service Napster, Paxton said. In fact, he noted, publicity about the legal disputes may have helped end a temporary sales-growth lull that began in May and ended in the past month or two.

A growing number of households with broadband Internet connections is also helping drive up unit sales, Paxton added, as are closeout prices on first-generation models at prices as low as $99 with 16MB to 32MB of included memory.

During the past year, however, the median selling price has actually gone up, in part because of a spike in flash memory prices. Part of the increase, however, was due to manufacturers bundling more memory with their players, said Paxton.

In July 1999, the median price of a portable was about $165, but a year later, it rose to $217. A growing library of downloads authorized by the big five music companies will also contribute to growth, In-Stat said.

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