Poor Performance of MP3/PMP Player Market in China in 2008

CCID Consulting Co., Ltd, a China’s research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong, recently reviewed China’s MP3/PMP player market.

In 2008, affected by the earthquakes in Sichuan, economic downturn, and performances of mobile phones and PSP, the MP3/PMP market reported poor performance, with a significant shrink in market size.

Sales Volume and Year-on-Year Growth Rate
of China’s MP3/PMP Player Market, 2005-2008 (e)
ccid_consulting_mp3_pmp_player_market_china_2008_14193_540
Source: CCID Consulting, Dec. 2008

Sales Revenue and Year-on-Year Growth Rate
of China’s MP3/PMP Player Market, 2005-2008 (e)
ccid_consulting_mp3_pmp_player_market_china_2008_14194_540
Source: CCID Consulting, Dec. 2008

Judging from China’s MP3/PMP market in 2008, the market presented five characteristics:

1. MP3 Experienced Large-Scale Decline while PMP
Failed to Meet Target
In 2008, affected by a weakening economic environment and competitive products, the MP3 player market size reduced significantly with a negative growth in sales volume. The market has entered a recession.

Sales Volume and Year-on-Year Growth
of China’s MP3 Player Market, 2005-2008
ccid_consulting_mp3_pmp_player_market_china_2008_14195_540
Source: CCID Consulting, Dec. 2008

In 2008, PMP market performed below expectations. PMP manufacturers failed to benefit from the Olympic Games, with the market attention shifted to other competitive products.

Sales Volume and Year-on-Year Growth
of China’s PMP Player Market, 2005-2008
ccid_consulting_mp3_pmp_player_market_china_2008_14196_540
Source: CCID Consulting, Dec. 2008

2. Mid-and-Low-End MP3 Products
Accounted for a Larger Market Share,
High-End PMP Products’ Share Gradually Decreased
A market breakdown over 10 consecutive months show that mid-and low-end MP3s were the mainstream, particularly those below 800 Yuan; with the competition heated up and prices gone further down, the share of mid-and low-end PMPs performed relatively better, particularly those that were priced under 1,000 Yuan.

Sales Volume Structure of China’s MP3 Player Market, Jan.-Oct. 2008 (By Different Price Brackets)
ccid_consulting_mp3_pmp_player_market_china_2008_table1
Source: CCID Consulting, Dec. 2008

Sales Volume Structure of China’s PMP Player Market, Jan.-Oct. 2008 (By Different Price Brackets)
ccid_consulting_mp3_pmp_player_market_china_2008_table2
Source: CCID Consulting, Dec. 2008

3. Flash Memory PMP Players Became a Focus
with Market Share Bypassing that of HD PMPs
Flash memory products monopolized the MP3 player field. As for PMPs, flash memory also captured more attention from PMP player manufacturers. From Jan. to Oct. 2008, sales volume of flash memory PMP products increased from 44.2% in Jan. to 87.3% in June.

4. PMP Video Support Capacity Continued
to Strengthen with More Functions
With the improvements of chip technology and industrial supply chain, PMP’s video support capacity continued to strengthen. PMP no longer stands for a audio and video player — as a platform, PMP could append many more functions, such as TV-OUT, mobile TV, GPS navigation, PDA, wireless Internet access and digital photo frame.

Forecast on China’s MP3/PMP
Market’s Development Trend in 2009

1. MP3 Players

Weak Market Growth for MP3s: Pure audio player market has entered a terminal phrase of maturity, with further market growth unlikely in 2009. Video MP3s, especially video MP3 products with large screen, still have certain market space, but its future market growth will be weak.
Terminal Consumptions’ Regional Hotspots Will Transfer to 3-4 Tier Cities and Central and Western Regions: After the development of 2002 to 2008, MP3 has saturated in China’s first and second tier cities. In the future, the developing areas with great potential will transfer to central and western areas and 3-4 tier cities.

2. PMP Players

Product Price Will Go Down While Functions Will Expand: In 2009, the application of master chips will bring down PMP prices. Meanwhile, as competition heats up among brands, a new round of upgrade will spark: audio and video formats supported will expand further, screen sizes will become larger, and more products will come with better visual effects and higher storage capacities.
Marketing Means Will Diversity: Judging from China’s PMP player market in 2008, many overseas and domestic manufacturers launched new products and adopted many marketing means, thereinto, they strengthened their audition experience activities in terminal market. Some second line manufacturers used strengthening the interactive with consumers to obtain market’s considerable development and attract consumers’ attention.