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Consumer Electronics

   
     
         
         
  China's 1H08 MP3 Player Market Down  
September 3, 2008

China's 1H 2008 MP3 player shipments reached 2.5 million, down 43.8% YOY, while revenues reached 12.2 million, down 43.6% YOY. MP3 player outlook remains weak, but vendors are competing on product features rather than on price.

MP3 Player

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

Shipments (thousands)

2,086.7

2,370.6 2,101.9 1,754.4 1,373.7 1,132.9

Shipment QOQ Growth (%)

-0.50%

13.60% -11.33%

-16.54%

-21.70% -17.53%

Revenues (millions Yuan)

10.21 11.46 10.35 8.61 6.77 5.46

Revenue QOQ Growth (%)

-2.9%

12.22% -9.67%

-16.82%

-21.32% -19.40%

source: ccid consulting, July 2008

 

Note: MP3 players exclude PMPs (portable media players that are not MP3-based). For PMP TrendWatch, see 1H08 PMP Growth Declines In China, But Outlook Positive. Combined 1H08 shipments of MP3 players and PMPs reached 3.07 million, down 39.19% YOY, while revenues reached 1.99 billion Yuan, down 40.51% YOY.

 

MP3 Player and PMP

1H06

1H07

1H08

Shipments ((thousands)

3,516.9

5,046.4 3,068.7

Change YOY (%)

  

43.49% -39.19%

source: ccid consulting, July 2008

For MP3 players, flash memory types were the mainstream, with 2GB and 4GB segments increasing rapidly.

Flash memory MP3 players continue to dominate in successive quarters. Flash memory 128MB, 256MB and 512MB steadily receded, replaced by GB capacities. 1GB had steady growth, while 2GB and 4GB increased significantly. Flash memory capacities will continue to increase, while HD will remain small, but with more capacity, popular in the 5GB and 6GB capacities.

 

MP3 Shipment
Share by Type

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

Flash 128MB

0.13%

0.00% 0.00% 0.00% 0.00% 0.00%

Flash 256MB

4.08%

2.10% 1.12%

0.88%

0.62% 0.15%

Flash 512MB

22.63% 11.41% 10.44% 9.16% 7.02% 3.88%

Flash 1GB

52.67%

50.24% 53.05%

55.66%

54.26% 47.67%

Flash 2GB

10.06% 22.79% 22.58% 22.52% 25.91% 34.44%

Flash 4GB

2.17% 5.09% 4.97% 4.99% 5.46% 7.14%

Flash 8GB

0.34% 0.93% 1.01% 1.12% 1.07% 1.18%

Flash Other

7.50% 7.05% 5.98% 5.23% 5.22% 5.24%

HD All

0.42% 0.39% 0.85% 0.43% 0.43% 0.31%

Total

100% 100% 100% 100% 100% 100%

source: ccid consulting, July 2008

 

Low-end MP3 players are the most popular, with those below 800 Yuan taking 90% shipment share.
 

Midrange to low-end MP3 players, priced below 800 Yuan, is the mainstream in China. MP3 players priced below 400 Yuan accounts for 40% of total MP3 player shipment share. As prices drop, these players will have increased capacities. High-end MP3 players are limited to multinational and some Chinese vendors, but they currently lack sufficient differentiation with lower-end players, and their shares decline.

 

MP3 Shipment
Share by Price Segment

1Q07

2Q07

3Q07

4Q07

1Q08

2Q08

Below 400 Yuan

37.1%

46.7%

43.4% 43.6% 41.5% 44.4%

400 500 Yuan

30.1%

22.9%

23.6%

23.4%

24.7% 22.1%

500 800 Yuan

24.0% 22.1% 24.6% 23.5% 24.0% 23.7%

800 1,000 Yuan

3.5%

2.9%

3.2%

4.4%

3.7% 3.3%

1,000 1,200 Yuan

2.7% 3.1% 2.3% 1.9% 2.3% 3.3%

1,200 1,500 Yuan

1.8% 1.7% 1.9% 2.4% 2.8% 2.7%

1,500 2,000 Yuan

0.6% 0.4% 0.5% 0.7% 0.8% 0.4%

2,000 2,500 Yuan

0.2% 0.2% 0.5% 0.1% 0.2% 0.1%

Total

100% 100% 100% 100% 100% 100%

source: ccid consulting, July 2008

2H08 TRENDS TO WATCH

MP3 players will continue to have weak growth.
 

Compact size, style, and audio quality will continue to be the themes for 2H08. For video MP3 players, products will emphasize large screens, many product choices, and many entrenched brands. Vendor market positions will hold steady.

However, MP3 player growth will be weak to negative, as substitute products such as PMP, music mobile phones, and GPS will increasingly prevail.

Vendors compete on features and differentiation.

Nonetheless, vendors continue to offer more. For pure-audio MP3 players, Samsung, Apple, and OPPO continue to offer new and stylish products, leveraging their brand, quality, and channels. For video MP3 players, Newman, Ramos, and Aigo focus on larger screen sizes, more capacity, video formats, channels and services to be competitive. Competition continues to shift towards more on differentiation and product, rather than price.

Product sales will spread towards China's more rural Tier 3 and 4 cities; and central and western regions.

MP3 players tend to be saturated in China's major Tier 1 and 2 cities. In the search for continued growth opportunities, vendors will focus on building channels in China's more rural areas, and first-tine buyers.

For more information

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Unless otherwise specified, all information provided is sourced from CCID Consulting.

 
         
         
     

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