First on TMO - Apple Dominates MP3 Market in Units Sold 5 to 1, Data Shows

by , 9:30 AM EDT, October 12th, 2004

Apple's iPod and iPod mini continued their domination of the U.S. portable music player market in August in terms of actual units shipped by a margin of five to one, new data shows.

According to August figures from market research firm NPD Group, Apple's market share of actual units shipped in August stood at 65.8% compared to 27.6% in August of 2003. It's closest rival was Rio at 6.4%, followed by iRiver in third with 5.6%. The numbers are based on all types of portable music players.

As for the market share of hard drive-based players, Apple has no equal, according to the numbers, and has widened its lead versus competitors by 40% over the last year.

Of HD-based players, Apple's market share of actual units shipped in August stood at a whopping 92%, compared to Rio with 2.5% and Creative Technology at 2.3%. A year ago, Apple controlled the same sector by 52.6%. It's closets competitor then was Rio with 7.8%.

iPod mini a big hit, data shows

NPD analyst Steven Baker told The Mac Observer the numbers clearly show the iPod mini has been a big hit over the last year and has helped Apple solidify its market share base.

"Any concern there was over the success of the mini was mistaken," Mr. Baker said. "It was a clear differentiation from its competitors. Apple knew the market and they understood what they were doing. They know their niche products well."

Mr. Baker said that in terms of all MP3 players shipped, the mini made up one-third of Apple's 65.8% market share number in August.

Monday, TMO reported on Apple's market share based on consumer surveys. The difference between the two types of market shares is significant. Consumer market share numbers are calculated using a percentage of actual unit sales reported by major retailers, such as Apple's retail stores, together with consumers surveys of buying habits. Market share based on actual units shipped reflects the true number of MP3 players ending up the hands of consumers.

"Apple is more interested in units shipped than consumer sentiment," Mr. Baker said. "Also, while they care how well they're doing against their competitors who make hard drive-based players, they are more interested in how they are doing against all types of players and if they are convincing consumers to buy an iPod instead of a flash-based player."

Christmas won't hurt iPod

Although a number of new portable music devices will debut this holiday season, Mr. Baker doesn't think any of them will have an major impact on Apple's market dominance.

"I don't think this Christmas is a big issue for Apple to worry about competition," he said. "Few can match their price and functionality right now. The issue becomes what happens next year. There will be better competition and it will be fierce. There will be pressure on pricing, and pressure on features. Apple has got to stay ahead of the competitors."