BEIJING, March 25 /Xinhua-PRNewswire/ -- CCID Consulting Co., Ltd., China’s leading research, consulting and IT outsourcing service provider, and the first Chinese consulting firm listed in Hong Kong (Hong Kong: 8235), released the 2007-2008 Annual Report on China’s MP3 Player Market at the Consumer Electronics Market China 2008. The report shows that in 2007, China’s MP3 market maintained a steady growth momentum. Total sales volume for the whole year reached 8.75 million sets, while sales revenue amounted to 4.26 billion Yuan, up by 17.0% and 2.7% over 2006, respectively.
The continuous enrichment and diversification of MP3 functions are a logical outcome of market growth. The market leads consumption. As portable MP3 players diversify and consumers show more diversified demands, MP3 players with only basic functions can no longer meet consumer demand. Many vendors will therefore shift their efforts to the video MP3 field. Pure audio MP3 has gradually reached the small mass market. However, it still has growth potential and room for market growth.
In 2007, big screen, big capacity and multifunctional video MP3 players were still the MP3 market segment of greatest attention in China. User groups further segmented. Market competition also gradually shifted from solely price wars to competition based on brand strength.
Fig. 1 Sales Volume and Its Growth in China’s MP3 Player Market, 2005-2007
http://www.ccidconsulting.com/upload/12880.GIF
Source: CCID Consulting, Jan. 2008
As the market of 2007 closed its curtain and the more promising year of 2008 entered, China’s overall MP3 player market showed the following major features in 2007:
The pure audio MP3 market is highly concentrated; foreign brands have the advantage
In 2007, 49.8% of China’s pure audio MP3 player market was concentrated in the hands of the top 5 brands, namely Samsung, Apple, OPPO, Sony and UNIbit. Of these 5 brands, foreign brands accounted for 36.3%. These figures fully show that in the pure audio MP3 field, foreign brands have advantages.
In the face of a declining pure audio MP3 market and increasingly thin product profits, differentiation is the key to MP3 brands’ survival. In essence, the process of differentiation is a process of innovation. Its key lies in the ability to look for blank spots in the market, tapping potential personalized demand, innovating product functions and added service values by innovating brand values and providing users with new consumption experiences. This will allow enterprises to expand their differentiation through continuous innovations and establish greater competitive advantages. As the origin of marketing, product differentiation directly affects the survival of brands.
Though the pure audio MP3 market in China has been gradually shrinking, foreign brands such as Samsung and Apple continue to introduce new products with their own styles in an effort to meet consumers’ diversified demand. Their differentiated competition have all won them good performances in the market.
Fig. 2 Sales Volume in China’s Pure Audio MP3 Market in 2007 by Brand
http://www.ccidconsulting.com/upload/12881.GIF
Source: CCID Consulting, Jan. 2008
"Small size, elegant appearance and fashion" become the development directions for pure audio MP3 players
In 2007, the hot sales of video MP3 players caused a major impact on pure audio MP3. However, enterprises such as Apple and Samsung still adhered to their long culture and continued to create a "music culture" for their products. In terms of appearance, small size, elegant appearance and fashion became the marketing spots for pure audio player products.
Fundamentally speaking, if a product or an industry does not want to be replaced or eliminated by the market, it must have a unique competitive edge. In addition, clear positioning is needed for the product. For pure audio MP3 player vendors, creating more "music" culture attached to their products and brands is very important. Listening anywhere at anytime should be the primary function of their products. "Small size, elegance and beautification" should become the future development directions for pure audio MP3 player products.
Big screen video MP3 is the mainstream; HD becomes the development direction
Video MP3 players make up the main part of MP3 player sales. As technology continues to advance, video MP3 players have seen their screen size grow from 1.0 inch at the beginning to 1.8 inches and then topping 3 inches. As screen size continues to hit new records, the mainstream products in the market have also changed. CCID Consulting’s monitoring data shows that 2.0-2.4 inch video MP3 products have gradually gained a mainstream position, accounting for 60.2% of the overall sales volume.
Major MP3 vendors have never given up making screen improvements. This is not only reflected in screen size upgrading. In terms of selection of screen texture materials, they have also more tailored to consumers’ desire for a high-quality digital life. Big screen and HD are the development directions in the whole video MP3 market.
Fig. 3 Sales Volume in China’s Video MP3 Market in 2007 by Screen Size
http://www.ccidconsulting.com/upload/12882.GIF
Source: CCID Consulting, Jan. 2008
Products under 500 Yuan dominated in the market
With the overall drop in MP3 prices, low-end models priced under 500 Yuan gradually become the mainstream in the market. Meanwhile, low-price models also have a growing capacity. Middle- and high-end models priced over 800 Yuan are only limited to a few high-end products from domestic and international brands. Due to their lack of effective differentiation from low-end products and together with pressures from the PMP player market, the middle- and high-end MP3’s market share has remained less than 10%.
Table 1 Quarterly Sales Volume of China’s MP3 Player Market in 2007
by Price Segment
Price
Segment 2007Q1 2007Q2 2007Q3 2007Q4
(Yuan)
≤500 67.2% 69.6% 67.1% 67.2%
501-800 24.0% 22.1% 24.5% 24.6%
801-1,000 3.5% 2.9% 3.2% 3.4%
1,001-1,500 4.6% 4.8% 4.2% 4.3%
1,501-2,000 0.5% 0.4% 0.5% 0.3%
≥2001 0.2% 0.2% 0.5% 0.2%
Total 100.0% 100.0% 100.0% 100.0%
Source: CCID Consulting, Jan. 2008
Video players now supporting Rm/Rmvb format
Video format conversion has long been a baffling problem for MP3 vendors and consumers. Due to different video compression standards and coding methods, solution developers usually only provide several common coding files for direct playing, while other formats must be converted into those supported by the video conversion software. However, video file conversion, falling picture quality, complicated operation processes and a long conversion time have deterred many consumers. In addition, lack of sufficient video resources has also become an important factor that restricts its development.
Today, there are very rich online video resources. Rm and Rmvb formats introduced by Real Company account for almost 80% of all online video formats, with huge market and user groups. Promoting people’s ready use of these free resources has long been a goal pursued by player vendors. In such a situation, video players supporting Rm/Rmvb format have come into being. The year 2007 was a year of big growth for them. It is believed that the era of Real player has arrived. In 2008, MP3 products that support full Rm/Rmvb specifications will become a new center of competition in the MP3 market.
In the next 5 years, China’s MP3 player market will grow steadily, with a drop in annual growth rate
Summing up MP3 vendors’ market strategy tendencies, balance between upstream resources, supply and demand, features of market and user demand, and market status, China’s MP3 player market will continue to maintain a steady growth momentum in the next 5 years. But, its growth rate will drop year by year. In the next 5 years, sales volume will have a CAGR of 7.9%, while sales revenue will achieve a CAGR of 5.9%.
Fig. 4 Sales Volume and Growth in China’s MP3 Player Market, 2008-2012
http://www.ccidconsulting.com/upload/12884.GIF
Source: CCID Consulting, Jan. 2008
Fig. 5 Sales Revenue and Growth in China’s MP3 Player Market, 2008-2012
http://www.ccidconsulting.com/upload/12885.GIF
Source: CCID Consulting, Jan. 2008
For more information, please contact:
Cynthia Liu
Coordinating Manager
CCID Consulting Co., Ltd.
Tel: +86-10-8855-9080
Email: liuyan@ccidconsulting.com