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Wednesday, 01 June 2005 |
MP3
leaders face off
Electronic Business -
San Jose,CA,USA
PortalPlayer and SigmaTel are taking aim at new markets—including each others'
After dominating their respective markets and seeing their sales multiply during
the past year, the top two suppliers of MP3 music player semiconductors are
introducing new chips targeting each other's markets.
PortalPlayer, the leading supplier of chips used for audio processing and other
functions in MP3 players based on a hard disk drive, such as Apple Computer's
iPod, recently unveiled its first chips for players that store music in flash
memory. Meanwhile SigmaTel, the leading supplier of MP3 audio chips for
flash-based players, such as those from Creative Technologies, Dell and Samsung,
plans to introduce new chips for hard-disk players in the third quarter of 2005.
"Both companies are aiming at each others' markets," says iSuppli analyst Shyam
Nagrani. "They had to, because that's the only way they could grow." Indeed,
although the digital music market shows few signs of slowing, each company so
thoroughly controls its own market segment that it would be difficult for either
to gain much more market share. Despite competition from Intel, Texas
Instruments, Philips and others, iSuppli estimates, PortalPlayer chips are used
in at least 80 percent of MP3 players based on hard disks and SigmaTel chips are
used in more than 70 percent of flash-based players.
Apple is a big factor in both companies' success. PortalPlayer's chips have
powered all of Apple's wildly successful iPod hard-disk players, which generated
more than $1 billion in sales in 2004. PortalPlayer's sales have soared along
with the iPod's, quadrupling from $21 million in 2003 to $93 million in 2004.
SigmaTel, which sold chips mostly to other MP3 makers last year, nearly doubled
its sales, from $100 million to $195 million, during 2004. But the company's
recent deal to supply chips for Apple's new Shuffle flash-based players was key
to its 26 percent sales growth in 2005's first quarter.
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