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Digital Audio Player Adoption To Decline In 2006

  |  August 8, 2005   |  Comments

Installed base of digital audio players will continue to increase, but new unit growth will begin to decline next year.

By 2010 the U.S. install base for Digital Audio Players (DAP) will reach 65.6 million. That's according to a DecisionNote forecast from Yankee Group.

As the total installed based of digital audio players increases, Yankee forecasts the number of first-time owners will decrease. The trend will begin in 2006 and continue to gain speed. By the end of 2007, less than half of digital audio player sales will be to first timers. The precipitous decline in new user adoption will fall to below 5 percent by 2008. The installed base of DAPs grew dramatically in 2004, hitting 10.3 million installed units, up from only four million in 2003, according to Yankee Group.

In February of 2005, the Pew Internet and American Life Project reported iPod adoption had reached the tipping point. Pew estimated over 22 million American adults own MP3 players or iPods.

According to Yankee Group, Apple's iPod represented three-quarters of all DAPs shipped in 2004, a position Yankee Group expects Apple to retain, thanks to its marketing and iTunes initiatives.

Broadband has also been one of the drivers behind DAP adoption. The market gained traction in 2004 when the U.S. broadband audience reached 30 million. Some 43 percent of U.S. households will have broadband access by the end of 2006 according to Yankee Group forecasts.

Yankee Group's 2004 IP Entertainment Survey found that 45 percent of internet users listen to music on their PC. Of those, nearly half have downloaded music.

"With the expanded accessibility of high-speed Internet and availability of online music services, DAPs are poised to become a mass-market product category," the report stated.

Yankee Group recommends that DAP manufacturers take advantage of free content such as podcasting. "Leveraging the growth of legitimate free content will be critical in offering consumers a compelling value proposition," the report said.

In April, the Pew Internet and American Life project reported that podcasting was growing in popularity. Twenty-nine percent of iPod- and MP3 player-owning Americans over the age of 18 report that they have listened to podcasts.

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