2006 will be the breakout year for portable media players (PMPs). Previously hindered by high price quotes, digital rights management issues and limited video content from service providers, PMPs broke ground in 2005 because of the continuous decline of the costs of storage media such as fl ash memory and hard disk drives. About 60 percent of PMP models in the market today were launched during H1 2005.
Surveyed makers are projecting an output of 4.91 million PMPs in 2006, after shipping about 2.2 million units in 2005.
Mainland China suppliers are mainly assemblers that rely on reference designs from component suppliers or cooperate with design houses. The region's supplier base is expected to increase to as many as 90 makers by the end of 2006 from about 50 makers in 2005.
Taiwan's supplier base will increase to 50 companies by the end of 2006, with new entrants that include several well-known IT companies which have been observing industry developments in the last couple of years.
This report covers PMPs that support more than one media format, such as audio and video, and include an LCD or OLED screen.
Based on the manufacturing, product development and export statistics provided by 36 PMP manufacturers, including 21 from mainland China, six from Taiwan, three from Hong Kong and six from South Korea, Global Sources presents the following findings:
The Manufacturing Capability section talks about what production processes the surveyed makers generally outsource and what processes are done and monitored in-house to ensure quality output and fast delivery time. It also outlines the quality control tests and inspections vital during assembly and pre-shipment, and component sourcing.
Products and Prices discusses the production share of HDD and flash PMPs. It reports on the current product trends as well as functions and features that distinguish high-end units from entry-level and midrange PMPs.
Major growth drivers that are likely to contribute to the PMP market in the future is explored in Outlook. The section includes pricing and component cost and supply forecasts. Part of the section focuses on the features and functions that buyers can expect from upcoming models.
Industry Overview
The portable digital entertainment industry is quickening the leap from audio-centric devices (MP3 players) to multimedia products that play videos and display digital images. Portable media players, or PMPs, are projected to be at the center of the mobile digital lifestyle, and many IT brands, such as Apple, Sony, Samsung, Archos and Creative, are jostling to position their brands in the upcoming market explosion.
As these companies lend their names to promoting awareness of PMPs into buyers' consciousness, however, the principal activity for their commoditization is actually happening in mainland China and Taiwan, where hundreds of manufacturers are in a flurry to develop PMPs.
Makers in the region are responsible for manufacturing in part or in full many of the PMPs bearing well-known brands in the market. For instance, Taiwan's Inventec Appliances is the contract manufacturer for Apple's video iPod. Many other makers in the island have released prototypes and working models, and are eager to accept OEM orders and carry out mass production.
The increasing output among manufacturers, the emergence of new manufacturers, falling prices of key components, and the growing availability of digital content are contributing to the growth of the PMP market. The surveyed PMP manufacturers in this report —representing a cross-section of the supplier base in mainland China, Taiwan, Hong Kong and South Korea —include those who have been in the line at least five years and makers who entered only in 2006. Some offer mainly assembly services, while others can carry out PMP development from drawing board to finish.
2006 is expected to become a breakout year for PMPs. Most expect output to increase by at least 50 percent. Collectively they project to ship 4.9 million units in 2006, a 122-percent improvement over 2005.
The major production centers are northern Taiwan and Guangdong province in mainland China.
There are about 40 makers of PMPs in Taiwan, among them are major computer peripheral and consumer electronics companies. They are headquartered in Taipei and Hsinchu, and own multiple factories located in Taiwan and offshore, usually in the mainland China provinces of Guangdong and Jiangsu.
Supplier Profile
BTL International Development Ltd
BTL International Development Ltd, based in Shenzhen and established in 2001, manufactures PMPs and MP3 players. Its product catalog also features Bluetooth headsets, USB flash drives, USB watches and USB pens.
BTL set up its own factory in August 2004. The factory conducts insertion, assembly, QC, QA, and packaging.
The company's competitive edges are its vast experience in the export business, established cooperation with customers, and low operating cost.
In 2006, BTL plans to improve its MP3 player and PMP lines. It will also explore other consumer electronics products such as car DVD players.
OEM accounts for 40 percent of the company's production, ODM and own brand units account for 30 percent each.
BTL's main export markets are Western Europe, which absorbs half of BTL's output, and East Asia, which accounts for 15 percent.
Other export markets include Australia, North America, the Middle East, and Central and South America.
Manufacturing Capability
BTL's headquarters and factory are located in Xili town in suburban Shenzhen, Guangdong province. Global Sources was able to visit both the office and factory.
The 2,000 sqm factory has about 160 production workers. Most of them are assigned along the assembly lines.
The company maintains an IQC department, which comprises eight workers. All purchased raw materials and components have to pass IQC before they are forwarded to the assembly line.
The main workshop has two assembly lines, each run by 50 assembly workers and five QC workers. The assembly lines are equipped to assemble PMPs and MP3 players.
After assembly, the finished products are sent to the QC room for 100 percent inspection.
Once the inspection is completed, the products undergo vibration and aging tests. All PMP models have to pass a six-hour aging test.
The aging room can handle 400 PMPs or MP3 players at the same time. The factory operates according to the 6S standard and adopts 2.5 AQL.
Instead of expanding the factory size, the company prefers focusing on product management and marketing to improve its business.
The company has a five-member technical department, which is tasked to conduct product tests, oversee production procedure planning, and provide production support and quality control.
BTL manufactures both HDD and flash PMPs. It offers 10 PMP models, which can be customized according to buyer's request. BTL purchases most of the key components and materials from overseas suppliers. Flash memory is purchased from Samsung and Hynix.
Products and Prices
BTL's HDD PMP models are quoted from US$190 to US$300, depending on add on functions such as video playback, games and TV-in. Its flash PMP models are usually quoted lower than HDD models.
All this column of information contained in China Sourcing Reports is the result of original, independent and impartial research conducted by Global Sources analysts.
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