NPD INTELECT Reports Higher Memory Capacity in MP3 Devices is Driver for Steadily Increasing Average Prices

Business Wire, April 12, 2001

Business/Technology Editors

PORT WASHINGTON, N.Y.--(BUSINESS WIRE)--April 12, 2001

According to leading marketing information provider NPD INTELECT(R) Market Tracking, the average selling price of MP3 players in February 2001 was 18% higher than pre-holiday pricing. This is true across all channels, including traditional retail and e-commerce outlets.

                  MP3 Players' Average Selling Price
                      November `00 - February '01

Month/Year    Nov. `00    Dec. `00    Jan. `01    Feb. `01    % Change
ASP           $196        $206        $229        $231        +18%

Source: NPD INTELECT(R) Market Tracking

According to NPD INTELECT, the steep increase over the short four-month period is due to added memory included in newer MP3 players. MP3 devices with higher-capacity removable memory and devices with hard drives are dominating category sales. By contrast, MP3 Players with limited-capacity, imbedded memory have lost share since last November. Products including Sony's Memory Stick Walkman, Iomega's Hip Zip and Creative Labs' Nomad Jukebox offer opportunity for more music downloads. Consumer desire to grab more music from the Web is driving sales of higher priced MP3 Players.

           MP3 Players Containing Different Types of Memory
                Unit Share: November `00 - February '01

Memory Types            Nov.'00    Dec. `00    Jan. `01    Feb. `01
Hard Drive                4.7%       4.5%        9.6%        8.2%
Imbedded Memory            17%       4.2%        5.4%        4.1%
Removable Memory         12.3%      15.7%       16.8%       15.1%
Removable Memory &
 Expansion Slot          65.9%      75.5%       68.2%       72.7%

Source: NPD INTELECT(R) Market Tracking

"In spite of the sales, there has to be a concern in the MP3 industry, since the courts have effectively shut-off the flow of free-music downloads. Still, many companies are betting on the MP3 format by including it throughout their product lines. For example, Samsung has a boombox that contains both a removable MP3 device and a CD player. Many manufacturers have personal CD players and car CD players that read MP3 files `burned' onto CDs," commented Jim Hirschberg, director of consumer electronics for NPD INTELECT.

NPD INTELECT also revealed that the category's market share leaders on the Internet are different from those most prominent in retail channels. In February, Creative Labs was the market leader on the Web; Rio led in traditional channels. This is significant because MP3 devices have become the top-selling consumer electronics category sold on the Web. On average, thirty-five percent of all MP3 players are sold through this channel.

About NPD INTELECT Market Tracking

NPD INTELECT Market Tracking is the leading provider of sales tracking services for the consumer electronics, imaging, home appliance, computer hardware and software industries. Data are collected from comprehensive panels representing each industry's key retail and business-to-business distribution channels. The company's clients include all of the major manufacturers, retailers and business-to-business sellers in each industry NPD INTELECT tracks. NPD INTELECT, is a joint venture of two leading marketing information providers, The NPD Group, Inc. and GfK AG. For more information, visit www.intelectmt.com.