MP3 Portable Players Make Some Noise

Electronic News, April 5, 1999 by Peter Brown

Downloading MPEG audio from Internet heats up

San Jose -- The most surprising hit in the consumer electronics market in recent years is the downloadable MPEG audio portable player, which allows consumers the use of a portable handheld player to download audio off the Internet to be listened to at their leisure.

The so-called MP3 players have been popping up as one of the top ten sellers on numerous on-line E-commerce sites. The hottest selling MP3 player has been the Rio, from Diamond Multimedia. Chipmakers are indicating that MP3 players and similar products may emerge as a potentially huge source of revenue in the coming years as they gain in popularity.

One of the key attractions to the MP3 players is that they are immune to shocks, vibration and bumps because there is nothing to skip or break apart. The music is compressed in a digital format on flash memory chips, eliminating the need for moving parts. Music is downloaded into the player from a PC or other network-linked platform, allowing the same flash card to be used multiple times.

The success of the MP3 has led to the proliferation of music content on the web. At first, there were only a half dozen or so sites where users could find content to be downloaded. Now with the early success of the Rio and with news that other players may be entering the market, music web sites and content are springing up all over the Internet, according to ST Microelectronics Inc. The number of MPEG audio sites should continue to rise if the market for the technology grows.

A typical MP3 player includes an MPEG audio decoder, flash memory, microcontroller, digital-to-analog converter, audio power amplifier and a 1.8V dc-dc converter.

Most of the companies that are developing the chips for this technology already have produced devices that integrate both MPEG-2 video and audio, making it easy for companies such as Zoran Inc., C-Cube Microsystems Inc. and ST Microelectronics to offer audio chips based on MPEG compression.

ST is the most recent addition to the market, announcing its MP3 chip at CeBIT in Germany last month. ST's layer 3 audio decoder chip is aimed at portable MP3 file players and PCs. The chip, dubbed the STA013, is available now and is designed to decode layer 3 compressed elementary streams specified by the ISO MPEG-1 and MPEG-2 standards. The chip is digital signal processor (DSP)-based and optimized for audio algorithms.

ST can provide all of these chips for an MP3 player and could in the very near future roll out a Rio-type player of its own.

MP3 players, including Diamond's Rio player, use CompactFlash memory to store the music in the MP3 players. This means that people can create whole libraries full of music stored on flash disks or they can erase the disk and record new material.

This is good news for companies such as Silicon Storage Technology (SST) Inc. and SanDisk Corp., which have been looking for other consumer applications to use their CompactFlash disks. Having already taken over the digital still camera market, these and other CompactFlash companies want to expand their revenue streams beyond that single area. These MP3 players could be a good fit and a good moneymaker in the near future if availability of content and players continues to grow. The players are already at a $199 or lower price point, making them available to most consumers.

Despite the success of MP3, it is uncertain whether it will remain the medium of choice in this market.

One of the major competitors to MP3 players is satellite radio, which will offer global access to digital MPEG audio via dedicated satellites. This satellite technology is far from a reality, however, and it will be many years before consumers have access to it. In contrast, MP3 players are available now.

"I don't know if MP3 will be the standard going forward or some other standard will be the most popular, but this will continue to be a market that is very viable to chip and systems companies," said Michelle Abraham, senior analyst at Cahners In-Stat Group, based in Scottsdale, Ariz.

From an unsigned musicians' point of view, MP3 offers a good way to get noticed by talent and music scouts, allowing them to put a song on the Internet and possibly attract the notice of recording companies, who maintain a stranglehold on the current music market. However, it also could move both industries into territories of copyright infringement and lawsuits. People could begin to set up pay Internet sites with MPEG audio where users would have access to all kinds of music, whether it was composed by signed artists or not. Individuals could even use the Internet to set up bootleg music sites taken from live and previously recorded material. Neither scenario would please record companies.

"I don't think the record industry could stop someone who was not under contract and it could be a good place for people without music deals to make a name for themselves or their web sites," Abraham said.