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Flash MP3 players: Stable NAND costs spur price cuts

No-frills flash-based models are leading the output targeted at the novelties and premiums sectors.

Flash-based units will continue to prevail in China's MP3 player industry covering FSTN, CSTN and no-display units, where stable NAND chip and key component costs are facilitating price reductions. Export quotes are likely to stay at 2H09 levels or drop by 5 to 10 percent in the next six months.

Flash MP3 player
  Yifang's model EM133LA flash MP3 player in frog head design comes with a 256MB to 8GB internal memory, USB port and rechargeable Li-polymer battery.
The line, regarded as entry level or midrange at best, takes up about 40 percent of production in the country, now dominated by TFT and OLED types. Most models are basic and used only for playing and storing music. Those without LCDs are aimed at the novelties and premiums sectors. Some have no internal memory but support an SD card or MMC.

Devices such as these do not leave much room for functional enhancements except in the cosmetic aspect. New models therefore have novelty housings in various shapes, colors and finishes.

The necklace-type VS-439LO model from Vstar International (HK) Ltd, for instance, is composed of two pieces that when put together form a heart. Another is Yifang Digital Technology Co. Ltd's model EM133LA MP3 player in the shape of a frog's head. It is made of rubber-coated green plastic and has two LEDs embedded in the eyes and three in the mouth with 2 and 8GB internal flash memory, respectively.

Enhancing audio quality is also an important development objective for many companies. To achieve this, most are adopting Actions, Sunplus, Ali and SigmaTel ICs. Rockchip's RK26XX and 27XX are likewise often used.

Constant performance upgrades and function integration have rendered mainstream the erstwhile highend units, according to the interviewees. The GX-M501B model from Gardex Electronics Co. Ltd and other similar products that support dual earphones, an FM radio and digital voice recording used to be upscale.

Demand, however, declined in recent years with the proliferation of MP3 players that have OLED and TFT LCD, pushing prices down $10 to $15 each, excluding internal memory.

Suppliers of no-display, FSTN and CSTN types will focus future R&D on the midrange segment as portable media players and smartphones continue to flood the market. Not many will concentrate on low-end versions in 2010 but these will remain a part of their line.

In coming months, companies will roll out more products with improved ICs and integrated functions in keeping with prevailing trends. Current screen sizes are 1 to 2in but there will be a profusion of 2.4 to 3in versions this year. As the ongoing migration to video-capable units ensues, the bulk of releases from China will be of this kind.

All manner of cosmetic design, meanwhile, can be expected. Custom specifications are accommodated by most manufacturers as well.

Varied range
Strong exports
Hong Kong: Innovation keeps line afloat
Taiwan: HDD-based multifunction units lead
Flash MP3 player
Varied range

MP3 players from China usually support other media files. Almost 90 percent of these have an internal flash memory, while the rest are hard disk-based. The latter, however, is increasingly being made for home theater applications. As with most devices in the line, products from suppliers interviewed for this report have FSTN or CSTN LCDs, the first showing only text while the second, images and videos. All have built-in NAND chips, the cost of which is excluded in quotes.

Units with 1 to 1.2in backlit color displays are low-end and do not exceed $10. Most are 1 to 4GB and have USB ports, earphone jacks and tactile buttons. They support WAV and WMA formats, and are powered by AAA or AA alkaline batteries. Versions without screens likewise fall under this category.

Midrange models have 1.5 to 2in screens, FM radios, internal microphones, and recording and lyrics synchronization on top of the basic functions. Units play back AAC, Ogg Vorbis, AVI and MPEG-4, and run text and JPEG. The 8GB internal memory can be supplemented by an SD card or MMC. Quotes are $10 to $15.

With prices starting at $15, high-end versions typically have at least 2in mostly touchscreen CSTN and 16GB capacity. Aside from the aforementioned features, models have stereo speakers, e-book readers, games, cameras and an HDMI output. They also support BMP, GIF, APE and RM or RMVB formats.

Strong exports

The continued recovery of the global economy is encouraging China MP3 suppliers to step up export activities. The current market climate suggests that shipments will pick up by 5 to 10 percent in the next six months.

Companies are expanding to new destinations, including Africa, the Middle East, Southeast Asia, South America and Eastern Europe. Orders from these regions have increased in the past months and will continue to rise throughout 2010.

Entry-level products are mainstream in these markets but makers are promoting their midrange line, which have higher returns. A larger share of exports will be allotted to these devices.

Most manufacturers of MP3 players without a display and those with FSTN or CSTN screens also turn out versions that have TFT LCDs or OLED. Overseas sales for the latter types, however, are bound to overtake that of no-display and FSTN or CSTN units. Export quotes will remain stable this year.

General R&D for MP3 players emphasizes Bluetooth and Wi-Fi capability, and HD or HDMI output. Compatibility with more video formats is likewise a priority.

There are at least 350 suppliers of MP3 players of all kinds in China. Small enterprises make 20,000 to 50,000 no-display and FST or CSTN-screen models monthly. They have about 300 workers.

Midsized companies have 500 employees and produce 80,000, while large manufacturers turn out at least 150,000. Tier 1 businesses have a workforce of 800 to 1,000. The majority is engaged in OEM and ODM.

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Hong Kong: Innovation keeps line afloat

Hong Kong suppliers of stand-alone MP3 players are getting creative, ensuring the segment's survival amid stiff competition from portable media players and integrated units.

Given depressed profits, makers are reluctant to undertake extensive product development on functions, concentrating instead on the housing. Many are updating existing series and marketing two to five releases every six or 12 months.

With hundreds of models already in their catalogs, companies believe streamlining costs is currently more important than R&D. Low prices are the main selling point for the devices, which are now constrained to the low-end and midrange.

Selections are generally minimalist and simple yet visually appealing. Suppliers are doing away with overly accessorized and complex designs. Many are rolling out miniature units, most of which have no LCDs. A few have hired in-house staff to broaden their portfolios and strengthen customization capability further.

Realigning targets, most Hong Kong enterprises are now producing units for children, marketing the devices as electronic toys.

Sysbay International Technology Ltd, for instance, makes versions with pastel housings, including pink, light blue, light green and combinations of these hues. Novelty designs, large buttons and a maximum volume level below adults' standards are value-added features.

Steering clear of memory fluctuation, most offer model with a card slot instead of internal flash memory, such as Ryde Products Ltd's CBM-01 Cube MP3 player. With up to 2GB storage capacity, the clip-on device also comes with a cable organizer.

Companies in the line have stopped manufacturing units with built-in hard disks due mainly to cost issues. There are at least 30 suppliers in Hong Kong but the majority have shifted focus to products with higher profit margins.

Others are concentrating on desktop versions rather than the portable kind. They put extra emphasis on design, according to E-3 Accessories (Hong Kong) Ltd.

The Solido Tube model from E3 supports MP3 and WMA formats, storing and accessing them directly from an SD card and a USB flash drive. The 2.1-channel system has a tubular metal housing, touch sensor controls and an auxiliary input for mobile phones or another MP3 player.

Notwithstanding restrictions on the industry's development, stand-alone MP3 players will continue to be produced in Hong Kong for many years. Output will remain stable and exports robust.

Taiwan: HDD-based multifunction units lead

Traditionally upscale-oriented, Taiwan suppliers have all but stopped producing units dedicated to MP3 playback, mainstream models boasting integrated functions and multimedia capability. Hard-disk based types outnumber flash versions and models without displays are prevalent.

Devices are typically for PC or TV applications and have 2.5 and 3.5in hard drives with 640GB to 2TB capacity, respectively. Wired or wireless connectivity is a staple, as are 10/100Mbps Ethernet and 802.11b/g. Most hard disk enclosure and networking product suppliers in the island offer these as a secondary line.

The USB 3.0 interface is increasingly becoming standard and releases in 1H10 will likely have this feature, according to interviewed companies.

A-Tec Subsystem Inc., for one, will add DVB-T tuners to its upcoming rollouts as a response to rising demand for units with digital TV capability. The series has 1-touch recording and time-shift options.

Software enhancement is a key development area in Taiwan. Suppliers there continue to upgrade the functionality of their products, many of which now support RM, RA, RMVB and H.264. Others have Bit Torrent download and recording functions.

Enhanced solutions have paved the way for integrated versions, including the model ADM-555H network media player from Alpha Networks Inc. The unit's connectivity includes residential IP surveillance cameras. It allows viewing of live video streaming from different rooms, and Internet access.

The product can likewise play back multimedia files from storage devices over the home network. It supports DTS 2.0 Digital output and Dolby Digital Plus surround sound, and decodes H.264, MKV, WMV9, DivX, Xvid, AVI, VC-1, VOB/ISO/IFO, MOV and DAT.

Future R&D will be directed at 10, 100 and 1,000Mbps units, which are bound to be mainstream this year.

Wireless connectivity through a USB dongle is expected to be a standard function. While 802.11n, eSATA interface and HDMI ports are currently restricted to high-end models, these are also becoming common.

Aside from ABS and other types of plastic, the range of material will include aluminum and other kinds of metal with a variety of surface finishes.

The main shipment destinations are Japan, Europe and the US, where there is a high penetration rate for PCs and related products.

Export models without hard drives are between $50 and $90 each. Versions that have 1080p or HD resolution, TV connectivity and wired LAN are $70 to $80. Those with TV recording and wireless connectivity are $80 to $90. An additional $3 to $4 per unit is levied on units with 802.11b/g and 802.11n.

This article "Flash MP3 players: Stable NAND costs spur price cuts" is originally posted in Global Sources.

Note: All price quotes in this report are in US dollars unless otherwise specified. FOB prices were provided by the companies interviewed only as reference prices at the time of interview and may have changed.

Disclaimer: All product images are provided by the companies interviewed and are for reference purposes only. Those product images featuring products with trademarks, brand names or logos are not intended for sale. We, our affiliates, and our affiliates' respective directors, officers, employees, representatives, agents or contractors, do not accept and will not have any responsibility or liability for product images (or any part thereof) which infringe on any intellectual property or other rights of a third party.

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