Apple`s ubiquitous device has fueled interest in all video-capable portable players.

August 10, 2006

The market for video-capable portable media players (PMPs) will increase 1282 percent to 5 million units worldwide by the end of 2006, an analyst said Thursday, thanks to Apple’s video iPod.

That figure compares with just 390,000 units in 2004, In-Stat industry analyst Stephanie Ethier said. In addition, the Apple gadget has spawned greater awareness of portable video players—75 percent of U.S. consumers surveyed by In-Stat say they are familiar with the devices.

And since Apple introduced its player in October 2005, competitors such as SanDisk and Samsung have unveiled similar products, helping to establish the market, Ms. Ethier said (see Apple Up 9% After Video iPod, SanDisk Chases iPod, Samsung Intros iPod Rival).

Of course, companies such as Creative bragged of video players before Apple, but the analyst said it’s the combination of the iPod’s brand awareness and iTunes’ seamless delivery of tier-1 content—videos that are actually popular rather than ones made specifically for mobility—that really started to pique consumer interest.

“What we’re going to see is, as consumers start seeing more and more PMPs, they will start educating themselves on what the devices are,” Ms. Ethier said. “The question will become, do they want to buy a cheap player? Or are they willing to spend several hundred dollars on a device they can hook into [TVs at home]?”

The way In-Stat defines a portable media player, as opposed to just a music player, is one with a screen that’s at least 3 inches wide. So even the current video iPod doesn’t fall into this category, Ms. Etheir said, as its screen is just 2.5 inches wide.

Now Playing?

Indeed, feature-length films are still conspicuously absent from the iTunes store, and Apple watchers have long been expecting movie downloads as the company’s next big thing (see iPhone Chatter’s Disconnect).

“For people to watch movies you have to have a comfortable-sized screen,” said Ms. Ethier, noting that until then it might be impractical for iTunes to sell full-length flicks. “But by mid-2007 we expect the technology will have improved” for players to have such screens—no matter who they’re made by.

As it’s been almost one year since the last iPod debuted, observers have been expecting a larger-screen player in time for the holidays—perhaps achievable with touch-screen technology (see Apple Ponders Touchless iPod).

Meanwhile, In-Stat also expects improvements in video compression technology, download content sites, and wireless communications will help drive the market.

“It’s still going to be early adopters, since they’re the ones that are going to be educated about this,” Ms. Ethier said. “But we hadn’t seen demand like this in 2004 or even last year.”