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Competition In Tne Mp3 Industry

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In looking at the case some assumptions were made on total units sold by each organization. This was based on the statement that Apple controlled at one point 60 - 80 % of the overall MP3 market. Price comparisons are based on the entry level product in the hard disk market of MP3 players for each company since some companies did not have a second offering that could be compared. Additionally it is noted that Scan Disk did not have a product offering in this group.

The overall competitive position on Sony and Creative is good. Each is behind the leader Apple but each brings its own positive features to bear. Creative brings an excellent product to the table but does not have the product branding required to compete effectively. Dell has the branding name but does not have the market presence it should. From a pricing and customer satisfaction perspective it would appear to be a quality product. Sony has the ability to succeed; but with their entrance into the market with a proprietary interface, could scare the knowledgeable consumer away from their product line. iRiver has a very strong presence in the Asian market and will be a strong competitor there. Scan Disk does not provide a product in the market but has a major strength in the flash memory.

Archos is in trouble loss of revenues and reduction in work force sounds like major steps in trying to right a wrong ship. There primary strength appears to be in the foreign market.

Hard Drive Tech

Apple: IPOD 30 GB $299 60 GB $399

Archos Gimini XS 202 20 GB $249 XS 400 20 GB $329

Creative ZEN Sleek 20 GB $269 ZEN Vision 30 GB $399

Dell Digital JukeBox Pocket 5 GB $169 DJ 30 GB $239

iRiver H10 20 GB $299 H10 20 GB $499

Rio Karma 20 GB $199 No second option

Sony Network Walkman 20 GB $279

Scan disk No entry

Industry Key Success Factors:

As technology constantly refines itself the manufactures of MP3 players are continuously able to take advantage of the technological advances developed by the suppliers of component parts. Factors such as battery life, storage capacity, storage technology (flash vs. hard drive) and sound quality provided by component suppliers allows MP3 manufactures to concentrate more on the cosmetic design of the player and its user interface.

Technology-related KSFs:

* Expertise in particular technology or scientific research: Of the 7 players in the market Apple has controlled the market with as much as 80 % share of the market place.

* Proven ability to improve production processes: In the case of Apple the continued release of new products has given them a competitive advantage over its rivals. Each new release of product has brought a new innovation to the consumer. For instance the IPOD was first introduced into the market in October of 2001 by July of 2004 it was already into its fourth generation of design. You compare this to Sony; who in its own right is an electronic and technology leader, did not bring a competitive product to market until August 2004.

Manufacturing-related KSF's:

* Because the MP3 industry product lines were becoming more of a fashion icon rather that a technology tool. Consumer demand trended more towards the "look". MP3 players could be found in sunglasses for instance, in attempt to provide the consumer the ability to listen to music and be able to make a fashion statement all at the same time.

Distribution-related KSF's:

* Direct sales from manufactures web sites such as the Apple Store, HP Direct provide retail sales direct to the manufacture.

* Other retail web outlets such as Amazon, Tiger Direct, New Egg, and Funk Software provide consumer's alternatives for product purchase.

* Retail stores such as CompUSA, Best Buy, Wal-Mart and Target place product in floor space based on consumer demand. The more products sold the more floor space provided for product display. Example would be Fry's Electronic stores on the west coast have very large sections of each store dedicated to Apple and its entire product line. There you will find prominently displayed on their floor space the IPOD product line.

Marketing-related KSF's:

* Each of the 7 competitors has variations of the product in both hard drive and flash drive technology. With alternative means of acquiring music to play of their devices.

* Each of the 7 competitors is well known in the technology industry, and not necessarily for the same products. For example when you think of Apple until the IPOD came out,I thought of the MAC, Dell I think of computer desktops, Creative Lab's I thought of sound systems, Sony I thought of TV's and consumer electronics. ScanDisk I thought of storage capacity. Both Archos and iRiver, I had never heard of until this case, but both have strong loyalty in the respective countries.

* Technical assistance can be obtained via several methods. For certified field service personnel that can be found in retail stores, 800 numbers to their technical support groups, and company wed site Q&A or knowledge bases.

* Advertising such as Apple's use of the band U2.

Skills and capability-related KSF's:

* All 7 of the competitors have large work forces with proper skills to develop and implement their products lines.

* Distribution capabilities: Producers use wholesalers to deliver their product to the retail industry. They also bypass the wholesaler with direct purchase capability from company web sites.

* Design expertise: With the MP3 player becoming a fashion accessory rather than an electronic tool. The design must fit the fashion. For example the simple ability to just change the face plate of the device to a young teenager would be a cool feature.

* Product innovation: Each manufacture has multiple variations of the product. Manufactures



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