According to sales data by top music player makers such as Sony and Philips, the demand for portable music players plunged by up to 25% in 2012, a year when smartphones and tablets became both cheaper and technologically superior devices than before for listening to music.
As a result, electronics chain Next has reduced focus on this segment while leading technology retailer The Mobile Store has stopped selling iPods and other portable music devices altogether in its outlets due to the plunging demand.
"The convergence of multimedia such as music, videos and photography in mobiles and tablets is becoming a big phenomenon in India as entry-to-mid segment smartphones and tablets are becoming more feature-rich than ever before, which will only further accelerate the decline in sales of music players," said Himanshu Chakrawarti, chief executive of The Mobile Store.
Sony India has reported a decline of almost 50% in sales of its Walkman portable music players, compared with the 2011 numbers. Sales fell for Philips as well, with the Dutch company on Tuesday announcing its global decision to completely exit the audio-visual business, which was largely driven by portable MP3 and MP4 players. Sales of Apple's range of iPods too fell for the first time in India in 2012, retailers said.
The launch of the fifth-generation iPod Touch during the festive season did not help much since it was priced at Rs 23,900 onwards. At the same time, the price of the iPhone 4 dropped to about Rs 26,000. Consumers appeared to prefer the more aspirational iPhone, even though it's a much older device, a store manager of an Apple premium reseller in Mumbai said.
The trend is taking shape in India almost two years after it was first noticed in developed economies such as the US and Europe. According to a study by market intelligence firm IHS, global personal media player shipments are set to fall to 126.8 million units in 2015, declining at a CAGR of 6.8% since 2010, compared with a growth of 38.7% during the previous fiveyear period from 2004 through 2009.
Market leader Apple has been reporting a global fall in sales of iPods for the past two years. For the quarter ended December 2012, Apple announced that it sold 12.7 million iPods during the quarter compared with 15.4 million in the year-ago quarter.
In response to an email on the decline in iPod sales in India, an Apple spokesman from London denied to share countryspecific details. He referred to Apple's CEO Tim Cook's call last week with analysts where he accepted that iPods sales had been cannibalised by iPhones and iPads.
"I see cannibalisation as a huge opportunity for us. One, our base philosophy is to never fear cannibalisation. If we do, somebody else will just cannibalise it and so we never fear it. We know that iPhone has cannibalised some iPod business. It doesn't worry us, but it's done that," Cook had said in the call.
As per industry estimates, Apple has about 50% share in the Indian portable music player, with the balance controlled by Philips, Sony and scores of Chinese and local smaller brands. The size of the total market is about . 80 crore.
Mobile phones: The biggest challenge
The latest smartphones are more than adept at convergence. Used with an external display and keyboard, a powerful smartphone can even replace a laptop. These days, smartphones are also replacing compact cameras, projectors, presentation devices, workout buddies and standalone GPS devices.
Sales of compact camera declined by 5% in India last year after growing by 40% between 2009 and 2011, for instance, because more consumers started using smartphones to take photos. Similarly, Nokia and Samsung are also challenging the notion of single-purpose music players by building up their own music service , which is available on their smartphones.
On several devices, users can legally download unlimited songs for free. Nokia, for instance boasts of the world's largest repository of digital music with over 7.7 million songs while Samsung has created a local collection of English and Bollywood numbers with more than 2.5 lakh songs.
Nokia is offering its music service across models like feature phones and smartphones and recently launched a new enhanced service Nokia Music + which allows unlimited downloads and lyric streaming. Samsung Mobile vice-president Asim Warsi said the company would focus on its music service in India as consumption of music on mobiles and tablets was on the rise. Though the music service is available only on the Galaxy series of smartphones at present, Samsung too plans to offer it across its range of mobile devices.
Innovation: The mantra for survival
Philips India president (consumer lifestyle) ADA Ratnam said the category needs significant innovation to improve sales.
"The lightweight MP3 players are still selling since they offer full sound and great battery life, which usually are hindrances for users who listen to music on their mobile phones," Ratnam said. Philips recently launched a new range of players with calorie tracker, ereader and touchscreen.
Sony India's sales head Sunil Nayyar said the company would continue to focus on portable players and offer newer features. The company has just announced the launch of portable players with features such as Near Field Communication, which allows seamless transfer of data or pairing with other NFC-enabled devices. Some devices are also waterproof and wire-free, so they can be used while swimming, jogging or cycling in the rain.
Standalone music players will have a fighting chance of survival only so long as they continue to do things that a smartphone cannot, analysts said.
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