MP4 players

	The T8 from Ramos of mainland China features a 4.3in screen with 480x272 resolution, 1GB to 16GB built-in memory and up to 4GB expandable memory via microSD card.

Though not without challenges, makers expect MP4 players to see limited market growth in 2009 and beyond.

China's sales of MP3/MP4 players dropped 39.19 percent year-on-year to hit 3.07 million sets in H1 2008, based on data from CCID Consulting. Despite this downturn, however, makers in China are optimistic of market growth in the region’s MP4 player segment. Although export volumes and sales are expected to drop in H1 2009, low technology and production requirements combined with the downtrend in the cost of flash memory will fuel production of MP4 players in China.

Innovations by leading international suppliers such as Samsung and Sony will also continue to stoke buyer interest. According to iSuppli, the anticipated slowdown in the growth rate of the global consumer electronic market in the next five years will encourage makers to focus on mobile devices and applications such as MP3/MP4 players. iSuppli forecasts that global shipments of portable media players (PMPs) will reach 162 million units in 2009, and revenue from MP3/MP4 players will reach $21.5 billion in 2011.

The positive outlook, however, is not without challenges. The global economic crisis continues to put pressure on suppliers, especially export-oriented companies. Some makers predict about 5 percent drop in export sales in 2009.

To boost their competitiveness in the international market, more China makers are prioritizing new product development and upgrades on existing models. Many suppliers are launching MP4 players that support more video formats and wireless connectivity through either Bluetooth or WLAN. Units with larger screens and touchscreen capability will also rise in volume in 2009.

China exports about 30 to 40 percent of its MP4 player output. Entry-level units are mainly shipped to Southeast Asia and Africa, and midrange models are exported to South America and Eastern Europe. The Middle East, Western Europe and North America are the primary destinations of high-end MP4 players from China.

	From Hong Kong, Shiro's SQ-S MP4 player has a built-in solar panel and up to 16GB built-in flash memory.

The main difference between PMPs and MP4 players lies in the number of supported formats. Early releases of MP4 players support only MPEG-4 files. Current models now support most high-quality audio formats such as APE, FLAC and AAC and common video formats such as ASF, AVI, MP4, MPEG-1 and MPEG-2. Many MP4 players available in the market are also compatible with DivX and WMV formats.

Compared with MP4 players, PMPs are equipped with better ICs and solutions to be able to support additional video formats such as RM, RMVB, WMA, VBR, MOV, 3GP, OGM, FLV, H.264 and XviD. These formats may need software conversion in order to be played by an MP4 player.

While MP4 players may seem inferior to PMPs, these products have a number of advantages over MP3 players. MP3 players differ from MP4 players primarily in terms of screen size, resolution and supported video formats. MP3 players in general have smaller screens than MP4 players. Mainstream MP3 players support MP3 and WMA audio formats. Some units support WAV and OGG files. Only a few MP3 players can work with MultiMediaCard (MMC) or Secure Digital (SD) formats as opposed to MP4 players, many of whose current models are equipped with slots for these memory cards.

Some MP3 players support ASF, AMV and MTV video formats, while other video formats may need decoding ICs in order to be played. Many models with video capability use Fuzhou Rockchip’s RK2606.

The major differentiating factors for MP4 players are storage medium, screen size and type, supported multimedia formats and value-added features. At present, China’s MP4 player supply range comprises flash-based models and hard disk drive (HDD) units. Flash memory-based MP4 players from China are generally quoted from less than $30 to more than $70. HDD-based models go for less than $100 to more than $150.

China’s entry-level flash MP4 players feature 1.8in to 2.4in TFT-LCD screens, 1GB to 2GB internal memory capacity and USB 2.0 interface. These products support ASF, MP4, AVI, AMV and MTV video formats. Units are equipped with earphones, microphones, FM radios, e-books, and picture preview and playback functions.

Models with 2.8in to 3.5in TFT-LCD screens are generally positioned as midrange flash MP4 players. These units usually have 4GB internal memory and support up to 4GB external memory. Common features include games, TV tuners, TV-out and PDA tools. In addition to the formats supported in entry-level units, midrange models also support MOV and WMV video formats.

Flash MP4 players in the high-end category commonly have 3.5in to 4.3in touchscreen TFT LCDs. These models have more than 4GB internal memory, which is extendible by another 4GB external memory. High-end flash MP4 players feature cameras, GPS, Wi-Fi and Bluetooth. In addition to formats supported in entry-level and midrange models, high-end flash MP4 players also support RM, RMVB, MPEG-1, MPEG-2 and XviD.

HDD MP4 players generally belong to the high-end market. HDD MP4 players from China use 1.8in, 2.5in or 3.5in HDDs. The majority of HDD MP4 players now incorporate 2.5in HDDs, and this will likely continue in the next six to 12 months.

Entry-level HDD MP4 players come with 3.5in to 4in TFT-LCD screens and up to 80GB storage capacity. Midrange products are equipped with 4in to 4.3in TFT-LCD screens and 80GB to 120GB memory. These units support SD/MMC, Memory Stick (MS), CompactFlash (CF) and xD cards.

High-end HDD MP4 players have more than 120GB memory capacity. These products usually come with 4.3in TFT-LCD screens, but some units have larger screens measuring up to 7in. Some high-end models also feature additional optional functions such as PVR and DVB-T.

	The iPlug Touch 3.0T from Taiwan's ICAT Technology Corp. has 4GB NAND flash memory and a TransFlash/microSD card slot for memory expansion.

Declining NAND flash memory cost is boosting the production of flash-based MP4 players in China. Besides the lower cost, more makers are turning to flash as a storage medium for their MP4 players to leverage its smaller form factor, lower failure rate and longer battery life.

At present, flash-based units account for about 80 percent of China’s total MP4 player output. These products are expected to remain dominant in the next few years. Production of HDD MP4 players, meanwhile, is projected to continue sliding, mainly as a result of tight competition with flash MP4 players, PSPs, PDAs and smart phones. The downturn in the US and Europe economies has also affected makers of HDD MP4 players, as these products are mainly targeted at the high-end segment as opposed to flash MP4 players, which are positioned as entry-level and midrange products.

Continued focus of flash MP4 players in China reflects global trends. Data from iSuppli projects strong growth for flash MP4 players, with global shipments rising by 174 percent from 54.84 million units in 2007 to 150.2 million units by 2011. Meanwhile, worldwide shipments of HDD PMPs and HDD MP4 players will post a 20 percent increase from 29.3 million units in 2007 to 35.30 million units by 2011. iSuppli also predicts that the annual average cost of NAND flash memory would drop by more than 47 percent in 2011, which may serve as further encouragement to makers to increase production of flash-based models.

With the positive outlook for flash MP4 players, more makers in China are focused on the production of flash-based models and are now targeting new and developing markets for these products, such as Africa, Southeast Asia and East Asia.

Product development efforts are geared toward larger screens and storage capacity. At present, models with 2.8in to 3.2in TFT-LCD screens and 16:9 aspect ratio are mainstream. More units featuring 3.5in models can be expected to roll out in the next 12 months. Suppliers will also be launching models with touchscreen capability.

In terms of storage capacity, 4GB internal memory is expected to be mainstream in 2009. More makers will offer models capable of up to 8GB external memory.

Makers in China are also developing flash MP4 players that support APE and FLAC audio formats and RM and RMVB video formats for the midrange and high-end markets. Some suppliers are also integrating mobile TV function into their latest releases to ride the handheld TV trend.

Storage medium, microcontroller unit (MCU) IC, decoding IC and TFT-LCD panel are the main components of MP4 players. China makers generally source NAND flash memory ICs, MCU ICs and decoding ICs from suppliers in Taiwan, South Korea, Japan and the US. HDDs are purchased from Hitachi, Toshiba, Seagate and Western Digital. TFT-LCD panels are obtained from providers in Taiwan, South Korea and Japan, which include AUO, Innolux, CPT, Samsung, LG Display and Sharp.

As solutions significantly affect product performance and cost, China makers place strong emphasis on choosing the right solutions that will suit their low-end, midrange and high-end products. For entry-level and some midrange flash MP4 players, China suppliers generally adopt solutions from Sunplus, Actions and Fuzhou Rockchip. For high-end and some midrange models, solutions from ADI, Freescale, Sigma Designs and TI are mostly used. Solutions from these providers support more video formats, but are also more expensive.

Entry-level HDD MP4 players from China adopt ESS and Sunplus solutions. Midrange and high-end models use solutions from ADI, Freescale, Sigma Designs and TI. In 2009, many China makers are planning to adopt SoC-based solutions for their HDD MP4 players.

In general, mainland China’s MP4 player makers also manufacture MP3 players and other consumer electronic products. At present, there are more than 300 MP4 and MP3 player suppliers in the region. Most of these suppliers are small and midsize privately owned companies. OEM projects take up more than 70 percent of these makers’ total output. Large-scale companies devote about 30 percent of their production to OEM business.

The key production centers in mainland China are Guangdong, Fujian, Zhejiang, Shanghai and Jiangsu. Some makers are also found in Sichuan and Beijing. Guangdong accounts for more than 80 percent of the supplier base.

Most suppliers in Guangdong settle in Shenzhen to take advantage of the city’s mature supply chain. The rapid development of Shenzhen’s electronic industry has also attracted investors from Taiwan and Hong Kong, which are mainly trading companies. Other suppliers in Guangdong are located in Zhuhai, Dongguan, Zhongshan and Guangzhou. Large-scale makers that have been producing MP4 players since 2004 include Shenzhen Bmorn Technology Co. Ltd, Shenzhen Ramos Digital Technology Co. Ltd, Netac Technology Co. Ltd, ONDA Technologies Inc. and Meizu Technology Co. Ltd.

Although MP4 and MP3 players differ in a number of technical aspects, many of these products’ manufacturing processes, including plastic injection molding, final assembly and testing, are similar. Small and midsize companies focus mainly on product development and assembly. Large-scale makers are able to conduct SMT and final assembly in-house. Processes that are more commonly outsourced to companies with stable OEM factories are PCB, mold making, package design and plastic injection molding.

Small and midsize HDD MP4 player makers in China have a monthly output volume ranging from less than 2,000 to 6,000 units. Large-scale makers, on the other hand, churn out 10,000 to 15,000 HDD MP4 players a month.

For flash-based models, small and midsize suppliers produce 10,000 to 80,000 units per month. The monthly output volume of large-scale makers ranges from 100,000 to 200,000 units.

China makers generally have separate teams responsible for the different phases of quality control. IQCE teams are in charge of incoming component quality inspections, while OQCE teams are mainly responsible for finished product output control. There is also a team that deals with issues on procurements and component suppliers. China’s MP4 players for export generally carry CE, FCC and RoHS approvals.

Tight competition has shrunk Hong Kong’s MP4 player supplier base in the past two years with some companies exiting the line. The low entry threshold, however, has offset the market shakeout by luring new suppliers as replacement. There are at present at least 30 suppliers of MP4 players in Hong Kong.

Flash memory-based models take up almost 100 percent of the region’s output. Almost all suppliers have given up on HDD-based models, largely because of their more complex and costlier product development requirements, as well as higher defect rates compared with flash MP4 players.

Like their mainland China and Taiwan counterparts, Hong Kong suppliers are able to sustain MP4 player exports by continually developing new models. Although the region’s exports of MP3 and MP4 players for the first nine months of 2008 was down 24.5 percent compared with the same period last year, Hong Kong makers remain upbeat about the industry’s future. In fact, product development continues as suppliers explore ways to make their products stand out in a crowded market.

Hong Kong suppliers are using fresh designs, which bring in better profit margins as opposed to using public molds and old designs. Many suppliers have also traded off high-volume, low-margin sales in favor of low-volume, high-value transactions.

Product development trends will mainly center on size, appearance and user interface. Latest models feature slim and lightweight designs. Traditional control buttons are being replaced by touchscreens and touch-sensitive control pads. Models with widescreen aspect ratios are also being emphasized.

Function-wise, mainstream MP4 players from Hong Kong are already loaded with so many extra functions that any further add-on would classify products as high-end models, many of which are marketed as MP5 players. Among these extra functions are digital cameras, Wi-Fi, Bluetooth, GPS, digital TV receivers, memory card readers and games. Many units support more multimedia formats such as RMVB, RM, FLV, ASF and 3GP.

One of Hong Kong’s design-driven suppliers of MP4 players is Shiro Corp. (HK) Ltd. The company regularly releases new models. Its SQ-S MP4 player supports USB interface and can be powered through solar charging of its internal Li-polymer battery. It comes with an 1.8in CSTN display and supports MP3, WMA, WAV, M4A, FLAC, APE, OGG, SMV, BMP, JPG, GIF and TXT.

Coby Mfg Co. Ltd is one of the few remaining Hong Kong suppliers of HDD-based MP4 players. Its PMP3531 comes with 20GB/30GB HDD, 3.5in TFT screen, FM radio, high-output speaker, CF card slot and USB port. The company also offers slim MP4 players and units with built-in stereo speakers and LED-backlit touchpads.

There are more than 60 makers of MP4 players in Taiwan, most of which are medium- and small-scale suppliers that offer both flash and HDD models. The supplier base is projected to remain stable in 2009 despite challenges posed by the worldwide economic recession.

In general, MP4 players from Taiwan feature 2.4in to 3.5in screens with QVGA resolution and 16:9 aspect ratio. With competition tightening—Topology Research Institute (TRI) projects MP4 players will continue to face strong threat from music phones—more suppliers are incorporating value-added features into their new releases. Larger screen sizes and Wi-Fi connectivity top these value-added features being emphasized by companies.

Suppliers are also focusing on multifunctionality and network connectivity, which are regarded by Taiwan’s Market Intelligence Center (MIC) as two major R&D directions for the product line in the coming months. Network connectivity features include video streaming, download service, Internet browsing and other online services.

In terms of housing design, more makers are releasing trendy but thinner and lighter form factors.

ICAT Technology Corp., one of Taiwan’s experienced manufacturers of MP3 players, MP4 players and PMPs, offers the iPlug Touch 3.0T, which supports TV-out function, picture browser, games, built-in microphone, USB 2.0 and FM radio. The model has 4GB NAND flash memory and a TransFlash/microSD card slot for memory expansion. It supports MP3, WMA, APE, FLAC, WMA, AAC and AMR. Other multimedia files supported include RM, RMVB, AVI, FLV, MPG, MPEG, WMV, 3GP, MOV, DAT, MP4, ASF and MPE.