Six months ago, many tech industry observers saw 2010 as the year that would see the iPod. Apple’s (NASDAQ:AAPL) game-changing product, which began life as a bulky MP3 player nearly 10 years ago and morphed into a portable multimedia device,was finally going to its grave due to the popularity of the iPhone 4.
In Apple’s most recent quarter, just 9.1 million iPods were sold, a decline of 11% from a year earlier.
In September, however, came the fourth-generation iPod Touch launched in September 2010 and the industry changed its tune. Janney Capital Markets said just last week that the Touch was a major force this Christmas, especially “popular for consumers looking to upgrade from an older iPod.”
The device is even affecting markets beyond portable music players: Wedbush Morgan analyst Michael Pachter said in October the iPod Touch was “cannibalizing” sales of Nintendo’s (PINK:NTDOY) Nintendo DS portable gaming device, contributing to that machine’s 18% decline in overall sales in 2010.
The portable media player market appears to be healthy, but with Apple holding a 70% market share, it would seem like an inopportune time for competitors. That isn’t stopping South Korean electronics giant Samsung, which confirmed Monday that it is debuting a Galaxy Player multimedia device next month at the Consumer Electronics Show in Las Vegas.
Taking a page from Apple, the Galaxy Player media player is almost identical to Samsung’s Galaxy S smartphone — much as the iPod Touch is nearly an iPhone. Running on Google’s (NASDAQ:GOOG) Android operating system, the Galaxy Player features a 4-inch Super Clear LCD screen, a 1GHz CPU, HD video playback, GPS, a microSD card slot, both WiFi and Bluetooth 3.0, a 3.2MP back-facing camera, and a front-facing VGA camera for video chat. It also allows access to both Google’s Android App Market and the Samsung Apps storefront.
The Galaxy Player will come in three models — an 8GB, a 16GB, and a 32GB device.
Given the popularity of the Galaxy S smartphone and the Android operating system with consumers, Samsung stands a good chance to succeed where Microsoft (NASDAQ:MSFT) failed with the Zune media player. Samsung’s Android devices are already proven in the mobile space — the Galaxy Tab tablet PC sold 1 million units in its first month earlier this holiday season.
However, Samsung faces significant hurdles beyond Apple’s intimidating market share. The device’s lack of access to the iTunes store automatically limits its appeal as a portable music player to consumers familiar with the iPod brand. Android devices also still trail Apple iOS platform devices in game-app sales, and game apps are increasingly important for the iPod Touch device.
There’s hope, though. Game revenue on Android platforms is on the rise. Independent developer Rovio’s Angry Birds, a top-selling paid game app on Apple’s iPod Touch and iPhone, is free on Android smartphones. The ad-supported game made $1 million in advertising revenue during its first month of availability according to Rovio’s Peter Vesterbacka, meaning that the Galaxy Player is likely to see strong game developer support.
The determining factor, then, will be price. If Samsung can undercut Apple by a significant margin on price, then the Galaxy Player might just be able to steal away a piece of the portable media player pie.
As of this writing, Anthony John Agnello did not own a position in any of the stocks named here.
