CCID¡¯s latest Analysis Report on China¡¯s MP4/PMP Player Market in 2007Q1 shows that in 2007Q1, 478,800 MP4/PMP players were sold in China, generating sales revenues of 708 million Yuan. CCID forecasts that in 2007, the MP4/PMP player sales volume in China will top 2 million sets.

CCID¡¯s Consumer Electronics Industry Center thinks that China¡¯s current PMP player market mainly shows the following 4 characteristics:

1. There are drastic changes in the brand pattern of the MP4/PMP market, while Aigo¡¯s market share drops fast.

Despite fierce and even chaotic competitions and gradually falling profits, domestic brands still firmly took up the top 5 positions in China¡¯s MP4/PMP market in terms of sales volume. Among them, Newman, Aigo and Changhong Zarva all followed their own roadmap and development routes, forming three major competing blocks. However, there were drastic changes in the brand pattern in the MP4/PMP market from 2006. Aigo was overtaken by Newman. It dropped to the 2nd place in the market.

CCID¡¯s survey data show that in 2007Q1 Newman topped the market share chart, accounting for 25.3% of the total sales volume in the market. This was mainly due to its entertainment marketing by sponsoring Central China Television Station¡¯s hit program Dream China in 2006 and its focus on the low price fashion field. These efforts have allowed the company to establish a strong brand image in cities of the 3rd and 4th tiers. The 2nd-placed Aigo focused relatively more on the middle- and high-end market. With its product status as first choice for national gifts and advantages in the business gift market, it was still among the market leaders. However, its share of the total sales volume in the market dropped by almost 10%. This also put forward higher requirements for Aigo for its development in the MP4/PMP market. Compared with Newman and Aigo, Changhong Zarva still has a certain gap to bridge. In 2007Q1, it nevertheless performed well in the market. The solid strength of the home appliance giant Changhong Group behind it was Changhong Zarva¡¯s competition advantage which Newman and Aigo cannot rival. As Changhong IT¡¯s flagship enterprise, Changhong Zarva has received the most favorable resources support from Changhong Group for its digital businesses. In 2007, Changhong Zarva also came up with the new entertainment brand idea of ¡°unbound joy and splendid heart¡± as its differentiated brand positioning. For this first, the company elevated digital product competitions to the height of advocating personal entertainment and improving the quality of spiritual life. In 2007Q1, Changhong Zarva brought its share of the total sales volume to 9.1%.

2. Big screen products became more enriched, and MP4/PMP players with a screen of over 3.5¡± accounted for over 50% of the total sales volume.

Fig. 1 Structure of China¡¯s MP4/PMP Player Market in 2007Q1 - By Screen Size

In terms of screen size, flash memory-type MP4/PMP players were mainly 2.5inch products in 2007Q1, while hard disk-type MP4/PMP players were mainly 3.5 and 4.3 inch products. MP4/PMP players with a screen size of over 3.5 inch accounted for over 50% of the total sales volume. As new vendors continue to enter the MP4/PMP player market to compete, the consumer demand for big screen size grows and the screen cost drops, products with a screen bigger than 3.5 inch will get richer in variety.

3. Video MP3 and other audio and video entertainment products sped up the product changes and functional extension of MP4/PMP players.

Currently, MP3 players in the world will grow steadily along two most typical market routes. One is that the video functions will further expand. The continuous advancement of video MP3 players is an important embodiment of this. Secondly, in tune with the essential product quality pursuit, there will be a return to the main theme of sound quality. Also, other products such as mobile phone and PSP will divert users from MP4/PMP players.

All these market changes will speed up the renewal of MP4/PMP player technologies and greatly enrich their functions. As for the technological trend, CCID thinks that video decoding solutions will continue to diversify. However, the full replacement of soft decoding by hard decoding will greatly improve the competitiveness of MP4/PMP players. In addition, strengthened battery support ability will also weaken the competitive threat from mobile phone and other entertainment terminal products. The development of wide screen film technology today will also be an important direction for consideration in the design of future MP4/PMP players.

However, these product technology changes are not yet enough to attract attention from consumers. MP4/PMP players need to embody more values. Such values mean that MP4/PMP players should be able to offer more functions. These functions must integrate forward-looking, convenience and fashion into one body. On one hand, there is a need to continue to tap the essential functions of MP4/PMP players, namely return to the track of video playing. On the other hand, MP4/PMP players need to have richer functions. For example, possessing PDA, gaming, DC/DV, DVB-T/DMB-TH digital TV functions, GPS navigation, WIFI wireless Internet access and Bluetooth functions will greatly improve product competitiveness.