SALES of MP3 players in the Chinese market tumbled more than 40 percent year on year in the first half as music phones, portable game players and other devices pose a challenge, a Beijing-based research firm said yesterday.

The MP3 device sales totaled 2.5 million units in the first six months, a drop of 43.76 percent. Revenue hit 1.22 billion yuan (US$179.4 million), a decline of 43.56 percent from a year ago, according to CCID Consulting.

"The MP3 player market in big Chinese cities is close to saturation and negative growth began to appear in sales in the first six months," said Li Ying, a consumer electronics industry analyst at CCID. The research firm under the Ministry of Industry and Information Technology also attributed the revenue drop to severe competition.

MP3 players costing below 400 yuan snapped up more than 40 percent share of the market by the middle of this year, CCID said.

The single-function MP3 player is being replaced by music-equipped phones, game players like PSP and some GPS (global positioning system) devices with MP3 functions, industry insiders said.

Entry-level MP3 devices will gradually be replaced by multimedia-function phones, like Nokia's N series, Nokia, the world's No. 1 phone vendor, said recently.

CCID also predicts pessimistic MP3 player sales in the second half because of the competition brought by replacement products.