In a mature consumer electronics market, consumers drive growth by upgrading from functional products. To persuade consumers to upgrade from working products, the industry must offer new step-up features, or a new playback medium.

The portable audio market flourishes in the presence of a mainstreaming new medium, but declines in the absence of a new medium. Between 1995 and 2002, the market declined every year except for 1998 and 2000. During this period, the market lacked its key ingredient—a new playback medium to propel upgrades from older products. From 2002 to 2004, sales have been driven by the uptake of a new playback medium, the MP3 player. Eventually the MP3 player became a mainstream product, and sales quadrupled between 2002 and 2004.

In a mature consumer electronics market, consumers drive growth by upgrading from functional products. To persuade consumers to upgrade from working products, the industry must offer new step-up features, or a new playback medium.

The portable audio market flourishes in the presence of a mainstreaming new medium, but declines in the absence of a new medium. Between 1995 and 2002, the market declined every year except for 1998 and 2000. During this period, the market lacked its key ingredient—a new playback medium to propel upgrades from older products. From 2002 to 2004, sales have been driven by the uptake of a new playback medium, the MP3 player. Eventually the MP3 player became a mainstream product, and sales quadrupled between 2002 and 2004.

The last time the industry carried a product from early adoption into mainstream uptake was between 1987 and 1994. During this period of uptake for the CD headset, the market advanced 11% per year on average. Similar strong growth may be seen during the mainstreaming of MP3 products in the years ahead. Driven by MP3 sales, the market may break its record sales of $2.3 billion (in 1994) in the year 2005.

Critical to this growth is a thorough understanding of changing demographics and consumer preferences. For example, between 2005 and 2010, the population of Asians and Hispanics will increase by 7.5 million, a growth of nearly 15%. Simultaneously, millions of first-generation Asian and Americans and Hispanic Americans will be entering the 12 to 24 year old bracket. Mintel’s research finds that Asians and Hispanics show a particular affinity for market products, with Asian teens carrying a 28% penetration for MP3 players (compared to 17% for all teens), and adult Hispanics showing 9% ownership of MP3 players (compared to 6% for all adults).

Mintel’s original consumer research reveals important trends and opportunities in portable audio. Market size, drivers, segmentation and distribution are all explored in depth, and a five-year market forecast prepares you for the future of portable audio.

Mintel defines the portable audio player market as consisting of electronic hardware capable of playing pre-recorded media via battery operation.

Products covered in this report include:

cassette tape players

MP3 players

CD players

boom boxes

headset radios

The report excludes sales of the following:

used products

niche markets including mini-disc, digital audio tape, compact cassette players, digital compact cassette

clock radios, watches, computers, cellular telephones, and other devices whose primary function is not the playback of pre-purchased audio products

CDs, cassette tapes, and other audio content products, whether pre-recorded or blank

mobile audio (car stereos)

home audio equipment, including compact and mini (single piece) stereo systems