The market was driven largely by the iPod, of course, which became the mainstay for the MP3 player boom. The year was also marked by a growing trend towards large corporate deals for the Apple iPod, especially the Nano. The consumer market size was still relatively small. The main buyers were students and high-end professionals. The market also received an impetus from price drops in the 20-25% range. An entry level MP3 in the legal market was available for as low as Rs 3,000 in the year 2005. However, there were certain issues as well. For instance, for the iPod, the dollar differential price is about 20% in India, which seemed to be hampering the India rupees business.

The MP3 players market made rapid strides in terms of storage capacities. In the Flash-based segment, the capacities moved from 128 MB as the dominant segment in early 2005 to 512 MB by the end of the year. The market has now already started moving towards 1 GB storage capacities on the flash side.

Towards the second half of 2005, the market took an interesting turn as a number of new players entered the market including iRiver. There were a number of small, local and region specific brands that marked their entry into the market, fuelling the competition further.

The good growth run for the MP3 players market in India is expected to continue. The market is expected to clock around 100% growth.

External HDDs
The external HDD market in India touched Rs 28 crore revenues in the year 2005, riding on a volume of around 60,000 units. This turned out to be the inflection year before the high incremental growth-turn expected to happen over the next 2-3 years. The growth rates are expected to touch around 50% in 2006 and around 65-70% in the next two years. The year 2005 set the pace for this growth to come.

The year saw other inflection points as well with the external storage capacities touching a terabyte, making a historical landmark of sorts. This was an exponential jump from last year's storage capacities of around 300 GB, reflecting the high growth in storage requirements expected by the vendors. Seagate, Maxtor, Western Digital and Hitachi emerged as the key players in this segment. 

During the year 2005, the external HDD market was essentially driven by the growing demand from consumers and professionals like photographers, designers, music aficionados, composers as well as the growing mobile workforce. A huge amount of digital content was being created on the consumer front in congruence with the digital lifestyle. This included creating and maintaining personal libraries of music, movies, digital photographs, family videos, games, etc. The need for storing this vast amount of digital content led to the growth of hard disk drive enabled storage devices, particularly external storage devices. External HDDs were used in SOHO settings or as archiving facilities for enterprises.

Some of the factors which worked in favor of external HDDs were their high storage capacities, portability and ease of handling. In fact, a major factor driving the growth of the external storage market was portability for the working professionals. A wide range of storage devices, which weigh less and offer a range of capacities up to 300 GB, effectively met the storage demands of the mobile workforce.

The growth in the digicam market also had a cumulative impact on the demand for external HDDs, as the growing volume of digital images required additional storage capacities. During the year external HDDs started emerging as a key medium for back-up purposes not only among the consumers for content like music, photographs, etc, but also among the corporate users for backing-up corporate data. 

The price drops in 2005 ranged between 15-20%. However, the drops are likely to become sharper at around 35-40% range in the next 1-2 years. This is expected to boost the market for external HDDs, especially in the high storage requirement applications.

The technology trends during the year saw plug-and-play and higher-speed interfaces, ruggedness and low power consumptions. The emerging trend in the future will be synchronization among the drives making it easier and faster to transfer data from one drive to another. Downloading software onto external HDDs will be another emerging trend in the coming years.

Flash Drives
While the external HDDs rode the wave when it came to high capacity storage requirements, pen drives or USB drives or flash drives dominated the market as the popular choice in low capacity external portable storage requirements.

During the year 2005, the total market for this segment is estimated to have touched 900,000 units, translating into Rs 54 crore revenues. The unorganized market was a major issue considering that it accounted for more than 50% of the total market with 540,000 units.

The shift from FDD to pen drives, which started in the last 1-2 years, gained considerable momentum in the year 2005 riding on the demand generated by the working professionals in corporate and SOHO segments. The youth market, which had started picking up in 2004, further strengthened, contributing to this growth. Corporate and SOHO will continue to be the biggest market for Flash drives for a couple of years more.

The year saw the availability of some low-cost models. The average price during the year stood at around Rs 600 per unit. The two major factors that influenced the pricing trends in this market were the global Flash prices and the duty structure. The pricing starts from about Rs 500 for a 256 MB drive to around Rs 1,200 for a 1 GB drive. While 128 MB capacity emerged as the standard in 2004, the threshold moved up to 1 GB in 2005. The trend is now moving towards 2 GB storage capacities as the next standard. The market is already breaking the capacity barriers with 8 GB flash drives now available in the market.

Some of the major players operating in the market are Umax, Lexar, Kingston, Sony, SimpleTech Inc, PNY Technologies, Viking InterWorks, Transcend, etc. Apart from the various brands, the bulk of the market is contributed by the grey segment. However, reduction in duty is likely to slow this unorganized market down. The impact of this will be reflected in the year 2006.

With falling prices and the growing demand from the youth segment and on-the-move executives, this market will gain further ground in the next one year and gradually evolve as the  mainstream storage medium for low storage requirements.

Shipra Arora
shipraa@cybermedia.co.in

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