Rio faces uphill struggle attempting to nibble at Apple’s iPod market dominance

“As digital entertainment goes, the undisputed star in recent years has been Apple Computer’s line of iPod handheld music players. And you wouldn’t know it from all the attention the little device is getting, but dozens of outfits making rival MP3 players are trying to undo Apple’s lead,” Amy Tsao writes for BusinessWeek. “Competitors such as privately held Rio Audio of Santa Clara, Calif., which is very close to Apple headquarters, figure iPod won’t be all things to all people. It hopes to nibble away some of Apple’s dominance. Like other small players in the business, Rio has a partnership with Microsoft to use its Windows Media Audio software.”

Tsao writes, “Nonetheless, Rio faces an uphill struggle. It’s a distant second to iPod and has a fraction of Apple’s resources. ‘Our way to execute is to design the right product at the right value and then use any kind of buzz we can take advantage of,’ says Hugh Cooney, Rio’s president. In the nine months ending this September, Apple’s iPod accounted for 54.7% of total digital-music-player units sold, vs. just 8.9% for Rio. Says Stephen Baker, analyst at market research outfit NPD Group: ‘It’s tough to maintain that [low] level of market share over the long term.’ Rio’s vice-president for marketing, Dan Torres, recently spoke with BusinessWeek Online reporter Amy Tsao about his company’s plans to catch the competition.”

Following are selected excerpts:

Q: How are you competing with Apple’s iPod?
A: When we look at the entire space, Apple makes only a hard-disk player. We have a new hard-disk offering in the Carbon 5 gigabyte. It’s a little hard for us to figure out what share we’re taking from them, but we’re competing with them directly. And we’ve seen Carbon doing quite well, but it’s still way early. We need to ride this season out and see. So far, we think we’re doing quite well, and we’ll be taking share away from iPod mini.

Q: What about Dell and Microsoft?
A: Dell is about cost. They really are a follower. They drive down costs of certain things. It’s more about [whether they will] continue to drive pricing down, but they don’t really change the landscape. Microsoft is interesting. With its Windows Media Player, it will have a significant role in changing behaviors.

Q: What will happen to the market if Apple comes out with a flash-memory-based player?
A: I think there will be a combination of things. It will be interesting to see how they change their position in coming into that market. Will they go after sports, which is one of our targets? It will be an interesting addition to the market. Apple will call attention to the importance of flash. Just a year ago they had said flash is passé.

Q: But the buzz around your products isn’t even close to iPod’s. How can you change that?
A: For not having the profile of Apple, we do well in getting people’s attention. People have been looking at our product as something that finally challenges iPod. It looks different. These devices are very small, very precious. When you get them in your hand, customers really take to them. We also have things that really matter to customers, like compact size and 20 hours of battery life, which is really important in the hard-disk market. You can plug a Rio into a Windows machine, and it mounts up automatically without any extra software.

Full article here.

MacDailyNews Take: Ohhh, a Rio mounts up automatically on a Windows machine without any extra software. Amazing. Incredible. Wow. Rio thinks an Apple iPod flash “will be an interesting addition to the market.” Yeah, you could say that – it’d be really interesting for Rio’s corporate health. Note to WMA pushers: people aren’t buying it.


  1. Swan:
    “will you ever forgive my insistant ignorance?”

    I’m guilty of same. I get mocked and ridiculed when I do it tho. Welcome to the club.

    It is easy to see how you were mislead. It is after all designed to be compatible with CompactFlash.

  2. Note to all —

    There will be a huge line at the return counter after Christmas with all the disappointed kids returning their “non” iPods that their parents got them and exchanging them for “real” iPods.

    This will only delay the true iPod sales numbers.


  3. CompUshitAbrick.. they’re also trying to get rid of them, cuz the ipods are selling like crazy..

    besides.. iPods can’t play mp3’s … ” width=”19″ height=”19″ alt=”wink” style=”border:0;” />

  4. hey guys, i’m a student, thinking about getting an iPod mini.. when a friend told me she heard the sound is whack on the minis..

    what gives? is she just referring to maybe the earbud’s quality or what?

    I had my heart set on a mini, but she was implying that i should go for the 20G…

    help! Can sb email me w a solution real quick?? mini owners out there, speak up, okay? 😀 thanks!

  5. Didn’t ask them why people HAVE TO SLAM THE RIO TO GET IT TO WORK!!!

    Lockups: the Karma has taken a lot of flak for locking up, and I can’t say that it’s not justified. The player has locked once when I was loading music on it, in which case I simply reset with a bent paper clip and it was good to go. However, several days ago I was walking with it, attempted to change songs midstride, and it locked hard. Since I was on my way to work with no paperclip in sight (and the unit won’t turn off when it locks up), the hard drive spun and seeked for 40 minutes until I got in the office. At that point, the unit was warm to the touch and had drained half the battery. After reset, the unit would not power up properly. Going into rescue mode showed that it was having trouble reading the disk. (crap!) After reading some message boards where others have experienced similar problems, I decided that I had little to lose and smacked it flat down on the desk. The Karma made a little grinding noise and booted up! It has worked perfectly since then, but I’m somewhat concerned about my purchase. Rio only offers a three-month warranty by default, so I would recommend going with an extended warranty if you decide to purchase a Karma.

  6. Mike, there were a few reports right when the mini first came out about static developing because of a connector cable to the earphone jack coming loose. However, and lot of time has passed since then and since there have been no other reports it would seem to have been a very isolated incident. Maybe your friend heard about that and that is what she is talking about.

    Anyway, the sound on the Mini’s is very good. If your primary concern is size then go for it. I think you might fill it up pretty fast though and so if you want to have a lot (and 5000 songs at 128 bps is A LOT) of music on it then the 20 gig model would be better. Also if you are really into very very high quality (or perhaps classical) music then you might want to get the 20 gig so you can record in apple lossless format and still get a decent number of songs on it. I have heard that lossless is better when you run it through a stereo and really crank the volume too.

  7. One other advantage of Flash players: since there are no moving parts, it doesn’t take as much power to drive them, therefore the battery life (arguably the iPod’s only weakness) is much longer.

  8. Not to MDN, People are buying WMA…Your not biased against Windows Media are you? HAHAHAHA

    According to NPD Group, the percentage of MP3-formatted songs in digital-music collections has slid steadily in recent months, down to about 72% of people’s collections from about 82% a year ago. NPD researchers estimate that there was a net loss of about 742 mln MP3 files from U.S. hard drives between Jan. 2003 and Dec. 2004, despite people acquiring blns of songs from file-trading networks and their own CDs. By contrast, Windows Media files showed a net gain of 537 mln files on US hard drives. Windows Media market share is at 19.6%% today. Apple’s iTunes AAC has gained 4.3% of the hard-drive share.

  9. NoMacForYou:

    Typical FUD from you.

    WHERE are the WMA hardware sales then? MS Windows tries to shovel WMA down it’s users’ throats, so I’m not surprised that there’s a notable market share, still I would heavily dispute those numbers. Those numbers are NOT reflected on file sharing networks, so who came up with them and how?

    NO WAY that WMA has nearly 20% share, that’s laughably rediculous. Next you’re going to be telling us about Santa and the Easter Bunny.

    Never trust statistics you didn’t falsify yourself.

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