Digital Trends

TDG Research is reporting that despite high demand for portable MP3 players, Portable Media Players (PMP) will face only limited demand.

Portable Media Player sales have had a slow start and mixed reviews. Both iRiver's and Creative Labs first players received only average marks from the industries top publications. But as with every new product, time will tell if the fad will pick up or fade away. TDG Research's report may be a little preliminary to this type of product, but its worth checking out. Below is the summary of their report:

"Despite the success of portable music players such as Apples iPod, portable media centers (PMCs) including, but not limited to, the Windows-operated devices now available  will likely experience a slow start in the journey toward mainstream adoption. According to the latest report from TDG Research, there are several factors that will limit the ability of PMCs to reach the majority of consumersfactors including the numerous substitute products, high unit prices, and an overt dependence on the home PC for media content.

No doubt these devices will be popular among early adopters and technology enthusiasts they will be the coolest new media device on store shelves for the next several months, and early adopters tend be to less price sensitive and are typically more familiar with using their personal PC for media consumption, says Dale Gilliam, analyst with TDG Research. While we have seen strong interest in PMCs, most consumers are quite sensitive to the $500 price tag these units carry. Our latest research suggests that interest is converted to actual purchase behavior at around $300, well below current pricing models.

Other important findings of the study include:

The early market for PMCs will be limited to those Internet consumers who already use the PC for media purposes. Unlike digital music, less than 30% of Internet consumers have digital video files stored on their computer that vast majority of which are short video clips or home movies. Moreover, only 1.5% of Internet consumers currently use on online movie download service such as CinemaNow or MovieLink.

Competition from less-expensive application specific alternatives such as portable photo viewers, multimedia cell phones, and full-featured portable game consoles will further hinder demand for PMCs.The build it and they will come strategy pushed by Microsoft and other PMC players is unlikely to be successful given the limited availability of high quality video content. While this is improving, we are still years away from seeing mainstream consumers downloading movies from the web to a portable video device. This finding is further complicated by digital rights and copy protection issues.

Content partnerships are indeed being announced (e.g., Microsofts partnership with CinemaNow and MLB.com to provide video content), but even these agreements are limited in scope. CinemaNows PMC download offerings contain but a portion of their video library, and most selections are of less-than-blockbuster caliber. "