Intel Prepares to Launch $300 Digital Music Player in February


Intel Corp. is jumping into the market for portable digital music players, hoping its strength in memory chips will overcome its late start in the field.

The company will announce plans today to ship a lightweight $300 player in February that has twice as much built-in capacity as the leading models from Sony, Philips and the Rio division of Sonicblue. The Intel Pocket Concert’s 128 megabytes of storage translates into four hours of better than FM-radio quality sound for consumers.

The move fits into Intel’s recent strategy of building devices that connect to, and increase the value of, home computers, particularly those equipped with Intel microprocessors. The goal is to involve personal computers in more aspects of life around the home, such as entertainment and education, said analyst Bob O’Donnell of IDC.


For consumers, though, Intel’s entry won’t address one of the main shortcomings of digital audio players: their steep price. Players with 64 MB of memory typically sell for $250 or more, compared with portable CD and cassette players that sell for well under $100.

Although future Intel models may cost less , “everything about this player is on the premium side,” said David W. Huffman, manager of Intel’s audio business segment.

For those resigned to the high cost of MP3 players, the palm-sized, brushed aluminum Pocket Concert offers a good value, analysts said. “It’s twice the memory for the same price,” O’Donnell said.

Portable digital music players are skyrocketing in popularity, with sales growing from about 626,000 units in 1999 to an estimated 1.3 million in 2000, said IDC analyst Bryan Ma. Yet high prices, combined with an overabundance of vendors--more than 100 companies have players on the market--have resulted in a supply glut.

Intel decided to get into the digital audio field because its technology could address some of the most common complaints about MP3 players, Huffman said. For starters, its StrataFlash memory chip can hold twice as much information as the flash memory used by the typical player.

Found in computers, cell phones and many other electronic items, flash memory is used to hold data in the device after its power is turned off. Because memory is the costliest component of a digital music player, Intel will have an important competitive advantage over other manufacturers.


“Intel makes more flash than anybody on Earth, so it’s going to be kind of hard to beat them,” said analyst Richard Doherty of the Envisioneering Group.

Although 128 MB would be tops for built-in memory among lightweight players, other manufacturers are exploring new forms of removable memory and ultra-small hard drives to provide even more capacity. Sony and Sharp have introduced $320 minidisc recorders in Japan that can store up to five hours of near-CD-quality music, and Sanyo is promising a player that uses removable 730 MB discs, Doherty said.

Consumers won’t be able to add memory to their Pocket Concerts, unlike some other players. But Intel is betting that consumers would rather buy a player with copious built-in memory than one that could be expanded with pricey add-on flash memory cards.

Intel’s researchers also found that consumers are unhappy with the sound quality of their digital audio players, particularly at high volumes, Huffman said. Intel promises extremely low levels of distortion, and two to 10 times the sonic power of other brands, he said.

The initial players will be able to handle only MP3 and Windows Media files, two of the most popular formats. But the Pocket Concert’s microprocessor--made by Cirrus Logic--is programmable, and Intel will provide the software needed to support more formats if there’s enough demand, Huffman said.

In keeping with the music industry’s wishes, the Pocket Concert will not be able to upload its contents to other machines. That deters more than music piracy, however--it also stops consumers from copying songs from a home PC to a work computer, or vice versa.