iPod Ecosystem

Barron’s writes that even as consumers buy iPod’s to stuff into Christmas stockings, there are many other companies benefiting:

About four million units, some fetching upward of $600 and holding up to 10,000 songs, are expected to sell this quarter, twice as many as in the prior three months. Indeed, iPods are driving the rapid growth in the $4.4 billion portable digital-audio market and firing up Apple’s stock, which has risen 200% this year.

Also on a tear are shares of several little-known outfits that supply components for the iPod and other portable digital audio devices, known generically as MP3 players. Among suppliers are Texas Instruments and Hitachi, though such work is a tiny part of those giants’ revenues. But the iPod is big business for smaller companies such as Synaptics, SigmaTel, PortalPlayer and Audible, whose stocks have shot up in the iPod frenzy.

Synaptics, a leader in touch-screen technology, and Audible, which provides audio content for MP3 players, look to profit long term. Semiconductor concerns SigmaTel and PortalPlayer, on the other hand, get upward of 90% of their revenue from the iPod and other MP3s, making them vulnerable as competition continues to grow.

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Rajesh Jain

An Entrepreneur based in Mumbai, India.