In 2005, the number of MP3 players sold in Germany is to rise by 44 percent to 4.6 million units according to industry association Bitkom. The lobby group for the IT sector, telecommunications, new media believes these players are “ideal interfaces between the digital world of computers and home entertainment electronics.” Lower prices, better design, and expanded features are to give the market for mobile entertainment devices a “boost.”

Bitkom expects sales of MP3 players to increase by 45 percent to 434 million euros in Germany. Last year, manufacturers posted just under 300 million euros in sales, with 3.2 million units sold in Germany. The industry association gets its statistics from a study of the development of digital home entertainment electronics conducted by the European Information Technology Observatory (EITO).

Another important reason for the skyrocketing sales of MP3 players is the growth of legal music downloads in the Internet. According to Bitkom, sales of music downloads from the Internet will grow almost fivefold to 31 million euros in Germany this year. Sales of music downloads are even expected to grow to more than 420 million euros in the next three years. That would be more than a fifth of the entire German music market by 2008. The industry lobby also expects the MP3 player market will receive a boost from new models and services presented at the International Radio Trade Fair (IFA), which will take place from 2-7 September 2005 in Berlin.

Samsung Electronics and German automaker Audi teamed up to enable users to listen to MP3 music files from their mobile handsets over the car’s stereo system. The system was first demonstrated at the Audi corporate headquarters in Germany last week.

Samsung says their future D600 mobile phone with Bluetooth technology will have 30GB of storage for personal music collections. The “Super Music Phone” is expected to hit the market mid next year and sports a 2 megapixel camera with TV output.

The new mobile handset adopts Bluetooth stereo technology called Advanced Audio Distribution Profile (A2DP), which allows MP3 music files in mobile handsets to be transmitted to an A2DP capable car stereo system.

The electronics giant plans to expand A2DP supporting cellular phone models in the future, including the i300 smart phone that comes with a 3-gigabyte hard disk memory.

On a similar front, U.S. digital jukebox maker Apple Computer is expanding partnerships with global auto nameplates, such as BMW, Mercedes-Benz and Audi, to incorporate MP3 players into their latest luxury models.

Mobile phones with built-in MP3 players are starting to form the mainstream of the cell phone market, with all products introduced by Samsung Electronics, LG Electronics, and Pantech & Curitel this year equipped with an MP3 function. Industry insiders expect that over 70 percent of the 15 million units of old and new handsets to be sold in the Korean market will be MP3 music phones. LG Electronics said “We are predicting that MP3 phones will account for more than 80 percent of our sales this year.”

The memory size and functions of MP3 phones have developed to approach the level of proper MP3 players. Samsung Electronics has released handsets with a 1.5-Gb HDD (hard disk drive) through KTF in February and plans to launch a ’super music phone’ with 3 GB of storage. Users can store up to 500 tunes with 1.5 GB and 1,000 with 3 GB.

LG has recently released a “Real MP3 Phone” with an exclusive chip for MP3 playback whose more powerful high and low registers offer users a crisper sound. It also provides equalizer effects, and a “multi-tasking” switch lets users to do multiple jobs simultaneously, such as sending text messages while listening to music.

Pantech & Curitel have released a necklace-style MP3 phone.

Domestic mobile telecom providers are also pushing the trend by opening music portal sites, with SK Telecom??s MelOn, LG Telecom??s MusicOn, and KTF??s Dosirac opened in the months since November. “The market share of music phones will grow as they are increasingly becoming a personalized fashion accessory and fashion trend, while mobile operators are expanding their music business,” an LG official said.

Jupiter Research found that US shipments of MP3 players more than tripled in 2004, and expects that figure to increase again by 35% in 2005. Jupiter predicts the US MP3 market to achieve a compound annual growth rate of more than 10% through 2010, reaching an installed base of 56 mln, from 16.2 mln in 2004. According to the NPD Group, 243 mln songs were downloaded from various peer-to-peer services in March 2005, while in the same month only 26 mln were purchased from digital music stores.