iPod Challenge Heats Up

I came across an interesting article on washingtonpost.com earlier this week that, just in time for the holidays, took a serious look at four alternatives to Apple's (NASDAQ:AAPL) white-hot iPod portable digital music player. So, while you could be forgiven for thinking nobody else was "doing" digital music besides Apple these days, there's more to the story.

I don't, however, necessarily mean that from a strict product perspective -- though that's the chicken to go with the egg of this story: a market that wanted to grow, but needed someone to serve it properly first. Articles like the one linked above are as good an indication as any that plenty of companies are ready to do that now.

Writer Daniel Greenberg tested Creative Technology's (NASDAQ:CREAF) Nomad Jukebox Zen Xtra, Dell's (NASDAQ:DELL) Digital Jukebox, Rio's Karma, and Samsung's YP-910GS Napster. What's most interesting to me here is that all four are seen as credible alternatives to the iPod -- and all, like the iPod, stand to run you several hundred dollars. (The models Greenberg compared go for $300 to $400.)

How quickly shoppers forgot that they don't need to spend anywhere near that much! Run a quick search on "portable MP3 player" over on eBay (NASDAQ:EBAY) and hundreds of items -- from MP3/CD player combos to smaller, jogger-friendly items -- can be had for well under $100. Thing is, though, the bidding is slow to nonexistent at the bottom of the price range, even for new items. Nobody wants 'em.

Then again, did anyone ever want those machines? Looking not too far back, you'll remember the early adopters struggling to come up with the right features, memory, and price. When sales didn't take off as hoped, they simply went into self-destructive price wars.

Sometimes cutting prices is enough to make markets move, but that's a difficult gamble in unestablished sectors. Apple, to its credit, restored life to the business -- and this was well before its iTunes music-purchasing website went live -- by creating something that worked the way users actually wanted it to work and worrying about the rest later. By doing so, it helped to revive a struggling market.

Now, of course, the increased strength and legitimacy of the competition threaten Apple's advantage. All indications, however, are that there's a rising tide here that should be able to lift several boats.

Considering an iPod alternative this holiday season? Talk it over on our Apple discussion board.

Dave Marino-Nachison can be reached at [email protected].