Apple laid the foundations in the digital music market, to the advantage of the other players, but now the competition is gearing up to take on Apple's lead.

Creative Technologies' brand manager Lisa O'Malley told New York Times: "Our hats are off to Apple and iPod. iPod has done a great job of increasing the viability of the category as a whole, raising awareness for all digital music and digital music players."

She admitted that the iPod taught Creative a valuable lesson. "We understood the whole thing with these players can't be just functionality, that we always concentrated on. People were using them as fashion statements," she said.


She also admitted that Apple outmanoeuvred Creative and other competitors when it cornered the supply of a smaller hard drive than that used by Creative.

She told New York Times: "Apple bought a ton of the 1.8-inch drives and locked up the supply. The smaller drives gave Apple the advantage of being able to produce its first-generation iPods with a more compact profile than the competition."

But while it is estimated that more than 9 of every 10 high-capacity players sold in the United States are estimated to be iPods, Apple's lead is not insurmountable, according to an analyst.

History repeats

NPD Group director of industry analysis Stephen Baker told New York Times: "It's hard to imagine iPod doing much better than it is doing now. But drawing parallels to the early days of the personal computer industry, Apple's lead is far from insurmountable."

"There are lots of opportunities for other companies to merchandise and market around them," Baker said.

Nintendo has announced that it is developing an adaptor that will enable MP3 music as well as MPEG-4 video playback on both the Game Boy Advance SP and Nintendo DS. Industry watchers also suggest that Sony's Playstation Portable, which also features music and video playing abilities, could prove a real competitor to the iPod.