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badice.com ~ travel musings for the masses

In my Operations and Productions Management class we had a group project that involved developing a product from scratch and seeing it through with all of the necessary research, financial studies, forecasting, and marketing. My group decided on an MP3 player as our product and today we presented it to the class (no we did not physically design an MP3 player).

The first thing that really stood out when doing this project was the growth that the portable music industry has seen over the past four years. When the players first started hitting the market it seemed as though they were truly niche items with very little opportunity for growth. During the past two years they have seen tremendous growth with Apple controlling a majority of the market (87.3%). There really is not a competitor to the iPod and maybe it’s time for one. Just from the numbers that we gathered from our research points to MP3 player sales growing by 219% over the next three years.

The real hang up for people trying to get into the market is the sheer cost of entry. It is very expensive to create an entire product like an MP3 player with the software to go with it and market it correctly. However, the break-even analysis we conducted pointed to only a few hundred thousand players needing to be sold for a company to see green. Of course this assumes marketing is able to get the product out there and in competition with the iPod. Currently Apple is producing in the area of 5 million iPods a quarter, making a few hundred thousand look like pocket change.

The moral of the story? If you have a design for a better MP3 player your odds of making it in the current and future market are high, though not guaranteed.

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