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iPod rivals vie for piece of Apple's pie

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CIOL Bureau
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Franklin Paul

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LAS VEGAS: Gadget industry giants came out swinging this week at the Consumer Electronics Show in Las Vegas, unveiling sleek designs and tiny portable digital music players in hopes of ending the dominance of Apple Computer Inc.'s iPods.

From Samsung to Sony to Sandisk, everyone wants a piece of Apple's pie in the portable digital music player market, where the iPod reigns.

Sandisk Corp. expects to make it a "two-horse race" in the chip-based memory segment of the market, led by the iPod Nano, and XM Satellite Radio Inc. ran magazine advertisements for its Samsung Electronics-designed MP3 player that said: "It's not a Pod, It's the Mothership."

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Tough talk, for sure. But in launching salvos, most acknowledged the marketing might of Apple in the $4.5 billion arena.

"We have been playing in the basement, guarding our future," by failing to match Apple's marketing spend, said Peter Weedfald, a senior vice president at South Korea's Samsung Electronics Co. Ltd., which introduced new MP3 players boasting long battery life. "For 2006 (however) you are going to feel a launch; you are going to see and hear our products."

Like its peers, Samsung has kept a low profile in the MP3 market, spending a relative pittance on marketing MP3 devices in North America versus an iPod budget of more than $100 million. Apple has keenly turned the relatively simple gadgets -- computer memory married with music-playing software -- into status items and fashion accessories.

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None are bold enough to say they can best the iPod, but Forrester Research analyst Josh Bernoff says that even incremental market share gains can bear fruit.

"Apple has a 75 percent market share. That means a quarter of the market is up for grabs," he told Reuters at the show.

Apple does not attend CES, the largest U.S. electronics show, where its rivals are offering alternatives that they say are bigger, better and less expensive than an iPod.

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"We found that the bigger screens are what people want," said EchoStar Communications Corp. Chief Executive Charles Ergen. He was at CES touting EchoStar's PocketDish player, which lets users view programs like "Desperate Housewives" recorded on television set-top boxes. "If you have the iPod, that costs 99 cents; with the PocketDish, it's free."

A new video iPod with a 2.5 inch screen allows users to watch TV shows downloaded for a fee.

Sandisk introduced a 6-gigabyte player made with flash memory -- chips that are smaller and lighter than hard disk drive technology memory. The Sansa e270 player, at about $300, is part of a family of new Sandisk models, which also supports music subscription services.

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XM unveiled a pair of portable, hand-held radio receivers that can also store digital songs, called the Helix and the Inno and manufactured by Samsung and Pioneer Corp. respectively. Both will sell for about $400 in the first quarter of this year, according to XM.

Even Microsoft Corp.took a swipe at Apple, though the software company does not make a portable MP3 player. At CES, Microsoft displayed new Windows Media player features with many of the intuitive touches of Apple iTunes media management software, which don't limit the user to one music player.

"You can get more flexibility and not lock people in ... but give people the choice to work with 75 different devices and mobile phones," said Kevin Unangst, a director at Microsoft's Windows Digital Media Division. Microsoft touted portable media players from Toshiba Corp. , LG Electronics and Tatung Co. Ltd. that can play music from MTV Networks or screen movies downloaded from the Starz channel.

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IPod challengers came from all directions, from small players like iRiver and Creative Labs to Sony Corp.'s PSP gaming device, which also plays digital music and movies, to makers of mobile phones with bigger memory capacity to hold songs.

Still, many of these companies made similar introductions in past years here at CES. XM CEO Hugh Panero suggests consumers will buy other gadgets -- in addition to their iPods.

"People are going to have multiple devices -- some are wedded to their personal music collection and iPod satisfies that ... and we offer live music, live sports," that they can get on satellite radio, he said. "We are competing in an enormously large portable consumer electronics market."

(Additional reporting by Douglas Young and Daisuke Wakabayashi)

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