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Last Updated: Wednesday, 4 January 2006, 11:16 GMT
Music players lead digital surge
By Alfred Hermida
Technology editor, BBC News website in Las Vegas

Wall of screens at CES, AP
The mammoth CES exhibition opens on Thursday in Las Vegas
More and more people are buying into the idea of carrying their music, and now video, with them.

According to figures released by the organisers of the Consumer Electronics Show (CES), sales of MP3 players soared by 200% in 2005 to $3bn (1.73bn).

The trend will continue in 2006, as more video-playing gadgets appear, with sales expected to hit $4.5bn.

Dozens of such gizmos are expected to be on show at CES in Las Vegas, which starts on Thursday.

Phenomenal growth

According to the Consumer Electronics Association, organisers of CES, MP3 players were the most desired gifts for this past Christmas. By contrast, a year ago portable players did not even feature in the top 10 wish lists of many consumers.

"We have witnessed this year a phenomenal growth in MP3," said Sean Wargo, director of industry analysis for the CEA, at a pre-show briefing.

"We have a lot to be thankful to Apple and the iPod in terms of the growth they are bringing to the industry."

While the various iPods account for a large chunk of the market for MP3 players, others such as Creative, Samsung and iRiver are trying to grab a bigger slice of the pie.

As well as music on the go, people are increasingly looking to gadgets that also play video.

Apple kick-started the trend toward portable video in October 2005 when it launched an iPod that could play movies, despite the fact that other devices already handled video.

Last year, 15% of MP3 players sold could also play video, according to the CEA. In 2006, that figure is set to rise to 30%.

Gaming hubs

The idea of being able to listen to music or watch video wherever and whenever you want is also changing the shape of home entertainment.

Close-up of Xbox 360 console, Microsoft
Gaming consoles are becoming multimedia hubs
"We have got consumers used to being time and place independent," said Mr Wargo.

"Since we all have huge digital libraries at home, how can I store and harness my digital content in the home?"

Mr Wargo referred to what he described as a media server explosion. By this he meant the introduction of boxes in the home that can store audio, video or pictures and deliver the content to any screen, anywhere in the home.

Ironically, this long heralded digital entertainment hub may turn out to be not a PC or dedicated device, but one of the new generation of games consoles.

Microsoft has already launched its Xbox 360, and Sony and Nintendo are following suit with their machines this year.

The processing power, storage capacity and online connectivity of the devices are expanding the capabilities of consoles beyond games.

"The console is something more than a gaming device," said Mr Wargo. "Now we are seeing it as a hub for media entertainment in the home. There is also the potential, particularly with Xbox 360, to reach a community."

The new consoles are expected to tempt Americans to spend more cash on video games.

The CEA predicts spending on consoles and games will hit $14bn in the US in 2006, up from $12bn last year.

Flat screens

The new gaming machines are expected to drive more people to invest in new flat screen TVs.

Steve Jobs unveils video-playing iPod, AP
Apple gave portable video viewing a kick-start
"They want full on entertainment systems to harness their gaming systems," said Mr Wargo.

The CEA predicts Americans will spend $23bn on new digital TVs in 2006, much of these on flat panel displays such as LCD and plasma screens.

In total, spending on consumer electronics overall is set to hit a record $135.4bn in the US this year, according to the CEA.

The huge market in digital entertainment is reflected in the size of CES. The show has more than 2,500 exhibitors spread over 1.6 million square feet

The expo, which is off limits to the public, is expected to attract 130,000 business executives, dealers, journalists and investors from 5 to 8 January.

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