Battle of form (and function) in MP3 players
Published: October 4, 2004, 9:48 AM PDT
By Saul Hansell
The New York Times
As the trading of MP3 files ate into music sales, Damon Dash, the 33-year-old entrepreneur behind Roc-A-Fella Records, turned his hip-hop music company into a platform to sell other, more profitable products.
He built Rocawear, a hip-hop-inspired clothing line, into a $300-million-a-year business. He launched Armadale Vodka, Tiret New York luxury watches, and America, an urban luxury fashion magazine. He even bought the venerable Pro-Keds name to use on a new line of athletic shoes.
Now Dash is taking his celebrity and music-infused marketing approach to a product line closer to the source of his troubles: MP3 files. In November, he will introduce a line of MP3 players under the name Rocbox, including one aimed squarely at competing with Apple Computer's iPod.
"We saw Apple making a killing, and we thought it would be good market to go after," Dash said in an interview last week. The players, which are being sold by a company he formed with some partners, called Roc Digital, are a natural area, he added, because of the possible tie-ins with his music label, which is part of the Island Def Jam Music Group of Universal Music Group, whose parent is Vivendi Universal.
"It has been rough going in the music business," Dash said, adding, "We have been using music to promote my other brands and validate them in a cool way."
With a chrome-colored front, glowing blue buttons and a black rubberized back, the hard-drive Rocbox is shinier and a bit bigger than an iPod, while matching its $299 price tag for a player with enough memory for 600 hours of music. A smaller white and aluminum flash-drive player is $159, and has enough memory for about eight hours of music. Both players will be sold at Macy's and CompUSA stores.
Dash is capitalizing on a significant shift in the electronics business, which until now has largely designed products to appeal to a worldwide audience.
Now that electronics items are getting smaller and are meant to be carried or even worn rather than being put on a shelf, consumers are choosing them for their looks as much as function.
"Things become more important as fashion items the more personal and portable they become," said Greg Woock, the chief executive of Virgin Electronics, a division of the Virgin Group, whose owner, Sir Richard Branson, is moving his music, airline and cell phone brand into the gadget world.
Other brands that have nothing to do with music or electronics are getting into the act. Oakley, the high-end sunglasses maker, is about to introduce the Oakley Thump, a line of sunglasses with tiny MP3 players built in, and priced at $395 and $495. The glasses look like they are out of a science-fiction movie, with flip-up lenses and flip-down speakers. The fashion trend in electronics is especially evident in MP3 players and wireless phones. In part, that's because those devices are most popular with young people. They are held more closely to the body than many other machines. And since they have very small circuitry and do not need to conform to the shape of a tape or disk, they can be designed in a wide range of shapes and sizes.
"A CD player has to be round or D-shaped," said Bradshaw Gray, the portable audio buyer for Circuit City, adding that MP3 players are flexible enough to invite creative designs.
Darryl Cobbin, the vice president of marketing for Boost Mobile, a subsidiary of Nextel Communications that is focused on the youth market, said that most makers of wireless phones market them as an electronic device and focus on their features.
"We see it as an intimate part of your life," he said. "How many products do you know that touch your mouth and your ear and that you hold in your hand and put in your pocket for extended periods?"
Boost began trying to sell prepaid telephones to young people on the West Coast two years ago by using affiliations with sports like surfing and skate boarding. Now the brand is being altered for a broader urban audience. It has gained some notoriety from commercials featuring hip-hop artists like Kanye West and Ludacris and the musical theme, "Where You At?"
Boost has introduced one phone with a built-in makeup mirror. And it plans to introduce a limited edition phone next year (with a wood grain finish), a strategy often used by Nike and other brands to enhance the exclusivity of an item.
Even televisions, which have long been an assortment of ever-larger rectangular boxes, are moving into the world of high design.
"It used to be that all televisions were square black boxes that differentiated themselves on picture quality and features," said Thomas Crowell, the television buyer at Circuit City. "In a digital world, everything looks so good, you need to make design the differentiation." The sleek look of the expensive flat-panel models attracts customers even though their picture quality is often inferior to that of many tube televisions.
Manufacturers see television buyers as divided mainly by budget, but for smaller devices they are increasingly targeting specific demographic and psychological groups of customers.
At Circuit City, Gray sees the Apple iPod as appealing to a broad audience. MP3 players from iRiver, a South Korean electronics maker, are marketed primarily to an urban audience with ties to hip-hop artists. And those from Rio, now a unit of D&M Holdings, a Japanese company, are marketed to people he calls "individualists," because the Rio players have rounded shapes and marketing that eschews celebrity tie-ins.
Dash hopes to distinguish the Rocbox players from other players on the market by weaving images of them into videos for artists of his label, and putting tags promoting them on his clothing. While details haven't been worked out yet, buyers of the player will have access to exclusive bits of Roc-A-Fella music.
"In the urban market, selling something cheap is not what they want," said Shae Hong, the president of Roc Digital. "They want the best," he said, pointing to the affiliation of many hip-hop artists to Courvoisier and the Cadillac Escalade sport utility vehicle.
Paradoxically, even as fashion elements creep into device design, many devices look very similar because consumers have a narrow band of preferences.
"More people want to look like a Gap ad than a Prada ad," said Woock of Virgin.
This season, he said, the cool electronic devices are extremely small, and many open to reveal hidden functions. Virgin, for example, now sells an MP3 player so small that it can be worn as a necklace, and it is about to introduce a set of portable speakers, for use with any portable music device, that unscrew from a tube that looks like a tennis ball can.
But despite the interest in style, Woock said, consumers aren't willing to let manufacturers substitute style for substance.
You may have a super product, Woock said, "but if it doesn't work, no one will buy it."
Currently, the broadest range of looks are on wireless phones. While manufacturers limit their palettes to silver, white, steel blue and black, accessory makers are selling covers for the phones with images ranging from motorcycles to matinee idols.
Wildseed, a Seattle company started by some former Microsoft executives, is creating a phone technology aimed at teenagers that makes phone covers do more than look cool.
Their phone, called Identity, has a line of covers that are both decorated and contain memory chips. When the cover is attached to the phone, the chip gives users a choice of ring tones to hear, images to see, games to play on the phone screen and more.
One, for example, is hot pink and features the character French Kitty. Another has the rap star Nelly. Each has sounds and images related to its theme.
The phone, which is just being introduced in some markets, will sell for about $250 for people who sign up for a service plan. The covers will cost another $25 to $50. Cindy Smith, Wildseed's marketing director, says she believes that consumers will pay for the new phone features.
"Kids can tell their parents that they update the phone to do new things when they want to," she said. "It's like a game console. You don't toss it out when you want new entertainment."
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