Chinese, Apple beating Korean MP3 companies

Small digital music player companies, lacking competitiveness in price and brand value, are losing ground to cheap products from China on the low end and Apple’s iPods on the high. Ezav Corp. was the third mid-sized firm on the market to throw in the towel this year.

The MP3 player maker apologized to customers yesterday on its Web site, saying it would no longer be able to provide free after-sale service. The company, which had received much media attention and government support in the past couple of years, closed quietly; it posted on its customer service Web forum last Friday that it was out of business.

Founded in 2002, Ezav was a small developer and manufacturer of MP3 players. Last year, it posted $5 million in exports and even received the prestigious European iF Product Design award in 2004 for its EMP-500 model. Ezav focused almost entirely on exports, but began losing bids to Chinese firms with lower prices.
“Companies like us have a weak brand so we have to compete on price, but we can’t compete in that area anymore,” a former executive at Ezav said.

Ezav’s fall was the third this year. In September, S-Cam Co., a maker of various digital devices including MP3 players, phones and computer chips, also closed quietly due to financial difficulties. The company made Sorell-brand MP3 players and once had plans to list on the Nasdaq.
A first-generation venture MP3 player firm, eStar Laboratories, shut down in May, although its MP3 brand Monolith was quite successful among extreme sports aficionados. Monolith was marketed as the “indestructible” music player with a focus on good bass and durability ― the device could even be run over by cars thanks to a special aluminum casing.

The trouble began for eStar, however, when Apple released the low-end iShuffle music player. It was unable to repay debts it had incurred for initial development as well as costs spent on marketing.
At the time, an executive at eStar blamed the government: “The government was bragging about how Korea was the leading country for MP3 players, but it did not create an environment to foster development and it did nothing when Chinese companies started flooding our market with cheap copies of our designs.”
Struggles are still going on at larger MP3 player makers such as Reigncom, Hyunwon, and Mpio. An industry source said that foreign buyers compare their products to Apple’s iPod. “They ask us if our brand, design, and performance are all better than the iPod and if they aren’t, they say we should offer a cheaper price,” he said.

Meanwhile, Apple Korea announced yesterday a new release less than a month after it started selling upgraded versions of its digital products. The iPod nano Red, a special edition created by U2 lead singer Bono and Bobby Shriver to fight AIDS in Africa, is now going on sale in Korea. A four-gigabyte model can be bought online only for 225,000 won ($234). by Wohn Dong-hee for JoongAng Daily