Thursday, April 26, 2007

Globalisation and the Economy

Hi everyone! im back again for my 2nd post!

As we all know, music plays an important part in the lives of people of all ages all over the world. In 1997, a South Korean invented the first audio player. This audio player was further perfected into what is now known as our portable mp3 player. In the modern world, people all over the world own an mp3 player. This is due to GLOBALISATION. And so, the invention of the mp3 player has greatly impacted the economy, by boosting the economy of many countries, like China, which exports many mp3 players.

The ipod, being one of the most popular mp3 players ever created, has contributed greatly to the annual income of Apple. "The announcement revealed sales figures of 4.4 million for the iPod in its fiscal year, an increase of 370 per cent. Total income from iPod sales rose $961 million, 279 per cent, on last year."(1).

However, recently, i realised the emergence of various mp3 players of unknown brands in the market, most of which are China companies. The significance of such a situation is that those mp3 players manufactured by China companies are sold at very low prices, because of low cost price in China (This is related to my previous post). An ipod nano 4GB costs about S$348 , while mp3 players from China companies of the same storage capacity could just cost S$100. Only those brand conscious people would go for the ipod nano, but some would ask themselves: why pay so much for something of the same storage capacity? Thus, the sales of such mp3 players have increased, causing more and more companies to enter the mp3 player market. Due to competition, prices of mp3 players are forced lower and lower. For example, the 1st generation ipod nano 4GB cost the same as the 2nd generation ipod nano 8GB. " 'Compressed-audio players are coming into the mainstream as portable flash-player prices fall and capacities rise; the iPod mini and other small form-factor portable jukeboxes are introduced; and more and more devices, such as DVD players, support compressed audio as a secondary feature,' Kevorkian pointed out." (2)

There have been many articles regarding the mp3 player market exploding. According to an article, "The worldwide market for MP3 players will hit $58 billion by 2008, according to a study released on Tuesday by IDC." "The volume of flash players shipped will jump to 50 million units in 2008, up from 12.5 million in 2003. Other segments will grow modestly." (3) According to studies, the number of players shipped will increase to 50 million units in 2008, which is alot. So is the sum of $58 billion, which will definitely impact the economy of many countries.

As more and more mp3 players enter the market, companies face competition, especially from China companies as mentioned above. They are forced to lower their prices until they cannot afford to lower it anymore. This has caused many companies to withdraw from the market, either because they income is greatly decreasing, or that they forsee that they will not benefit much from the mp3 market due to competition. Companies like Dell, Benq, and Olympus have realised the sudden increase in cheap mp3 players in the market and decided to withdraw from the market. (4)

Technology has improved so much that it has created cheaper and cheaper products. Thus, I forsee that the prices of mp3 players will continue decreasing. In this article, it is seen how globalisation has led to the worldwide usage of mp3 players, causing explosion in the mp3 player market, greatly impacting the global economy. The explosion of the mp3 player market has benefitted the global economy, as well as the economy of many countries, because it has brought high income, and has increased the Gross Domestic Product of many countries. It has also brought the price of the mp3 player down, allowing consumers to get it at a low price.


(1):http://news.ipodworld.co.uk/index.php/weblog/61/
(2):http://www.newsfactor.com/perl/story/27117.html
(3):http://news.com.com/Study+MP3+player+market+to+explode/2100-1041_3-5376070.html
(4):http://www.macnn.com/articles/06/08/22/dell.concedes.defeat.again
http://www.engadget.com/2005/11/25/benq-exiting-mp3-player-market/
http://www.theregister.co.uk/2005/11/10/olympus_quits_mp3_biz/

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