MP3 player makers ask Samsung for better deals

A commission of local makers of digital music players met yesterday with Samsung Electronics Co. to request that the world’s largest maker of computer-memory chips offer a large amount of flash memory chips at lower prices. In response, Samsung said it would consider the suggestion, adding that previous mass memory chip purchasing by foreign companies, including Apple Computer Inc., dragged down the prices by only 10 percent. The meeting was arranged by the Ministry of Commerce. Korea Portable Audio Commission, a domestic lobby group with 20 small and medium-sized portable jukebox vendors as members, said, “The exceptionally cheap price of Apple’s flash-based ‘iPod nano’ was possible because Samsung offered a fairly large discount.” According to news reports that Samsung has declined to confirm, the company sold Apple 40 percent of its memory chip output this year with a 50-percent discount. The allegations prompted local audio player makers to criticize Samsung over the alleged unfair business practice. In a related move, the MP3 player manufacturers told Samsung that they would like to buy flash memory at bargain prices. But what mainly spurred yesterday’s meeting was recent news reports that Apple’s latest MP3 player, the iPod nano, ran out of stock in less than three weeks after its release here on Sept. 23. The first import volume of 10,000 units sold out in just three days at department stores, and Apple Korea is now putting new buyers on its waiting list. More units are expected to reach here around late this month, the company said. The major attraction of the audio player was its price: its 2-giga-byte model is priced at 229,000 won ($220), about 30 percent cheaper than Korean players with the same storage size. The nano’s entry has set off a price war among local vendors, forcing them to slash prices for their flash-chip MP3 players. ReignCom’s Iriver N10, with 1-giga-byte of storage, is now priced at 220,000 won, down 26 percent from its release in February. Cowon System lowered the price of its 2-gigabyte G3 by as much as 28 percent to 280,000 won in March. Domestic MP3 player makers fear that further price cuts would seriously hurt their profit margins in the near future. by Seo Ji-eun