Samsung to Challenge iTunes' Dominance

Samsung plans to enter the nascent online music market and although there's a vast pool of consumers who have not yet made the leap to downloading songs, it will take "an incredibly compelling proposition" to make a dent in Apple's (Nasdaq: AAPL) hold on the segment, one analyst said.

Speaking to South Korean media Friday, Samsung's digital media business head, Choi Gee-sung, said the company would work with domestic and international partners to develop a service similar to iTunes. He did not say when the service would launch or give any other details.

Plenty of Room

"If you're talking about retailers of legal digital music, the market is so wholly untapped, that there's a lot of opportunity," Russ Crupnick, president of NPD Music and Movies Business, told TechNewsWorld. "There are tens of millions of users who aren't buying from anyone including Apple."

But the hurdles facing any new entry into the online music services are technical and cultural.

"The big challenge is that there are two components," Crupnick said. "It's as much about the iPod as it is about iTunes. Apple marketing and engineering have carved out real leadership in the market; we truly are an iPod nation."

Roughly 75 percent of portable music players sold are iPods. Samsung said it expects to sell about 3.7 million MP3 players this year, about double what it sold last year, however, the whole market is expected to double so Samsung would merely be keeping pace with that growth.

Ours Are Better

However, Choi said he believes Samsung's music players are superior to Apple's and that the reason they haven't caught on more is the lack of an online music service tied directly to them, like iPods and iTunes. MP3 users can download songs from online services such as Napster and Yahoo (Nasdaq: YHOO).

"What would it take to be the 'iPod killer' if there is such a thing? It's a big, big challenge," Crupnick said. "You'd have to have the marketing equivalent to what Apple's done, a product that's equivalent or better and online services that is as seamless and easy to use as iTunes."

NPD tests many portable music players, he said, and he believes iPods are.