Competition is intensifying in Japan over a new breed of portable digital-audio players that allows music lovers to carry around a vast library of their favorite tracks.

Posing a serious challenge to Apple Computer Inc.’s iPod, Sony Corp. earlier this month launched its latest Walkman model, featuring a large-capacity hard-disk drive.

But Apple is unlikely to relinquish its dominance easily; it will release its popular iPod mini, a smaller version of the iPod, in markets outside the U.S. on Saturday.

The iPod mini’s release was delayed for months in non-U.S. markets due to a shortage of supplies.

While not expected to surpass MD players, the prevalent choice as portable items among the Japanese, anytime soon, there is nevertheless growing interest beyond the circle of gadget buffs.

“We are seeing a huge number of preorders for the iPod mini,” said Yoriyoshi Takizawa, a store clerk at Yodobashi Camera in Tokyo’s Shinjuku Ward.

The store now devotes prime display space on its portable music player floor to the iPod and other so-called HDD players, crowding out MD and CD players. At this store, Sony’s new Walkman is currently neck and neck with the iPod for the position as the No. 1 seller.

The trend is similar at other retail outlets, according to GfK Marketing Services Japan Ltd., a marketing research firm that tracks sales data of 3,500 electric appliance stores.

Even before Sony’s new Walkman was released, the iPod was not the sole HDD portable music player on the Japanese market. Other Japanese and South Korean makers have released HDD players, but suffered low brand recognition among consumers.

“With the entry of the Walkman, I think people who have not bought HDD players will be attracted,” Takizawa said.

HDD is the latest recording media for portable audio players, which have previously relied on cassette tapes, CDs, MDs and flash memory sticks, tiny chewing gum stick-like semiconductor devices.

But, in stark difference to preceding media, HDD’s sheer capacity allows regular music lovers to store almost their entire library on the portable device.

The iPod became an instant success following its launch in late 2001, selling more than 3 million units worldwide. It is one of Apple’s core profit makers.

“Ninety percent of workers commute by train in Japan, so we have huge potential for portable music players here,” said Tatsuya Konishi, an Apple marketing official in Japan.

Apple is running a campaign in Japan to encourage MD player users to defect, with posters proclaiming, “Goodbye MD.”

“Today, MD players are still the mainstream of portables in Japan. They have 10 times the market size” of HDD players, Konishi said.

Apple’s direct assault on MD players might be unnerving for Sony, the creator of the MD and holder of nearly half of the domestic MD market.

“I really hate that ‘Goodbye MD’ thing,” Sony President Kunitake Ando jokingly told reporters earlier this month during a ceremony to celebrate Walkman’s 25th anniversary.

Sony used the same occasion to release its latest HDD Walkman model.

Sony’s new flagship portable digital-audio player is designed to outdo the iPod.

The Walkman can store up to 13,000 songs — about 900 CDs worth of music — in its 20 gigabyte HDD. The iPod can store up to 10,000 songs on its 40 gigabyte HDD. The Walkman boasts a battery life nearly three times that of the iPod.

The iPod mini can store up to 1,000 songs on a 4 gigabyte HDD.

While falling short of declaring war on the iPod, Sony executives expressed confidence.

“We will dominate this field in the next six to 12 months,” Sony’s Ando said. “In the end, we will grab a 50 percent share.”

Sidelined by the two bigger rivals, other makers are trying to grab a bigger share of the rapidly growing market.

Toshiba Corp. last month unveiled its new lineup of so-called gigabeat players, featuring 5 gigabyte, 20 gigabyte and 40 gigabyte HDDs. The company said it plans to release more new models in the coming months.

Hajime Akiyama, Toshiba’s marketing official for portable imaging and audio products, expects the HDD player market to follow the same course as that of digital cameras, with the top position frequently changing hands in the early stages with each new arrival of a popular model.

“I don’t think the iPod can keep its market share as big as it enjoys at this moment,” he said. “The game is not over yet.”

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