The iPod had 51.3% of the MP3 player market in Japan at the end of 2005, up from around 32% in 2004 and dwarfing its nearest competitors, second-place Sony (16.2%) and third-place Panasonic (8.2%). BusinessWeek's Ian Rowley explained that while Japan has "one of the most competitive consumer-electronics markets on the planet," consumers in that country "are jazzed by iPod's sleek and hip design, easy-to-use functions and first-class software."

Gartner Dataquest analyst Jon Erensen told Mr. Rowley that "other companies, including the Japanese consumer-electronics giants, have been focused on one or two pieces of the equation." As an example, Mr. Rowley said that Sony's players have been praised for their design and sound quality, but the company's Connect software is oft-maligned.

Japan's overall market for MP3 players rose 50% during 2005, to 4.2 million units sold. Part of the credit for Apple's gain, according to Mr. Rowley, goes to last August's opening of the iTunes Music Store in Japan, along with the opening of an Apple Store in Tokyo's Shibuya district, which is well-known as the center of all things cool in Japan.

Apple, however, still faces threats on a number of fronts, including Sony's release of a new Walkman that "has been well-received in Japan," according to Mr. Rowley. He also said that the Japanese digital music service Mora, which offers Japanese pop stars not available through the iTMS, saw its downloads increase 190% from December 2004 to December 2005.

In addition, cell phones pose a substantial threat, with Toshiba offering one that includes a 4GB hard drive that can store 2,000 tracks. Japanese carrier AU has sold 33 million songs since November 2004 and in April will add an online music store that will enable consumers to download music to their computers or to their cell phones. "Apple claims iTunes is the leading supplier of downloadable music via PCs in Japan," Mr. Rowley wrote.