iPod Claims a Victim; Second on Life-Support

"The mass-market portable digital audio player market was not a strong enough strategic fit with the company's core and profitable premium consumer electronics brands to warrant additional investment in the category," said D&M in a statement.

According to a report at Bloomberg.com, the Rio contributed the bulk of D&M's 1.04 billion operating loss in the quarter ended June 30.

Meanwhile, Creative Technology, maker of the MuVo and Zen brands of MP3 players, is "reeling from losses in the MP3 player market." Creative reported a fourth quarter loss, its first in three years, after a challenge to the popular Apple iPod music player backfired.

In November, Chief Executive Sim Wong Hoo announced an a $100 million global marketing campaign, and said he expected to have 40% of the global market for MP3 players this year. Analysts expect Creative to only have about 14% market share for 2005.