2005 is seen as the year when the digital players will reach a tipping point and reach 20% household penetration. That’s good news for iPod and Apple. In fact, despite increased competition, Apple will have a couple of great iPod years ahead. Few reasons, mostly capped nicely in Jupiter Research’s latest report, US Portable Music Device Forecast.

First, despite all the hoopla around portable music players and ubiquitous iPod adverts, Jupiter Research says only 16.2 million devices were sold in the US in 2004, or roughly 12% household penetration. Jupiter predicts that the sales of portable music players is going to increase 35% in 2005, and will eventually reach 56 million users in 2010.

Research shows that nearly 6% of adults who are also online have indicated an interest in shopping for a hard drive-based iPod, and 4% say they would buy a competing hard drive based product from a rival vendor. he growth of the market means, iPod sales have little chance of stalling.

Secondly, the sweet spot of the market at present and likely through 2007 will be a hard drive based player, that costs about $200 and has 5 GB capacity. By 2007, however, the flash memory based players with 2GB capacity for under $100 will become the hot sellers, Jupiter predicts. If Moore’s Law holds, and there is no reason it shouldn’t, then iPod (and its rivals) would be available at those price points.

Jupiter’s research shows that despite all the madness around mobile music, the consumers will not be using phones as their primary music device. The only perceptible impact of music-player-phones is going to be seen in some lost sales for the flash-memory based players. Does that mean Samsung phones will eat into Samsung Mp3 Player sales?