MP3 (or MPEG1 layer 3) is a technical format that has become synonymous with digitized music distributed on the Internet. It is actually one of many formats, each of which uses sophisticated compression algorithms to make storage of digital recordings practical, without sacrificing the audio quality of the original. Using formats like MP3, a high-quality stereo recording of a three-minute song that typically would take up about 30 MB of disk space can be captured in a near-CD quality file requiring about 3 MB of storage: a 10:1 compression ratio.

The best known digital audio products today are small players that allow consumers to listen to audio files recorded, compressed and then downloaded from a consumer's desktop computer. First introduced in 1998, these portable players have captured the imagination of technically savvy consumers, creating a market of millions of units per year. But these products are just the tip of the iceberg. As more people gain access to high-bandwidth Internet connections, market demand for products that support digital music will grow exponentially. This growth will be based on two closely related applications, downloadable audio for personal use, and streaming audio to deliver digital radio broadcasts via the Internet. To support both applications, familiar home and car audio systems will feature digital audio capability, and entirely new classes of products that use the technology will soon begin to reach the market.

PortalPlayer provides its OEM customers with the complete product infrastructure required to deliver exciting new products for the digital media revolution. These products include semiconductor chipsets, based on the PortalPlayer SuperIntegration Chip Architecture, upgradable firmware, application software to manage the capture, compression and storage of content, and server-based application software for Internet-delivery mechanisms. The company has an extensive network of alliances and licensing arrangements to ensure that all required technologies are delivered to the consumer electronics manufacturer in one comprehensive package.