D&M has decided to pull out of the digital audio player market, despite being number to Apple’s iPod. Reuters reports a company statement: “(The) decision to shut down the Rio business followed a determination that 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.” With Creative also taking a financial beating, the DAP market is narrowing rapidly. If the market number two is pulling out, where does that leave the rest of the field? The FT has a tidy report.

If Apple does launch an iTunes mobile handset on 7 September, it will, of course, open up a new market for iTunes but potentially Apple could easily swamp that market as the current consumer offerings are inconsistent, expensive and not easy to use.

Maybe interoperability won’t be such an issue after all if there’s no one left standing …