Hard Disk Car Audio Sales Off To A Good Start

Early reports on new hard-drive-based car stereo products are in and sales are running ahead of supplier expectations. Although the market is still very limited because of the high price of the units, some suppliers are already lowering price tags.

Pioneer says that it has sold more than 600 units of its new hard disk/Memory Stick DEH-P90HDD at $2,000 since January, although many dealers are just beginning to sell the product. Kenwood says it has sold "many times more than that" of its Music Keg, which integrates with a Kenwood head unit to offer 10GB of stored music at $749.

Just now shipping is the Sony MEX-1HD hard drive/Memory Stick unit at $1,499, and the Blaupunkt 1GB Microdrive add-on piece at $799.

Pioneer and Kenwood say they are pleased with the initial sell-in and claim that the category will grow to an important part of car audio. "We're very bullish on the category and we think as we move into next year, it will definitely become a major category for mobile electronics," said Law, who estimates that by the fourth quarter, the industry will sell 2,500 pieces per month.

Dealers say they would like to see lower prices on the units and greater consumer awareness. Suppliers are responding.

Kenwood said it will offer a second version of its Music Keg to ship in late summer at a lower price of $499. To achieve this, Kenwood switched from an extruded aluminum casing and included some new components. The original Keg will remain in the line but will offer 20GB of storage (upgraded from 10GB) and improved DA converters. Also available will be an RF modulator that will work with both Keg models at $99, Law said.

SSI America, Piscataway, N.J., which has been selling the Neo Car Jukebox since last year, expects to ship over 20,000 units this year. It is currently sold at 2,000 storefronts including Best Buy.

The Neo works with any car stereo via RCA outputs or RF modulator and can be used in a docking bay with a home stereo. The company recently lowered the price of its basic 20GB model to $399 from $499, the 40GB model to $499 from $599 and the 80GB model (which holds the equivalent of 1,600 CDs) to $599 from $699, said company president James Buchheim.

SSI also plans to launch in June a text-to-speech module for $30 which allows the Neo to "announce" which mode it is in and which file name or folder name it is addressing to help users keep their eyes on the road. The Neo does not allow voice commands.

Several retailers said they expect the category to blossom once prices become more reasonable.

At Tweeter, Canton, Mass., "The Kenwood Keg seems to be doing pretty well. There's still little consumer understanding so it will take a while to build up since it's a whole new product category," mobile electronics VP Dan Jeancola said.

At Freeman's Car Stereo, Charlotte, N.C., the Kenwood piece was not moving yet due to the price of the original model. "It's just a little too out of reach for the [younger] people that would be most interested in it," David Richardson, VP/COO said. "For older people, it a tougher sell. They don't quite understand it and our guys aren't good at explaining it yet. So the younger guys are going to wait for the price to come down. It needs to be at $399 to $499. Once it gets to the price of a CD changer I think it will be a home run," he said.

Beach Auto Sound, Huntington Beach, Calif., has had a lot of success selling the 40GB Neo from SSI America, at $599, as well as the Kenwood Music Keg. The store sells six hard drive units a month and says it attracts all ages. "My business doesn't skew that young and I've sold Neos to guys in their 60s," said general manager Tom Sweere.

Greg Thomas, car audio merchandise manager for Thornton, Colo.-based Ultimate Electronics said, "We're very happy with the success we've had with the new category and we'd like to see products from different vendors."

Several retailers noted that an add-on product like the Music Keg or Neo is a cheaper, more universal solution than an in-dash head unit. "You have a chance with the Keg [with RF modulator] for 100 percent of the customers, but with an in-dash piece you have to want a new head unit," said one buyer. Another said some of his younger consumers could easily find cheaper desktop/portable downloading configurations at a local computer store, so price is very important.

Several retailers said they have not yet begun carrying the new hard-drive-based units.

Car Stereo City, Portland, Ore., is shying away from the segment as the products are still too expensive. Sound FX, West Warwick, R.I., said it was planning on picking up the Pioneer DEH-P90HDD in the near future but was not yet carrying other models. The Specialists, Tuscon, Ariz., said they were waiting on both the Sony and Pioneer head units.