Growth Forecast In Networked Audio

NEW YORK — Worldwide retail sales of networked home audio products will rise to $7.2 billion by 2012, from only about $500 million in 2006, an ABI Research study concludes.

North American retail-level sales will hit about $3 billion in 2012, up from $300 million in 2006, said research director Michael Wolf. By way of comparison, last year's factory-level home audio sales in the U.S. were $2.52 billion, including home radios, statistics from the Consumer Electronics Association show.

The study defined networked audio products as using wired Ethernet connections, IP-based no-new-wires network connections, or proprietary no-new-wires network technologies to distribute music to multiple rooms in the house from a dedicated A/V server or PC. The products range from dedicated music and audio/video servers to Apple's Airport Express, a Wi-Fi wall wart that streams music from a PC to a connected home audio system. The definition also includes digital media adapters (DMAs) that stream music and sometimes video from a networked PC or dedicated music server, IP-based amplified speaker systems, and home audio components and systems (compacts and home theater in a box systems) that network with PCs and dedicated A/V servers. Compact systems and HTiBs with embedded music servers are also included, as are audio components, systems and clock radios that stream music directly from the web without a PC connection.

The statistics exclude A/V servers designed to integrate with custom-installed multiroom audio systems, whose sources are controlled from in-wall keypads and touchscreens and which reproduce music through in-wall and in-ceiling speakers.

Examples of included products are Philips's Streamium-brand music systems, clients and music servers, as well as music servers from NetStreams. Also included: Sonos' PC-based wireless music system and DMAs from NetGear, Linksys and Roku.

Retail-level of these and other networked-audio products will grow at a compound annual growth rate of 55 percent between 2006 and 2012, but the bend in the hockey stick begins in 2010 and 2011 (see table), Wolf said.

Sales will grow as prices fall and new network technologies, such as wireless 802.11n and HomePlug A/V, are added to deliver wider bandwidth to improve audio quality and longer range, he said.

"Existing heavyweights in home audio and consumer electronics, such as Yamaha and Sony, have joined the early contenders," said Wolf, "but we believe the market will take some time to develop. One of the key driving factors will be lower prices for dedicated audio/media servers." Typical audio servers cost anywhere from $1,000 to over $10,000, but "as large vendors bring scale to the market, we expect the average price of audio/media servers to drop to below $1,000 by 2010 and to close to $500 by 2012."