MP3-Player Speaker Docks Surge: CEA

ARLINGTON, VA. — Factory-level sales of MP3-player docking-speaker systems have risen so rapidly in the past few years that their 2007 dollar volume was almost a third of the size of the traditional home audio market, according to the latest Consumer Electronics Association (CEA) estimates.

In 2007, CEA estimates speaker-dock sales rose 44.5 percent to $867 million compared with $2.96 billion in estimated sales of traditional home audio products, whose volume rose 6 percent in 2007. The docking-speaker numbers include models with embedded radios and clock radios but not dock-equipped compact stereo systems, which add CD player, or dock-equipped home theater in a box systems (HTiBs). The traditional home audio market consists of components, HTiBs, compact stereo systems and table radios.

In 2008, CEA forecast speaker-dock sales will jump another 27.7 percent to $1.11 billion, or about 38 percent of the size of forecast home audio sales of $2.93 billion, down 1.3 percent.

In units, factory-level speaker-dock sales rose 39 percent in 2007 to 6.11 million units, CEA estimated. In 2008, CEA forecasts unit-sales growth of 45 percent to 8.86 million units.

With household penetration of MP3 players hitting 45 percent in January 2008, according to CEA surveys, it's no wonder that docks clocked record sales in 2007. Sales of MP3 players themselves, however, are stabilizing. In 2007, factory-level dollar volume rose a meager 0.1 percent to an estimated $5.56 billion even though unit sales gained at a double-digit percentage rate, CEA factory-sales estimates show. Measured in units, 2007 sales rose an estimated 23.5 percent to 47.1 million units, but the percentage gain was less than half that of 2006's 53.7 percent gain, 2005's gain of 248 percent, and 135 percent in 2004, CEA statistics show.

In 2007, dollar sales flattened despite the unit-sales surge, marketers and, The NPD Group believes, because consumers stepped down from pricier hard-drive-based models to less expensive flash-memory models, whose capacities have grown sufficiently to store ample numbers of songs, videos and digital photos for most people. The decline in the average wholesale price to $118 in 2007 from the previous year's $146 supports that view.