Home-theater-in-a-box (HTiB) and compact music systems may have lagged behind other consumer electronics products in making the transition to the 21st century, at CES here this week buyers will find few systems with dual-well cassette decks.
Instead, mainstream system suppliers are focusing on connecting to new music sources such as iPods, other-brand MP3 players, satellite radio, PCs, and the Internet. Suppliers are also dtepping up their selection of virtual surround-sound HTiBs to eliminate speaker clutter and simplify setup (see product roundup on p. 16)
HDMI connectivity has been added to systems to deliver a one-cable connection to new HDTV displays and in many cases to upscale the system's DVD output to high def. Manufacturers are also visually integrating their systems with flat-panel displays by packing electronics and all satellite speakers into a bar-type chassis that can be placed above or below a flat-panel TV.
These developments could help drive up average retails in what has become a commodity market whose factory-level dollar volume fell by 10.8 percent for the first 10 months of 2006 to $969.2 million, according to CEA statistics.
Here at CES, dealers will find a series of firsts:
the first iPod docking HTiBs from LG and Philips, and an expanded selection by JVC;
the first iPod-docking shelf systems from LG, Sharp, and Jensen, and an expanded selection from Philips;
the first home theater systems and shelf systems designed to dock and recharge a specific brand of MP3 player other than the iPod brand. Philips will show models that dock with iPods and its GoGear MP3 players, and iLuv will show shelf systems and other home products that dock with the Samsung Yepp K5 and TP flash-memory players.
There will also be 720p/1,080i-upscaling HDMI outputs appearing in more HTiBs, with LG, Philips and Panasonic expanding their selection. HTiBs with HDMI outputs that scale up to 1,080p making their first appearance, with Philips and Panasonic showing their first model will be shown.
The first virtual surround systems from Klipsch, LG and Panasonic, and an expanded selection from Philips and JVC will debut at CES and join systems from multiple other vendors.
Philips and Sherwood will debut the first bar-style virtual-surround HTiBs while an expanded selection of XM-ready HTiBs will come from LG and Panasonic, which is also expanding its selection of XM-ready shelf systems.
JVC will debut its the first XM-ready HTiBs, shelf systems, and boombox. Also JVC will introduce the first PC-networked HTiBs, both DLNA-certified.
More wireless multiroom audio options will be available, with Panasonic showing its first HTiB with music-storing HDD wireless music server and Philips showing its next generation of compact stereo systems with similar capability.
The introductions represent a "trend toward higher price points that will be driven by HDMI, iPod, network audio clients, and satellite-radio connectivity," said Pioneer A/V marketing manager David Bales. Nonetheless, he said, "the category volume will continue to be driven — more than 50 percent — by entry-level (under-$299) integrated receiver/subwoofer systems that deliver high power and possess a multi-DVD disc player."
"A couple of manufacturers dominating the higher price points," he noted, "are only now beginning to offer network audio clients, satellite radio and iPod connectivity, as well as room calibration and surround sound via two-speaker configurations.
Lower priced HTiBs are also incorporating some of these technologies, said Andy Mintz, Philips senior VP of mainstream sales and marketing. "Entry-level and under $200 HTIBs continued to be popular in 2006, driven mainly by high-power output and connectivity features like USB, HDMI and satellite-radio-ready." In 2007, he said, those trends will continue and will be augmented by 1,080i/1,080p upscaling and iPod docking.
Even two-channel shelf systems, whose sales have plummeted as consumers turn to their PCs to play music, could get a boost in 2007 as they evolve to incorporate iPod- and satellite-radio connectivity — and stay relevant despite soaring sales of iPod-dedicated amplified speaker systems, or iPod hifis.
"Everybody has jumped on the iPod bandwagon to a level that makes it affordable to integrate, and we see this trend continuing as long as iPod is the defacto portable music player," said Pioneer's Bales.
iPod-dedicated amplified speaker systems "are starting to fill the role of two-channel systems in some living environments," said Mike Klipsch, president of Klipsch Audio Technologies. "People are using these setups as secondary systems in their living rooms, bedrooms and kitchens and as primary systems in their offices and dorm rooms." The opportunity for traditional home audio suppliers, he said, lies in delivering high-performance alternatives to "most iPod solutions," which he said "suffer from low-quality sonic performance."
The iPod "has been a catalyst in the development of a whole new spin on the tabletop or shelf system," added Paul Bente, president of the Harman Consumer Group home products division.
Systems' future also lies in making the connection to other sources of music, many suppliers say. "Networking, Internet radio, and satellite radio have only started to become compelling features but will continue to become extremely important," said Bales. "The Internet is just another source of entertainment and A/V content. Consumers will begin to realize that this content can easily find its way into the living room and multi-rooms throughout their homes. We believe it's a key component in the future of the CE industry."
Paul Wasek, Onkyo national product and marketing manager, agreed. "The ability to upgrade or expand your HTiB or stereo system was key in 2006," he said, referring to iPod compatibility, satellite radio, and automatic acoustical set-up features. "They will become even more significant in 2007."
Besides incorporating new technology, HTiB systems here at CES are getting a cosmetic makeover, in part through the adoption of virtual surround technologies of one stripe or another. These 2.1 virtual surround systems "will be driven by designs to match flat TVs and non-traditional form factors," said Philips's Mintz.
The challenge for retailers and suppliers, he continued, is to convey 2.1 systems' benefits to consumers on the sales floor. "They offer great sound performance, nontraditional form factors, ease of installation, and less clutter than 5.1 systems. However, it is a challenge to convey these benefits on the sales floor. Misconceptions like `less speakers equals less sound' or `5.1 is better because 5 is bigger than 2' have to be overcome through demos and point-of-sale material."