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CEA Sees iPod Systems Outselling HTiBs, Compacts

1/07/2008 02:00:00 AM Eastern

LAS VEGAS — Sales of iPod-docking speaker systems and clock radios will outsell combined sales of traditional compact shelf systems and home theater in a box (HTiB) systems for the first time in 2008, Consumer Electronics Association (CEA) forecasts show.

Suppliers here at International CES this week are eager to maintain their share of the market or increase it by expanding their selections of iPod-docking speaker systems. Many suppliers are also tapping into the iPod phenomenon by expanding their selection of stereo shelf systems and HTiB systems equipped with iPod docks.

CEA’s July 2007 forecast called for an expected 45 percent rise in factory-level sales of iPod speaker-system sales, including docking clock radios, to $867 million in 2007 and another 23 percent rise in 2008 to $1.07 billion. The statistics exclude the growing sales of shelf systems and HTiBs sold with included or embedded docks, illustrating the influence of the iPod brand of MP3 players as a source of audio content in home as well as on the go.

In contrast, combined factory sales of HTiBs and compact stereos will slip to $1.04 billion in 2008, the forecast shows. CEA will unveil an updated forecast here at CES.

To take advantage of shifting demand, U.S. retailers advertised 279 different models of iPod-docking speaker systems under 93 different brands during the 12 months ending October 2007, IFR Monitoring data shows. IFR defined the category as dedicated amplified/speaker systems with embedded digital media player (or iPod) docks, docking clock radios, and docking tabletop radios. iPod-docking shelf systems and HTiBs weren’t included in the tabulations.

Multiple brands here at CES will give retailers even more SKUs to promote in 2008. Brands offering their first iPod speaker systems, clock radios or table radios here at CES include Acoustic Research, Dice, Lifestyle Group and Tannoy. Samsung will show its first iPod-docking HTiBs.

Companies expanding their iPod-docking product selection include Coby, iLive, iLuv, Sony, Spectra under the Jensen brand and Philips, which is adding iPod docks to almost every one of its stereo music systems and home theater systems in 2008.

"The iPod is a de facto content provider," explained Cesar Martinez, Philips’s home entertainment solutions marketing VP.

Other CES introductions include JVC’s dual-dock iPod speaker system and Spectra’s Jensen-brand iPod speaker system with LCD screen to display iPod videos and photos. It joins a similarly equipped model from Altec Lansing; more docking speakers systems intended for the Microsoft-brand Zune MP3 players, which are from iHome, iLive, Altec Lansing, and others; and, more importantly, there will be an expanded assortment of iPod-docking, iTunes-tagging HD-Radio table radios.

The first tabletop models, previously announced by Polk at a suggested $499 and JBL, will be joined by models from Dice, Sony, Spectra’s licensed Jensen brand and possibly the Audiovox-owned Acoustics Research brand. They in turn will be joined by their first car audio counterparts from Alpine and Dual.

The iTunes Tagging feature, which lets consumers "tag" songs broadcast by a digital FM station, works like this: At the touch of a button, an iPod-docking HD Radio will store song metadata broadcast by the digital FM station. The metadata is transferred automatically to an iPod when an iPod is docked to the HD Radio. When the iPod is later synced with a PC, the PC’s iTunes software automatically displays the tagged song’s metadata in a "tagged" playlist for previewing, buying and downloading.

Six major radio station groups have said they are installing iTunes Tagging technology but at press time still hadn’t announced a launch date.

The iTunes-tagging devices will tap into demand for iPod-related audio gear that SDI Technologies president Ezra S. Ashkenazi said appeals to a "higher tech audience" that "wants to use and integrate its iPod player into all facets of living. "

iPod-docking clock and table radios, he added, represent "the next evolution for the category," and he contended that the "ability to customize your listening experience without interruption is an entirely different experience than listening to commercial radio."

Sales of iPod speaker systems and table radios, however, are "fragmenting with low-cost entry options, true performance products at higher price points and few real middle-of-the-road options," contended Polk product manager Al Baron. "It’s a time of transition, which translates to opportunity for companies that help consumers integrate their digital media with the home listening experience, especially now that the PC and the iPod are often used as primary sources."

The opportunity is also coming with challenges, said Dave Rogers, sales VP for Klipsch Group Americas. "Increased competition is providing retailers with more options while they narrow assortments. We anticipate continued price compression and short product life cycles in the category during 2008."

Paul Bente, president of Harman Consumer Group’s home products division, also sees "some margin compression as the result of increasing competition from lower priced products," but he said opportunities exist to supply products to people "We know that people still want better sound along with products that have an appealing design."