CEA: MP3 Speaker Docks Top Home Audio

By Joseph Palenchar On Mar 23 2010 - 9:16am

ARLINGTON, VA. — MP3-player docking-speaker systems emerged for the first time in 2009 as the home audio industry’s largest category by factory-level dollar volume, even though their volume slipped for the first time in 2009, Consumer Electronics Association (CEA) estimates show.

Factory-level unit and dollar sales have been rising at double-digit percentage rates since the first MP3 speaker systems debuted in the early 2000s, but 2009’s 4.8 percent decline to an estimated $947 million was much smaller than the declines experienced by all other major home audio categories, CEA’s statistics show.

Despite the dollar decline, unit sales of docking speakers kept on growing, with unit sales up an estimated 12 percent in 2009 to 9.24 million and forecast by CEA to rise more than 8 percent in 2010 to 10 million units.

In 2011, CEA forecasts unit and dollar growth of 6 percent and 1 percent, respectively, with 2012 forecast to post flat unit growth on a 4 percent dollar decline. In 2013, units will drop 4 percent to 10.2 million, with dollars falling 6 percent to $887 million.

The statistics exclude iPod-docking clock radios and tabletop radios, but when those categories are included, the influence of iPod docking capabilities on home audio sales grows further.

In 2010, CEA forecasts that 53 percent of all 11.2 million clock radios and 67 percent of all 1.06 million tabletop home radios will feature iPod docks. So will 31 percent of all 2.62 million home theater in a box (HTiB) systems, 44.7 percent of all 1.35 million compact systems, and 45 percent of 1.35 million compact stereo systems, and 61 percent of 1.15 million component receivers.

Among docking speaker systems, the share of AC/DC models has been shrinking as consumers opt increasingly for AConly models capable of driving higher power amplifi ers that, in turn, deliver deeper bass response, higher volume and improved sonic accuracy, NPD statistics show. In 2009, 57 percent of docking speakers sold to consumers were AC-only models, up from 50 percent in 2007, NPD statistics show.

Despite their 2009 decline, docking speakers systems have held up better than every one of the other key home audio segments but home/clock radios, whose sales rose 56 percent in 2009, CEA estimates show.

Although the 2008 and 2009 freefall in total home audio sales will abate in 2010, a return to growth is still a few years away, according to CEA forecasts.

Factory-level home audio sales fell an estimated 14.1 percent to $2.99 billion in 2009 following a 2008 decline of 9.7 percent, but the decline will slow in 2010 to a forecast 2.5 percent to $2.91 billion, the statistics show. Sales will continue to decline in 2012 and 2013 at single-digit rates before sales head back up in 2013 by 2.6 percent, the statistics show. The sales comprise home audio components (including custom-installed speakers and multi-room-A/V electronics), compact systems, HTiBs, AC-only and AC/DC MP3-docking speaker systems, and home and clock radios.

The segments that suffered the most in 2009 were components, down 27 percent to $882 million; compact systems, down 35.4 percent to a meager $148 million; and HTiBs, down percent to $665 million. Audio components are way off from their 1990 peak of $1.93 billion, and HTiB sales are below their 2003 peak of $961 million.

Despite the recession’s after effects, CEA expects MP3 speaker-system sales to resume growth in 2010 and 2011, albeit at modest rates.

Marketers cite multiple reasons for resumed docking-speaker growth. For one thing, the total addressable market is far from saturated. Household penetration of MP3 players hit 51 percent in January 2010, but the penetration of MP3 speaker systems was only 35 percent, CEA consumer surveys show. Another reason is that the number of multiple-iPod households is growing. Consumers buying their second and third models are passing on their old ones to other family members, marketers said, creating opportunities to sell additional docking speaker systems into a household. The growth of multi-iPod households also accounts for the small-but-growing selection of dualdocking speaker systems that charge two iPods or iPhones simultaneously.

Another factor contributing to iPodspeaker growth is the popularity of the iPhone, whose high-usage owners are in constant need of recharging their phone.

Docking-speaker gains will come despite the influx of home audio products that incorporate iPod docks as a standard or optional feature, marketers contend. Although growing percentages of A/V receivers, HTiBs and compact stereo systems come with iPod docks, such products do not offer the portability advantage that one-piece tabletop speaker docks offer, marketers contended.

In 2010, CEA forecasts that 31 percent of HTiBs sold by suppliers will come with iPod connectivity, accounting for 40 percent of HTiB dollar sales. The percentages are similar to CEA’s 2009 estimates.

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