Dolby AC-3 Gains; Starting Price Falls

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Audio electronics suppliers are lining up solidly behind Dolby AC-3 digital surround, chosen last month as DVD's mandatory 5.1-channel digital surround format.At WCES, suppliers are connecting a multitude of AC-3 processors and a couple of AC-3 receivers to laserdisc players and DVD players -- including the industry's first LD/DVD/CD player from Pioneer. The Pioneer unit is targeted for third-quarter shipments at an undetermined price.

The price of an AC-3 ticket is also going down at WCES: Kenwood is demonstrating an AC-3 receiver with suggested retail of $1,200 to $1,400, and Technics is showing a $699 A/V receiver with input for a 5.1 digital surround decoder. Technics' 5.1 decoder plans, however, were unavailable at press time. The pricing compares to current AC-3 pricing of a suggested $1,925 and $2,100 for a pair of Pioneer AC-3 receivers, the only AC-3 receivers currently available, and to a suggested $1,499 for a Yamaha receiver with AC-3 input for connection to Yamaha's $599 AC-3 decoder.

Also at the show:

* Denon plans to show its first AC-3 receiver. Pricing and ship date were undetermined at press time.

* And at least seven companies are introducing their first Dolby AC-3 processors. They are Lexicon, Marantz, Meridian, Onkyo, Parasound, Rotel, and Harman Kardon in its Citation and Harman Kardon lines.

For the processors whose pricing has been announced, suggested retails range mostly from $699 to $799, but Parasound said it plans a price point of less than $500.

THX Surround

While AC-3 gains ground in audio circles, LucasFilm's THX surround specification is also strengthening its position at WCES. At least two companies -- Harman Kardon and Marantz -- will show their first THX-certified receivers, priced at $1,699 and $1,499, respectively. And both Technics and Onkyo will show their second-generation THX-certified receivers, the former at a suggested $1,000, the latter at an estimated suggested retail of $1,500. All four companies' receivers feature inputs for AC-3 or other digital surround format. Rotel's first THX processor, a tuner/preamp, is also on display. It comes with an input for its planned outboard AC-3 processor.

THX 5.1 Processing Due

Like most suppliers, however, Rotel is holding off the introduction of THX's implementation of AC-3 because, as Onkyo senior marketing manager Mike Strange said, implementing THX 5.1 is "extremely expensive" until Motorola's 56009 chip becomes available to suppliers in the first quarter. Even if chip deliveries occur on schedule, he believes suppliers such as Onkyo would be "hard-pressed" to deliver an AC-3/THX 5.1 product in the first half. Shipments will more likely wait until the fourth quarter or early 1997, Strange said. Some suppliers, however, can't wait.

Denon is demonstrating the industry's first AC-3 component to incorporate THX 5.1 processing. Its $3,500-suggested-retail AVP8000 tuner/preamp/processor shipped in December. And Lexicon is displaying a DC-1 processor that can be upgraded to offer AC-3 and THX 5.1, although the latter would be defeatable. The processor's AC-3 version is due in April or May at $4,500, said VP Buzz Goddard.

Harman Kardon also plans an AC-3/THX 5.1 decoder for late-spring shipment, but it is not on display at WCES. Suppliers also point out that the Motorola 56009 chip accommodates any 5.1 digital surround format, including DTS, not just AC-3 and LucasFilm's THX 5.1.

Pro Logic Outlook

Despite the growing number of AC-3 products, suppliers said they expect Pro Logic sales to remain strong in 1996. "AC-3 will still be relatively expensive for consumers," said Denon sales and marketing VP Steve Baker. "Even if AC-3 drops in half, it's still $1,000, and there's a huge difference in $399 volume and $1,000 volume." Nonetheless, suppliers acknowledge the potential this year for AC-3 to chill sales of top-end Pro Logic components, particularly at prices of $2,000 and up. That would explain Lexicon's offer of a $3,000 credit to purchasers of its CP-3 digital processor should they later decide to upgrade to an AC-3-equipped DC-1.

Many consumers, however, appear to be eager to snap up AC-3 as soon as possible. Yamaha national marketing director Tom Graham, for example, said sales of his company's AC-3 decoder have exceeded the company's "aggressive" forecasts. "We're heavily back-ordered," Graham said in mid-December. He also noted that dealers report "a surprising amount of consumer knowledge about AC-3."

THX, AC-3 Receivers Appear; Upgradable Systems Unveiled

Here's what dealers are finding in home theater electronics from suppliers at WCES:

Denon: The industry's first AC-3 component to incorporate THX 5.1 processing, available since December, will be on display. It's the $3,500-suggested-retail AVP8000 tuner/preamp/processor. Denon's AC-3 receiver is also expected to be on display, but details were unavailable at press time.

Fisher: A $199-suggested-retail Pro Logic processor with three-channel amplifier will be packaged with three speakers. The midi-size component, which can be used with shelf systems, has already been packaged with some of the company's existing shelf systems. Also, Fisher is adding the Sound Stage name to audio and video components that qualify for use in a home theater system. The name will appear on HiFi VCRs, stereo TVs, A/V receivers, and home theater shelf systems.

Harman Kardon: The planned $1,699 THX-certified receiver sports an AC-3 input, and it will link up with one of two planned AC-3 decoders, one with THX 5.1 processing and one without.

Decoder shipments are planned for late spring, but they won't be displayed at WCES, said product manager John McCreedy. In its Citation line, Harman Kardon plans to exhibit the 7.5 digital processor, which will incorporate AC-3 decoding and THX 5.1 processing but will make THX processing defeatable. The processor price will range from about $2,200 to less than $3,000 depending on options when it ships sometime in mid spring. It can be upgraded to include the DTS 5.1 format in the future if demand warrants, the company said.

Kenwood: The company will introduce two AC-3 products, the KC-X1 tuner/preamp/controller, and its first AC-3 receiver, expected to ship sometime in the first half. The receiver, at a suggested $1,200 to $1,400, is the KR-V990D, which is rated at 3x100 plus 2x70 watts but comes with preamp outputs for all channels and features a subwoofer preout. Other features include universal remote, S-video input, and onscreen GUI. Kenwood's KC-X1 tuner/preamp/controller features a detachable LCD touchscreen with graphical user interface. When detached, the touchscreen operates as a 900MHz wireless remote to operate a home theater system, even if other home theater components aren't Kenwood-branded. Shipments are planned for late March or early April at a suggested retail of about $2,500. Its companion 6x120-watt amplifier, the KM-X1, ships at about $1,500. New Kenwood receivers won't sport AC-3 inputs, and the opening price point on a Pro Logic receiver goes to a suggested $220 from $250. Two new two-channel receivers will get built-in SRS audio processing.

Lexicon: Lexicon introduces the DC-1 Digital Controller, a modular device that can be upgraded from its digital Pro Logic processing configuration, available in March at $1,995, to include THX processing or AC-3 decoding with defeatable THX 5.1 processing. The Pro Logic version is due in March at $1,995; the THX version at $2,995 is due in February; and the AC-3/THX 5.1 version is due in April or May at $4,500. Lexicon is also introducing its first amplifiers, five THX-certified models in two-, three- and four-channel configurations priced from $1,695 to $2,995.

Marantz: A $699-suggested-retail AC-3 decoder/demodulator will link up to $1,499 THX-certified A/V receiver, which is equipped with an AC-3 input but won't perform THX 5.1 processing when the $699 AC-3 decoder is wired in.

Meridian America: The company is demonstrating a $700 AC-3 upgrade board for its 565 digital surround processor for a total package price of $4,490.

Onkyo: As part of its DVD demo, Onkyo plans to demonstrate the ED-901 AC-3 decoder, expected to ship in the spring at less than $800, and its second THX receiver, the TX-SV828, which features AC-3 input. The receiver, due in February at an estimated suggested retail of $1,500, will complement the company's first THX receiver, which retails for a suggested $2,100 and provides more power and more digital soundfield modes. Because of the current cost and complexity of incorporating THX 5.1 in an AC-3 processor, Onkyo will incorporate only a portion of the THX standard in its decoder: LucasFilm's Cinema re-EQ, which provides equalization and decorrelation for the rear channels.

Parasound: The company is introducing a THX processor dubbed the PSP-1500. Slated to ship in February at less than $1,500, the processor sports a 5.1-channel input for an AC-3 decoder scheduled for March shipment at less than $500.

Pioneer: To go with its DVD demo, Pioneer will exhibit two new AC-3 laserdisc/CD combi players, including the $650-suggested-retail CLD-D505 two-side-play model. It replaces a similarly priced model. Five new Pro Logic receivers include three models incorporating Intelligent System Control (ISC), previously available only in the step-up Elite line. One ISC model, the VSX-505S, is described as a mid-end receiver. Pricing was undetermined. The feature will also be added to the step-up VSX-605S and VSX-705S, which uses a GUI appearing on a TV screen rather than the front-panel fluorescent display on the 505S.

ISC incorporates a self-prompting GUI, provides remote control of non-Pioneer products in a home theater system, and turns on all home theater components with one touch of a remote button.

For 1996, Pioneer has upgraded ISC to include GUI control of DSS and DVD. The two step-up receivers also feature VCR channel control and CD titling for use with Pioneer's new mass-storage CD changers.

The company doesn't plan to introduce THX receivers or an outboard AC-3 processor at the show, but it will lower the already-low opening price point on a Pro Logic receiver from a current suggested retail of $350 to $290 on a new model, the VSX-305, due in March. Promotional retails could hit close to $200. To date, promotional retails on Pioneer's Pro Logic receivers have ranged from $229 to $249.

Rotel: To go with its RB-985 THX power amplifier, the company is introducing the $1,500 RTC-980 tuner/preamp, due in the first quarter. It comes with an input for a Rotel AC-3 decoder due in April or May. The decoder will be displayed but not demonstrated at Rotel's Mirage suite.

Technics: Its newest THX receiver is the $999-suggested-retail SA-TX1010, rated at 3x120 plus 2x60 watts. It's due in May to replace a model at the same price point, but the new model adds more advanced features such as an input for a 5.1-channel surround decoder. Technics' 5.1 decoder plans were unavailable .

Yamaha: The DSP-A3090 integrated amplifier/AC-3 surround processor is due in spring at a suggested $2,500. Unlike an existing receiver with DSP and AC-3 input, it can apply digital soundfield processing modes to the playback of an AC-3 soundtrack. The company is also upgrading its outboard processor/three-channel amp with more power to the center channel and calling it the DSP-E390, retailing for a suggested $329. It provides DSP and six preamp outputs.

CD Changers Heading Toward Critical Mass

By Rebecca Day

The number of slots will go up, and prices will head down, on mass-storage changers at WCES, where suppliers are focusing on adding value to the nascent category to stimulate sales.

"Manufacturers have to become realistic regarding goals and how much consumers are willing to pay as a premium to get storage," said Andy Nelkin, home audio general manager for Panasonic/Technics.

Though suppliers admit that volume has been limited by pricing, Kenwood said that sales of its mass-storage models are nonetheless higher than forecast. However, sales and marketing director Bob Law said, the industry could be doing a lot more to stimulate interest. "I'm a little surprised that sales are above expectations," Law said. "Mass-storage changers are selling through fairly well at retail, but I don't know why. Most stores don't set it apart as a new product category, and it's not the kind of thing consumers come in asking for."

To help drive up sales at a faster clip in 1996, Sony will lead the value-driven charge by offering 200-disc changers in the same-size chassis used for its 100-disc changers. At WCES, Sony plans to show three 200-disc models ranging in price from less than $500 to more than $1,000, including a model for the upscale ES line.

Also at WCES:

* Pioneer will expand its selection and drop out of the magazine-changer market with the introduction of a new 100-disc model and a series of 25[+]1 and 50[+]1 models that use a faster, quieter mechanism with a lot fewer moving parts.

* Sharp will introduce its first mega changers, which will be incorporated in rack and shelf systems.

* And Technics will expand its selection with the introduction of 60[+]1 and 110[+]1 models, replacing a lone 50-disc model introduced last year.

The Radical Lift

At Sony, engineers reworked the way the changer lifts the CD out of the tray and built the box to tighter tolerances, said hi-fi division VP Vic Pacor. The company had no choice but to up the ante, he maintained. Conventional changers are topping out at the $250 to $280 retail level in the mainstream market, "and if retailers want to enjoy sales in prices above that level -- in the $400 to $1,000 range -- they're going to have to have a good representation of mass-storage models," Pacor stated. He defined the mass-storage market as anything holding 25 discs or more and foresaw a broad spectrum of offerings in between the entry-level and the 200-disc top end. "You're going to see the market evolve into a range of products offering varying degrees of sophistication," said Pacor. "In the popular price points, getting huge disc capacity is going to create a lot of resurgence of interest. People have gained a general awareness of mass-storage changers, and they realize we've reached economies of scale in cost versus value."

How high can the numbers go? At 200 discs, Sony's not looking back. The company is replacing its entire mass-storage line with the 200-disc models. "We think the appeal of mass storage is mass storage," Pacor explained. At the high end of the Sony line, models will be able to operate as master units, capable of driving lower-priced models as slave devices. "Maybe it could even control two slave changers, which would give users control and storage of 400 or 600 discs," he pointed out.

"There's no downside to buying a 200-disc changer even if you only have 20, 50 or 100 discs at home," Pacor said, "especially if the price is comparable to other units out there."

Here's what other suppliers are planning:

Kenwood's first mass-storage changers shipped last July, and the models will continue coming through the spring.

Pioneer plans to pack mass-storage CD changers into every facet of the new line, including components, racks, mini and midi systems. "We're looking at mass storage as the next step up from single-play CD players," said Albert Margolis, marketing coordinator. Pioneer will discontinue the six-disc magazine-type changer sometime this year. "If you look at the largest-growing segment of CD owners, it's the 20 to 50-plus area," Margolis explained. "That's where the market is shifting, and with our new, lower cost mechanism, we're able to bring the price of mass-storage changers to where six-disc changers were." The same mechanism will be used across the board throughout the world. The old mechanism operated jukebox-style, but the new system moves the discs rather than the reader. "We now have fewer moving parts, and that's how we're achieving cost savings," he said.

The new Pioneer line includes the top-end 100[+]1 PDF-1005, featuring optical digital output and onscreen graphics. It is scheduled to ship in July. The 100[+]1 PDF-905, due in June, lacks onscreen graphics. The 50[+]1 PDF-605 ships this month; the PDF-605 25[+]1 and PDF-505 25[+]1 models will ship in March; and the 905 is due out in June. Little pricing information or details were available at press time, but Margolis says the leader 505 model is expected to sell for less than $200.

Sharp will enter the mass-storage market with 50-disc changers in four new rack systems and a compact music system. The leader rack is the SYS-9650AV, due in May at $599.95. The step-up SYS-9660AV at $699.95 is also due in May, followed by the SYS-9680AV at $899.95 in June.

The flagship rack system, the SYS-9690AV at $1,099.95, will hit the market in April. And rounding out the line is the $599 CMS-1650AV shelf system, due in May. The Sharp changer mechanism stores discs vertically from left to right. CDs are loaded into an opening on the left of the unit and are picked up by a sliding CD mechanism that actually plays the disc.

Technics introduced a 60[+]1 model last year and will expand its selection with 60[+]1 and 110[+]1 component models. The 110 number was chosen "because we could," said Nelkin. "In a standard configuration, that's as many as we could fit." One of the 110-disc models, the SL-MC700, ships in May at a suggested $499. Technics' megachangers will offer a single-disc drawer that gives users the ability to change all of the discs while a single disc is playing. "Our approach to mass storage," Nelkin explained, "is that when consumers add mass-storage changers, they shouldn't be giving up something else."

Technics will keep its carousel changer line, which tops out at $249. It will also offer 60[+]1 and 110[+]1 changers in selected rack systems and 60[+]1 changers in selcted shelf systems.

"We're making mass-storage CD the focal point of our minisystem line," Nelkin said. The line starts at $399 suggested retail and is due to ship in May.

Kenwood's KR-V990D receiver, at a suggested $1,200 to $1,400, will be the industry's lowest-priced receiver with built-in Dolby AC-3 processingTechnics adds AC-3 inputs to two receivers: the THX-certified $999-suggested-retail SA-TX50 and a $699 receiver.Sony's CDP-CX270 is one of three 200-disc changers scheduled to be introduced at suggested retails of $500 to more than $1,000.


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