HD Radio technology will continue its slow but inexorable expansion into home and car audio systems in 2009, aided by at least one new brand and a growing selection of home and car products with iTunes Tagging technology.
At last year's CES, at least nine brands launched their first HD Radio products, autosound suppliers spread HD Radio throughout their lines from the low to high ends, home audio suppliers bulked up the selection of tabletop HD Radios, and two low-price $100 add-on tuners appeared for use with existing stereo systems. Later in 2008, HD Radio turned up in more AV receivers, with prices starting at a suggested $999 compared to the previous year's opening price of $2,099.
By the end of 2008, a total of 78 HD Radio SKUs were available to consumers, 53 of them for the home, including tuners for custom-installed multiroom-audio systems. That's up from more than 60 SKUs in January 2008, more than 40 in 2007, and 25 in 2006, iBiquity said.
Since the launch of the first HD Radios in 2004, the total installed base hit 600,000 at the end of the third quarter of 2008, up from 340,000 at the end of 2007, iBiquity also said. The statistics include OEM and aftermarket car audio and home audio.
This year, fewer companies are entering the market for the first time, but existing suppliers are remaining in the market to broaden the selection of iTunes-tagging HD Radios.
Here at the show:
- autosound supplier Clarion will enter the market.
- at least two more suppliers — Azentek and Kenwood — will build HD Radio into a car head unit rather than offer it only as an optional outboard tuner. Embedded HD Radio tuners will boost HD Radio sales, multiple suppliers said, because the attachment rate of optional outboard HD Radio tuners to an HD Radio-ready head unit is only 5 percent. As HD Radio chipset prices fall, suppliers said they can afford to embed HD Radio in more head units.
- iTunes tagging will expand markedly in the car audio arena, with almost every leading supplier offering the feature. Last year it was available only on two Dual and two Alpine models, but this year it will start at suggested retails as low as $159 for a Jensen CD receiver with built-in HD Radio. Other suppliers launching it are Azentek, Eclipse, Jensen, JVC and Kenwood. Dual's were a suggested $250 and $300 with built-in, and Alpine's HD radio started at $199 plus the module.
- Sony, iLive and iLuv plan to show their first iTunes-tagging tabletop HD Radios.
- At least two other home-audio suppliers who entered the HD Radio market last year said they expected to show new models but couldn't confirm plans at press time.
- Audio Design Associates will expand its selection of multiroom-oriented multizone receivers with optional HD Radio module.
In December, Philips launched its first HD Radio, an iPod-docking home speaker system with FM and iTunes tagging at a suggested $169.
(See p. 72 for more details on homeaudio HD Radio launches.)
In a related introduction, Pioneer will become the first supplier to bring iTunes tagging to analog FM tuners equipped with RDS (Radio Data System) technology, which is used by analog FM stations to broadcast station call letters, song metadata and other information via a low-bandwidth digital signal. iTunes tagging is designed to make it easier for consumers to download a song to their PC after hearing it on FM. (See story on p. 72.)
The new products will receive digital broadcasts from more than 1,800 HD Radio AM and FM stations that were on the air by early December. More than 900 of the FM stations were offering up to two additional multicast channels. That compares with more than 1,500 AM and FM stations broadcasting digital programs in early December 2007, when more than 700 FM stations were offering subscription-free multicast channels. About 1,200 more stations have committed to offering HD Radio in the future, HD Radio developer iBiquity Digital said. That's out of around 13,500 commercial and educational radio stations on the air in the U.S.
The rollout on the broadcast side and the receiver side has been slow but steady, HD Radio developer iBiquity Digital agreed. Suppliers, retailers and analysts point to multiple reasons that the station rollout and consumer adoption have not occurred at brisk rates.
On the broadcast side, falling revenues are one reason. Radio ad revenues fell for the 18th consecutive month in October, when revenues dropped 10 percent from October 2007, the Radio Advertising Bureau said. Many broadcast groups also carry high debt loads. "Broadcasters don't have the resources right now to give their primary station its proper resources," said Sean Ross, VP at Edison Media Research.
On the consumer side, suppliers and analysts cite a lack of consume awareness of HD Radio's benefits, an inability to demonstrate HD Radio in many stores, and a lack of signage in national big-box chains that prohibit vendor-supplied signage.
Although awareness of HD Radio is high because of promotions by the HD Digital Radio Alliance, most consumers still do not understand the technology's benefits, according to research company Mark Kassoff and Co. A September 2008 survey found that 67 percent of 18- to 64-year-olds have heard of HD Radio, up from 38 percent in 2006, but only 21 percent of the age group are aware that the technology delivers higher sound quality, and only 8 percent know the technology delivers more stations on the FM dial, the survey found.
As for displaying the product, said one supplier, "Lack of telling the story except for trying our best on our gift boxes is a big drawback." Nonetheless, "iBiquity has done a good job at great expense in supplying various POP materials, but except for Target, I don't know how successful iBiquity has been in getting their signage out there."
HD Radio sales are also challenged by an inability to demo the technology because of in-door reception problems and RF interference caused by scores of flat-screen TVs and other electronics products. In hundreds of stores, however, iBiquity has placed "retail demonstration modules" (RDMs) that connect to up to 10 HD Radios at a time to walk consumers through a simulated demo delivered through the radio's own speakers.
Against these headwinds, vendors see some reasons for home and aftermarket autosound sales to accelerate: falling chipset prices, more autosound head units with built-in HD Radio, growing awareness as more automakers offer HD Radio, and, ironically, the recession. Said Ross Rubin, analyst, The NPD Group, "As consumers look at their overall expenditures in a tight economy, there may be an opportunity to woo satellite radio users that may be looking to cancel their subscriptions."
Citing the other reasons, Alpine marketing VP Steve Witt expects some "significant growth in 2009" and claims a new chipset due for 2010 products will further reduce the cost. "We're about to enter the third phase [third-generation chipset] of HD Radio and if you look historically [at other technologies], that's when you typically have significant costs coming down."
Lower costs will also help on the home side, said a tabletop radio vendor. "We think the vote is still out on HD Radio, at least as long as it is a feature at a retail premium of at least $30." That premium is down from up to $40 on the previous-generation product, the marketer noted.
The price premium, nonetheless, is far smaller than in 2004, when one supplier told TWICE that the premium would be $300 if the technology were integrated into an in-dash CD receiver. That year, the first add-on car tuner was priced at a suggested $399.
Consumer awareness and acceptance will grow further in 2010 when the technology will be standard in a significant number of vehicles, Witt said. Mike Hench, president of The EDGE Distributors Group, agreed. "HD Radio is very neat, but its awareness level is still very low … I believe that will slowly change as more cars offer HD Radio capability."
Several automakers have announced commitments to include HD Radio technology in their vehicles. As of mid-December, the Hyundai Genesis, one Jaguar model, select Mercedes models, and all MINI and BMW vehicles offer HD Radio technology as a factory-installed option, and most Fords, Lincolns and Mercury vehicles offer it as a dealer-installed option.
In addition, Volvo announced that the technology would be standard across its product line beginning in March 2009, while Audi, Ford, Jaguar, Lincoln, Mercury and Scion have announced that the technology will be available in the 2009 and 2010 calendar years as factory-installed products. Audi plans to offer HD Radio as standard in many of its vehicles starting with the 2011 model year. Those models arrive in dealerships in 2010.
"Changing something as established as radio is tough work," said Bernice Cramer, Altec Lansing marketing VP. "Considering the technical, regulatory and political challenges, we think HD Radio has made tremendous progress in a short period of time. Consumer education and in-store demos are an issue, but this is no different from any other developing audio technology." Ongoing work by the Alliance will continue to help, and "as consumers are better educated and migrate, we expect HD Radio to become a more common feature.
Some retailers, however, wish awareness could have grown at a faster pace. "With as much money as has been spent on it and all the promotions, relative to everything else we sell, if I didn't have any HD Radio to sell, I wouldn't lose a wink of sleep over it," said Grant Philips, purchasing director for Scottsdale, Ariz.-based Audio Express, the 44-store car audio chain.