The docking iPod speaker market will see narrower growth this year, after a meteoric rise over the past two years, which gave birth to a new genre of audio.
Almost non existent a few years ago, the market for clock radios, boomboxes and table top stations that dock with iPods and other MP3 players has now become a $300 to $600 retail market, according to supplier estimates.
Growth for iPod docking speakers this year will slow to about 10 percent in dollar sales to consumers, as growth for the iPod itself narrows to between 10 percent and 20 percent over the next few years, according to industry estimates.
But as the iPod speaker matures, it is also diversifying. Some products now dock exclusively with the Microsoft Zune or a SanDisk Sansa or with music-ready cellular phones or satellite radio portables.
In addition, the "docking audio system" is going upscale as more high-end audio systems and shelf systems debut with iPod docks.
As a byproduct of the category's overnight success, many dealers this year have doubled their assortments and suppliers are fighting for shelf space, and the even more rarified display space that allows for live demonstration. There are an estimated 100 suppliers of docking speakers at present.
"Anybody can see that the market is over assorted," said Altec Lansing sales and marketing senior VP Robert Heiblim, adding, "Clearly, I think that the days of 300 percent sales growth are over. You have a very healthy market but many retailers are over assorted with 12 or more iPod speakers and a year ago they had two or three. So, all the items are selling less well. I expect there will be a shakeout this year."
Wells Brimhall, mobile product manager for home speakers at Logitech, added, "I think a shakeout is inevitable, but not necessarily because of the sheer number of companies in the space. In most industries, the shakeout starts to happen once the overall market growth flattens out. When that happens, I would expect a shakeout to occur."
Another market trend to watch for is the popularity of lower end iPods such as the Apple shuffle, which is boosting the low end. That may translate into a surge in demand for lower end iPod speakers.
"If we're going to sell a lot of $79 shuffles and $100 Sansas, we have to address them with audio systems. You can't ignore that," said Heiblim, adding that Altec Lansing is also banking on the future popularity of music-ready cellphones. "We believe music on cellphones will become significant. Everyone looks at a cellphone and says it's a terrible music player, but it's in your hand and they sell close to a billion a year. So we expect a lot of people overall will adapt to listening to music on cellphones and those phones will employ Bluetooth and there you go."
Bluetooth would allow iPod stations to wirelessly connect to the cellphone.