San Francisco - The U.S. market for digital audio receivers - devices which enable playback of PC-stored music content and streaming Internet audio on legacy analog home entertainment systems - is expected to grow from less than 150,000 units in 2003 to almost to 2 million units by 2006.
According to the Dallas-based Diffusion Group, the early market for digital audio receivers (DAR) such as NETGEAR's MP101 and digital audio adapters (DAA) such as Apple's Airport Express will enjoy rapid growth through 2006 and then face a host of market challenges.
Predrag Filipovic, consulting analyst with The Diffusion Group, predicts that price pressures from multimedia PC makers will force the so-called Digital Receivers into a corner after 2006. Digital audio processors within desktop PCs, set top boxes and personal video recorders (PVRs) will threaten the utility of a stand-alone decoder.
"Third, single-purpose audio-only digital receivers will be replaced by multipurpose digital media receivers that support both audio and video," says Filipovic. His report is entitled Digital Audio Receivers: Competitive Analysis & Forecasts.
Other key findings of the report include:
1. Almost 40 percent of home network owners are interested in digital audio receivers (DARs), but this interest is highly price contingent. Such an adoption rate would depend on how consumers perceive the price/performance ratio. For example, while a list price below $70 would be highly attractive it would come at the expense of usability.
2. Consumer adoption of DAR functionality (as opposed to stand-alone units) is expected to approach 50% of home network users once devices become available at appropriate price points (that is, no more than 20% above similar non-connected systems) and once mainstream consumers become familiar with the concept. However, such widespread consumer awareness is unlikely before 2007.
3. The adoption of digital audio adapters (DAAs - devices without direct user interface) is expected to lag behind stand-digital audio receivers for the next few years. But unlike DARs, demand for digital audio adapters is not expected to decline due to the inclusion of DAR functionality in other multipurpose devices. DAA adoption should remain below 5% of networked households in the next few years (but with more then one DAA per home possible) due to usage constraints (that is, everything will be tied to the PC) and expected slow adoption of UPnP control point devices.
The report projects unit and revenue forecasts for DARs and DAAs through 2010. It can be purchased online at TDG's website, www.tdgresearch.com.