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Radio at CES: Hype for HD Radio, but price is still the biggest barrier


HD Radio: Don't believe the hype

Like PE says: Don't believe the hype!

I keep reading all this hype about how HD Radio is the big audio deal at this year’s Consumer Electronics Show, yet I fail to quite see what’s so exciting. Sure, there are some new models of HD Radio receivers rolling out, but the number of new entries roughly equals the number of models being retired. The end result is that there will be about as many HD receivers on the market as last year. That’s big news?

I guess Ford announcing stronger support for HD and the new iTunes tagging features count for something. But where the rubber meets the road is whether car buyers are willing to pony up the extra cash for the higher-end stereos. While Ford is doing better than Chrysler and GM, the last time I checked, the auto industry isn’t exactly thriving. And let’s not forget that just few years ago the big hype was how the auto manufacturers were embracing satellite, yet that seems to have mostly resulted in lots of XM Sirius-equipped rental cars.

I keep searching for information about all these new non-automotive HD receivers and I keep coming up with the same iBiquity press release regurgitated all over the place. The release lists off a pile of model numbers, but no other info that might help me evaluate how great these new receivers might be.

iBiquity's CES News Page

According to iBiquity there is no CES 2010 news!

iBiquity set up a special page just for “breaking news” from CES 2010. But today, the next-to-last day of the show, there’s no news to be found.

Only This Week in Consumer Electronics has any useful information, including the most valuable data of all: price. Amongst the models listed by TWICE, at $69 the lowest cost receiver is Radio Shack’s FM-only Gigaware-branded add-on for the iPhone and iPod Touch. The price isn’t outrageous, and marks only a $10 – $20 premium over a typical FM-only radio for the iPhone. Past that, all of the new HD receivers come in over a hundred bucks. That includes even the entry from discount electronics brand Coby, whose HDR700 has a street price of around $99.

I really believe that price is the key here. With the collapse in the quality of commercial radio programming, HD Radio really has not been able to sell itself on programming, despite the largest broadcasters like CBS Radio blanketing their stations with ads touting HD’s virtues. The quality issue is also debatable. So, at best, I think HD Radio is still a curiosity for most people who might be attracted by having a few more channels at their disposal, or having AM news, traffic and weather on the FM HD channels. But what are people willing to pay for this curiosity?

Putting aside geeks, radio-heads and gadget freaks, my bet is that the average shopper is willing to pay a $10 to $20 price premium to get HD Radio. That’s why I think the pricing on the Radio Shack iPhone add-on is about right. But that one device isn’t going to greatly expand HD radio listenership. First, because it’s limited to iPhone and iPod Touch owners, and second because I’m doubtful that too many people want to hang an extra little device off their player. I sure don’t.

Once you move into the world of what we might call “premium” or higher-fidelity radios–a market pioneered by the Tivoli Model One–or A/V receivers, then it looks like that $10-20 price premium is starting to become a reality. But again, I’m really not sure how big the market for these items are. I’ll agree that A/V receivers are popular, but how many people really listen to radio on them?

The way HD Radio is going to make it into more households is when there’s an HD-capable $50 radio on the shelf of every local store that sells electronics. That radio doesn’t need to be fancy, but it’s got to have a speaker and a handle, run on batteries or AC, and look like a radio. It shouldn’t be a headphone-only radio, but it should have a headphone jack. It has to be the kind of radio you can take into the garage or the backyard, keep in the kitchen or on the bedside table.

Simply, for HD Radio to take off, the average person walking into the store looking for a new radio (not looking for an HD Radio) has to see an HD-capable radio and decide that the extra $10 or $20 is worth it. As long as HD Radio is depending on folks to go out of their way to seek out and buy HD Radios it will always be a niche market, struggling on the sidelines.

Beyond that, once HD Radio is a $10 – $20 premium on boomboxes, iPod docks and compact stereos then it has a shot at real popularity and use. In the car make it part of every stereo, including the base-model. These are the devices most people use to listen to radio, and right now the HD Radio options for them are skimpy, to say the least.

If the public were dying for HD Radio it would be a hit already. Give them the option to hear it without spending a lot of dough, and HD Radio has a fighting chance. But 24 new models, with only one under $100? Forget about it for 2010.


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4 Responses to Radio at CES: Hype for HD Radio, but price is still the biggest barrier

  1. HDRadioFarce January 9, 2010 at 3:23 pm #

    Boy, you sure that this one right – LOL! HD Radio is nothing but a farce:http://hdradiofarce.blogspot.com

  2. Greg January 10, 2010 at 9:58 am #

    “Are you waiting in line for your HD radio?”

    “If you lower the price enough, folks will buy the radio. That’s the belief about HD radio that is being stoked in our industry. And, of course, it’s wrong.”

    http://www.hear2.com/2006/11/are_you_waiting.html

    i would tend to agree with Mark Ramsey about price-point. If one looks at Amazon’s Best-sellers in portable audio/video, the best-ranked radio comes in a lonely 28th place, well-behind iPods, etc. Because these HD radios simply not working well, the return rate must be extremely high.

  3. Paul Riismandel January 10, 2010 at 10:57 am #

    Greg,

    Back in 2006 when he wrote those comments I might have agreed with Ramsey. What he was hoping for and predicting is that HD Radio as a technology and service would be popular and desirable in and of itself. He was hoping HD Radio would be like Playstation 3, iPhones and the Wii, with people lining up around the block to have a chance at buying one.

    Three years later it’s obvious that didn’t happen. While I have many criticisms of the IBOC technology and how it was drafted and approved, I don’t think the relative popularity of HD Radio has anything to do with the technology.

    The primary reason why HD Radio is not popular is programming. The commercial radio industry did such a good idea of driving away listeners by squeezing every last cent out of stations and homogenizing programming that they give listeners very little incentive to invest more money to just get more channels of the same crap. Combined with having to invest quite a bit more in equipment to get HD than to get analog broadcast, and that’s why the average person hasn’t bitten.

    Had Clear Channel, Cumulus, Citadel and their brethren not ruined a perfectly good industry the situation might be different. They might have been in a better position to convince consumers that HD offered significant benefit and choice. But they failed.

    Given this situation, then the industry’s only hope to spread HD Radio is to make it inexpensive. The time to sell it as a high-value item has passed, and the industry failed.

    And, frankly, I will be very surprised if HD Radio succeeds in even matching satellite radio within the next year or two. It might have a chance if receivers cost only $10-$20 more than comparable analog radios. But it’s still only a chance.

    –Paul

  4. Greg January 10, 2010 at 4:13 pm #

    Paul,

    The flaws in this defective IBOC technology are probably the first reasons for the high return rate. Take a look at BMW’s Trouble-Shooting Guide for consumers: http://tinyurl.com/ygbspcb. When consumers can’t even get these homogenized HD channels, back go the radios. This is not the 1960’s, where outside, rooftop antennas were commonplace. All HD Radio is is just more channels – radio groups don’t want to put the proper investments into their main analog signals. HD Radio = radio on the cheap. HD Radio has sold MAYBE a million radios (probably 500,000), with a high return rate, and this is over about 5 years. How on earth could it ever match the subscriber-base of Satellite Radio in one to two years, let alone 10 years?

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