HD Gets A Boost

Scott Fybush scott@fybush.com
Wed Feb 1 19:38:04 EST 2006

At 06:52 PM 2/1/2006, rogerkirk wrote:
>Boston Acoustics announced it is reducing the price on its 
>"Receptor" to $299.  Now, they're really gonna fly off the shelves.

Similarly snide posts have been making the rounds on the various DX 
lists today as well. Here's my response to one of them on the 
National Radio Club's list:

>If a tree falls in the forest and no one is around, does it make a 
>sound?   I see this has the current state of HD radio.  The original 
>offering equipment prices were so out of line, who would go for 
>it?  The message is out, drop the prices or talk to space.  If BA 
>can drop the price so drastically, imagine what their initial profit 
>margin was.

Less than you'd think, I bet. Remember, there are all kinds of design 
and tooling costs to build an initial small run of any new product. 
There are no economies of scale in putting out perhaps 10,000 HD 
Receptors, versus a million or ten million $39 Wal-Mart DVD players, 
for instance. BA put their initial run of $499 radios out there 
primarily at the behest of the broadcasters in the earliest vanguard 
of the IBOC rollout, who needed something to put out there to listen 
to their signals on, and who were willing to pay accordingly. The 
price drop to $299 tells me that they probably had enough response 
from the initial run to go back to whatever Asian factory they're 
using and do another run. With the initial costs now paid off, 
they're getting closer to an economy of scale.

While it may not seem that way to DXers who've been hearing the 
hissing and buzzing for a few years now, we are still in the very 
earliest stage of the commercial rollout of IBOC. The manufacturers 
who are putting the money up to design and build receivers are taking 
a very big risk, as are the broadcasters who have spent big bucks so 
far to equip their facilities for IBOC. Every successful consumer 
electronics introduction (and every unsuccessful one, too) goes 
through this early-adopter phase. Have we all forgotten about the 
$2000 VCR, circa 1976, and the $25 blank tapes? Or about the $1200 CD 
player, circa 1983? Or the $1500 cell phones and dollar-a-minute 
service plans of the same era? I'm guessing that none of us jumped at 
those prices, nor should we have. But they got the products out there 
on store shelves and paved the way for mass production and 
dramatically lower prices pretty quickly. (My recollection is that 
the $1200 first-generation CD player of 1983 had become about $250 by 
the time I got my first player two years later.)

I'm not saying that HD Radio will necessarily be a success - my sense 
right now is that the AM system, thanks to its interference issues 
and its inability to multicast, will end up failing, but that 
multicasting will make the FM system at least moderately successful. 
But I do think that after a rollout that took longer than it should 
have, the industry is finally taking the steps it needs to take to 
make something happen. For receiver manufacturers to take the risks 
involved in tooling up for mass production at reasonable prices, they 
needed to see that broadcasters were committed to providing the 
programming and on-air promotion that would make people want to seek 
out receivers.

We are now, literally, TWO WEEKS into that process. If we're still at 
these price levels in two years, then we can start talking about 
success or failure. Right now, it's far too early.


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