CD Sales Up in '98; High End Stalls over DVD-Audio

Unit sales of CD players rebounded in 1998, rising 4% to $336 million, according to statistics from the Consumer Electronics Manufacturers Association. All segments of the CD hardware market---single-play, carousel changers, and mega-disc changers---improved over the big slump of 1997, when unit sales fell 60% and dollar sales fell 40%. Through November 1998, single-disc player sales were up 33% in units and 24% in dollar volume. Carousel changers, component-CD's largest segment, rose 15% in units and 7.5% in dollars during the first three quarters of 1998.

What might look like good news for retailers overall isn't so promising for the High End. The upper end of the market is stalled as music lovers await 24-bit/96kHz DVD-Audio players, the Sony/Philips Super Audio CD, and other high-resolution formats. Recent figures for players over the $500, $1000, and $2500 price points indicate that consumers have decided to postpone buying until the next generation of machines becomes available.

Noticeably affected have been manufacturers of players in the over-$1000 category, including Krell, Madrigal, Meridian, Nakamichi, Yamaha, Denon, and California Audio Labs. Owners of expensive players are interested in maximum playback potential, and they realize that 16-bit/44.1kHz, no matter how well executed, isn't it. They are willing to wait. Krell Industries executive Irv Gross said he gets "three or four phone calls a day" from consumers and retailers who have questions about 24/96 and Sony's Direct Stream Digital coding.

Andy Regan, Meridian America's vice president of sales, admits that consumer anticipation of coming formats is having an impact on high-end CD players. His company's $4000 model, which came out in October, was well received by the audio press but did not meet sales expectations. "It sold pretty well," Regan said, but "a few years ago, we probably would have sold 25% more."

Stereophile's February issue featured in-depth coverage of the Linn Sondek CD12, a $20,000 CD player---likely the ultimate statement for the old format. Krell also makes a machine at that price. Such machines are the digital equivalents of archival-quality analog record players.

DVD players will offer better performance at lower prices due to the inherently better resolution of DVD's high sampling and bit rates. High performance on a budget will increasingly become the rule rather than the exception, as will the convergence of audio with home-theater systems as DVD becomes the dominant format---a process that will take years. Sony plans to roll out a $799 DVD carousel changer later this year.