Audio Ups & Downs
By Jon Iverson November 13, 2005 — As audiophiles, we all started somewhere, and the important fact is, we all started with a love of music. When it came to music playback equipment, more than a few of us remember the fold-up record player stacked with 45s, or the little transistor radio tucked under our pillow at night with a low-fi, one-channel earpiece attached.

Seems that kids these days are really no different—only the technology has changed. The modern equivalent of that transistor radio or plastic record machine is the portable music player, typified by the iPod, and the good news is that music appreciation among our youth is as strong as ever.

According to a study released recently by the Consumer Electronics Association (CEA), portable MP3 players rank as the most wanted gift among teens this holiday season. Seventeen percent of teenagers in the study selected the device as a desired gift, a 9% increase over 2003. As expected, video game consoles, computers, portable gaming devices, and cell phones rounded out the top five on teens' technology wish lists.

Granted, portables are not necessarily great music systems, and audiophiles are quick to condemn MP3's ascendancy as the death of sound quality. But it can be argued that this is simply proof that these kids are in it for the love of music, not the love of sound. And if nurtured and supported, many of them will go on to become interested in the reproduction of that music.

Another interesting finding from the study: Beyond consumer electronics products, teens remain consistently interested in CDs as gifts they wish to receive. The CEA's Sean Wargo noted, "CDs in particular stand out as a reminder of the remaining importance of the shiny disc format as the preferred medium for music, despite the strong growth of online music services and teens' predilection for MP3."Wargo went on to say, "While many teens continue to buy tracks online, it's clear that they also continue to rely on CDs to fill their hungry portable devices and music appetites."

According to the CEA research, MP3 players also top the list of gifts teens expect to give this holiday season. Nearly 60% of teens who will buy at least one consumer electronics item reported that they might choose an MP3 player as a gift. In addition, the number of youngsters who report that they'll purchase gifts online is 43%, up from 40% in 2003.

As a result, in terms of revenue, the overall market for audio products is up. But all of this is happening amid a serious home audio slump. While portables have climbed almost 90% so far this year, the CEA is reporting that sales of home audio components and systems—non-portable products—dropped a dramatic 30% in the same period.

If the trend continues, the CEA projects that portables will shortly outsell the home and car audio markets combined. This is certainly bad news for today's home audio–centric companies.

But this much attention on music technology will undoubtedly also have a positive ripple effect as today's youth look for ways to improve the sound of their collections—in whatever form they exist—for years to come. Just as the current batch of audiophiles migrated from transistor radios to great sounding systems, today's kids will eventually outgrow their iPods. The question is, will existing audio manufacturers find a way to adapt, or will a new generation of companies emerge to service the coming boom?