To expand home audio’s appeal, suppliers have developed extensive lines of all-in-one audio systems that consist of speakers and audio electronics bundled together to simplify purchasing decisions. Systems are perfect if you don't have time to shop for separate components or are intimidated to choose multiple components.

By any measure, audio systems have been a resounding success. In 1994, factory-level system sales exceeded component-audio sales for the first time, and in recent years, systems have widened the margin, CEA statistics show. In 2004, factory-level system sales hit an estimated $1.87 billion, up a whopping 22 percent from 2003. 

System Types:

Systems come in three types:

•  Compact music systems. Often called shelf systems, they fall into two categories: minisystems and microsystems depending on their size. Either type is small enough to sit on a shelf or table, but some vertically oriented models can be hung on a wall like a flat-panel TV. Compact systems are two-channel music systems that combine a CD player or changer, AM/FM tuner, amplifier and cassette deck into one or two modules connected to a pair of speakers. The latest models stream music from a networked PC or, through a broadband modem, from the Internet. A few feature DVD-Video and DVD-Audio players. At least one model in 2005 will stream music wirelessly from its own hard disk drive (HDD) to compact systems in other rooms.

•  Rack systems. These are larger floor-standing systems, often built from standard-size audio components. Although popular in the 1980s and early 1990s, demand is negligible as consumers opt for more diminutive systems.

•  Home-theater-in-a-box (HTiB) systems. They come with all of the electronics and speakers needed to add surround sound to a TV, and their sales are exploding. More often than not, HTiBs pack a DVD player or changer, providing all the components of a home theater system but the TV. Some incorporate digital video recorders (DVRs) to record programs off a connected TV. A growing number also tap into a home network to stream music from PCs or the Internet.

HTiBs are so popular that their factory-level sales rose for the sixth consecutive year in 2004. In 2003, factory-level HTiB sales exceeded combined sales of compact systems and rack systems for the first time, and they maintained their lead in 2004 despite resurgent compact-system sales, according to CEA estimates.

Compact System Turnaround:

Suppliers are trying to keep compact systems relevant in a world where people increasingly turn to their PCs to listen to stored music files or stream music from Internet radio stations. In 2004, it looks like suppliers succeeded.

Compact-system sales rose in 2004 for the first time after three consecutive years of decline. Factory-level dollar volume rose 23 percent to an estimated $900 million on unit-sales growth of

15.4 percent to 7.06 million, although they’re still well below their peak of $1.78 billion in 2000.

Previously, the PC competition, combined with high compact-system penetration rates, had taken a toll.

To make compacts more relevant, suppliers have incorporated MP3-CD playback in more minisystems. A handful of systems include USB ports or wireless technology to connect to PCs, turning them into higher power, better-sounding PC-speaker systems. Some systems connect to game machines to replace a game's background music with music from a compact system’s CD or cassette player.

In other major compact-system developments:

•  Consumers in 2005 will be able to buy the first-ever compact system with a built-in HDD music server that distributes music wirelessly to other compact systems scattered through out the house. What’s more, listeners in six rooms can listen to different songs simultaneously from the server.

•  DVD-Video playback will turn up in a handful of compact systems in 2005, turning them into tabletop home theater systems suited for secondary rooms such as bedrooms.

•  At least one supplier will offer a CD shelf system that records CDs in MP3 format and transfers the MP3 files to a connected headphone portable that stores them in flash memory.

The smallest compact systems, called microsystems, use sophisticated styling and performance to maintain their appeal. Many feature furniture-grade wood cabinets for use in offices, home offices and bedrooms. Others design elements include vertically oriented models. Some are mountable on the wall. 

Racks Don’t Roll:

Floor-standing rack systems no longer rock. Consumers have opted for compact two-channel systems and HTiBs whose power output, performance and feature levels continue to rise. Once the leader in system sales, racks accounted for a mere $2 million in factory-level audio sales in 2004, according to CEA estimates.

HTiB Systems:
Factory-level HTiB sales surged over the years to account for 52 percent of audio-system dollar volume in 2004, according to CEA estimates. Sales have risen every year since 1998, when sales were a mere $229 million. In 2004, sales hit $971 million. That’s up only 1 percent from the previous year, but the small percentage gain doesn’t truly reflect HTiBs’ true popularity. Unit-sales gains do, and unit sales rose an astounding 34.4 percent to 4.87 million units in 2004. Attribute the unit-sales explosion to production efficiencies and competition that drove the average wholesale price down in 2004 by 24.5 percent to $200. Now, some low-powered HTiBs with DVD sell for less than $99.

HTiB systems come in three basic types. One type consists of a component A/V receiver, five satellite speakers, a powered subwoofer and sometimes a separate DVD-Video player. Another type integrates the receiver and DVD player into a single component called a DVD-receiver. A third type moves all amplification and most electronics into the subwoofer enclosure, allowing for a diminutive main control unit. All types feature surround sound decoding, typically in the Dolby Digital and DTS 5.1-channel formats, but increasingly in 6.1-channel formats.

The vast majority come with a stand-alone DVD player or integrated DVD-receiver, according to NPD Group, which tracks sales through online and brick-and-mortar retailers.

In the January-September 2004 period, HTiBs equipped with DVD players and changers accounted for 78.9 percent of the HTiBs sold at retail, up from the year-ago 74.2 percent, NPD found. Among the systems equipped with DVD, 49.9 percent were equipped with a DVD changer. In 1999, in contrast, only a handful of HTiBs incorporated DVD players or changers.

HTiBs Pack in the Features:

Nowadays, consumers get more than just a DVD player when they buy an HTiB. In 2005, consumers could be expected to find a greater selection of HTiBs with:

•  DVD-Audio players, SACD players or universal players. Universal models play the DVD-Audio and SACD multi-channel-music formats. Models with universal players were expected to retail for as little as $399, while DVD-Audio-equipped models were expected to start at around $299.

•  DVD-recorders. At least five suppliers planned to include

them in HTiBs, up from one supplier in 2003.

•  Combination VCRs/DVD players: Far more suppliers are incorporating combination VCR/ DVD players in their HTiBs to reduce living room clutter, in some cases packing three devices --VCR, DVD player and A/V receiver – into a single chassis. At least one company is packing a VCR and DVD-recorder into its HTiB.

•  Digital video recorders (DVRs): Video-recording hard disk drives (HDDs) will appear in 2005 in systems from at least two suppliers, whose systems also feature DVD-recorders.

•  High-definition output: At least four companies plan to offer DVD-equipped systems that convert DVD video into high-definition (HD) video for true-to-life viewing on an HDTV screen. Only one company offered that feature in 2004. System prices start at about $399.