Electronics and Semiconductors

No Static On the Air: Digital Radio to Thrive

20 June 2013

Digital radio in cars will continue to find new listeners as shipments rise this year and beyond for systems incorporating the technology, according to an Automotive Infotainment & Telematics report from information and analytics provider IHS.

Shipments this year of digital radio systems for vehicles made by original equipment manufacturers (OEM) are forecast to reach 16.1 million units, up a solid 15 percent from 14.0 million units in 2012. Included in the shipments are digital terrestrial radio systems such as HD Radio in the United States and DAB/DAB+ in Europe, as well as digital satellite radio systems like U.S. service Sirius XM.

The global OEM market digital radio systems enjoyed a banner year in 2011 when growth topped 22 percent, but business has remained strong with expansion in the 20 percent range since then. Yearly increases of at least 16 percent will also continue from 2014 until 2018, maintaining a robust market for the next few years.

Digital radio is thriving because audio remains among the most valuable elements of an infotainment system in the vehicle. Working with premium audio solutions in the car and other associated technologies such as surround sound and sound processing, digital radio is likely to keep its place as an important source of music in autos for the foreseeable future.

All over the world, however, various digital radio technologies are offered, generating a complex and competitive environment for the overall market. As a result, it is unlikely that any single digital radio solution will be suitable for all markets. The diversity of formats has also required vehicle manufacturers to examine any overlaps that exist among technologies before deploying rollout strategies worldwide. To further complicate digital radio planning, increasing competition can be found from mobile digital music players and emerging Internet radio services.

HD Radio in the US

The last two years saw interest in the U.S. moving to HD Radio, which many believe now garners as much attention as satellite radio. Ibiquity Digital Corp., which owns the HD Radio trademark, today relies on broad support from a growing number of original equipment manufacturers and aftermarket vendors to disseminate its system. To date, HD Radio can be found in 33 brands spread over 170 vehicle models, out of which at least 80 have HD Radio systems installed as standard configuration in cars as of the first quarter this year.

All major world brands are part of the 33, with HD Radio offered as standard across the entire vehicle lineups for Bentley, BMW, Mini, Rolls-Royce and Volvo. Ibiquity says a new HD Radio system is sold in the country every six seconds.

Ibiquity has also expressed confidence in conquering new markets like Mexico and China.

DAB/DAB+ in Europe

With the adoption of the upgraded DAB technology known as DAB+ in Europe as the standard for digital radio, more stations and new services have become available, at the same time creating a bigger market for device manufacturers. The DAB/DAB+ technology has reached about 90 percent of the population in Germany, while more than a third of all new cars sold in the United Kingdom now come with digital radio as a standard feature.

The U.K.’s BBC and Deutschland Radio of Germany have also confirmed their support for the development of a single, universal chip solution to enable radios to receive multiple broadcasting standards suitable for the entire European market, with enough volume to significantly reduce the deployment cost of digital radio. Such a solution will further help overcome some of the market hurdles for digital radio at least in Europe, IHS believes.

Sirius XM satellite radio in the US

A rival to digital terrestrial radio, digital satellite radio entity Sirius XM also reported very robust growth, adding 2 million net subscribers last year for a total of 23.9 million customers overall. Revenue results for the company exceeded expectations despite a challenging U.S. economy and an increase of $1.50 in its monthly subscriber fees to $14.99.

Satellite radio as a whole is expected to further benefit from the popularity of the Sirius XM application on the Apple iPhone and on other smartphones.

In particular, the dual usage of Sirius XM in the car and on smartphones will boost subscriber numbers and improve the fortunes of the company beyond its already notable recent growth. Future challenges may appear, however, from the increasing proliferation of its rival HD Radio, which comes free of charge to users when the vehicle on which it is installed is purchased.

Some regional numbers

In the United States, the OEM market for HD Radio will expand rapidly. A 66 percent attach rate is expected by 2018, up from 18 percent today. Meanwhile, digital radio in its various versions will reach 52 percent of all new-vehicle sales in Western Europe by 2018, up from just 7 percent at present. For Asia-Pacific, where digital radio remains very limited in scope, attach rates will stay below 10 percent by 2018, up from the current low of 1.5 percent.

As for satellite radio, OEM attach rates in the United States will be flat in the next seven years, hitting 70 percent by 2018, up from an already strong 68 percent this year.

Digital vs. analog; the future of digital radio

While digital radio proliferates, traditional AM and FM radio will be in no danger and remain available in automotive infotainment equipment for some time to come. The already broad base of listeners as well as available range of stations that currently exist for AM and FM radio will ensure its continued presence in cars, and persisting uncertainties on coverage and compatibility issues relating to digital broadband will foster the maintenance of standard analog radio in vehicles.

An initiative called software-defined radio is also being considered by car manufacturers for future implementation in vehicle infotainment systems, which would ease the adoption of digital radio across global territories with differing system or market requirements. The effort, already in place among semiconductor suppliers like NXP of the Netherlands and French-Italian maker STMicroelectronics, seeks to offer highly integrated components while also limiting the number of necessary hardware modifications that need to be made.

With the software-defined radio approach, it will be possible to utilize a single front end along with a post-processing hardware solution to serve multiple broadcasting standards, which will then be selectable via software.

Read more >> Connectivity a Hot Topic in Autos

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