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New technology may spur audio industry

BS Corporate Bureau

The domestic audio industry is hoping to double its turnover to around Rs 20 billion in the next five years, despite the current sluggish growth trends.

The turnaround, industry players said, will happen due to the adoption of new technology by the industry as well as consumers.

New digital audio technology - MP3, VCD, DVD, internet radio and satellite radios - is fast replacing analog technology-based products, which will result in a spurt in volume sales during the next few years, representatives of the industry said here at a seminar on the roadmap for the audio industry.

The seminar was organised by the Consumer Electronics and TV Manufacturers Association.

The more optimistic players said a growing high-end home audio market in the metros and increasing Internet subscription rates, expected to touch 8 million by the end of 2002, provide ample opportunities for the industry, and these required to be tapped.

Some others advised the local players to engage in research and development activities in the audio business so that the country could take on the might of the Chinese audio industry.

In fact, if the local industry has anything to fear, it is growing competition from the Chinese industry. The low-end audio market in the country was swamped by cheap products from China, which resulted in domestic industry sales remaining stagnant as compared to the previous years.

On the other hand, the high-end segment has been growing at about 20 per cent, said Rajeev Karwal, president of Cetma. Branded players have had the maximum sales in the high-end market, while the unorganised market has been predominant in the low-end segment.

However in the high-end segment, most dealings are grey and feature imported products, he added.

New technology is expected to help increase penetration of audio products in the semi-urban and rural markets. On the other hand, it will also help convert conventional products such as the radio (or the transistor radio) from being primarily a rural product to an urban product.

Said Vivek Badrinath, managing director of Thomson Consumer Electronics: "With prices of the VCD player dropping to the Rs 2,500-3,000 levels, and music software being available in the MP3 format, which means that the price of music has come down substantially, the mono-cassette player market in the rural and semi-urban pockets will be replaced by the CD products. In the urban markets, the revolution will be led by the MP3 and other digital products."

Badrinath said that cost advantage was the key criterion for mass adoption of technology and exhorted the audio industry to invest in MP3 technology. India's software market of Rs 13.50 billion is an asset. That needs to be made better use of, he added.

In the urban audio hardware scenario, mono-cassette players have 39 per cent market penetration, followed by CDs with 4 per cent and MP3/VCDs with 3 per cent. The MP3/VCD market, again, is primarily grey. CD sales are expected to rise to around 15 per cent in 2002 from around 4 per cent in 2000.

Factors like high content cost, piracy and free streaming of music through radio and TV were responsible for the slow growth of CD sales, said Ranjeet Kate, vice-president and head of mass music division, Saregama.

Availability of audio-CDs for less than Rs 100 provides great opportunity in a largely untapped market.

With the prices of MP3 and DVDs having crashed, compression technology is bound to contribute in a big way towards achieving the target of consumer electronics production of Rs 1,000 billion.

Sonodyne International vice-president, Anindya Mukherjee, said that India's strength would lie in innovation and setting trends. Indian companies could emerge as OEMs for foreign audio brands seeking to tap the Asian markets, Mukherjee said.

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