|More than a quarter of light vehicles sold in the United States now have a branded factory-installed stereo. Nearly a fifth have premium audio, with at least 2 of these 3 features: 400 watts of power, 8 speakers and surround sound.|
|Branded premium (Bose, etc.)||16%|
|Branded nonpremium (Boston Acoustics, etc.)||10%|
|No audio system (light commercial vehicles)||2%|
|Note: Numbers add to 101% because of rounding.|
|Source: IHS Automotive|
|5 brands control about 60% of the global market for factory-installed premium audio. Bose leads, but Harman's speakers, sold under such brands as Harman Kardon and JBL, make up 29% of premium systems installed worldwide.|
|2. Harman Kardon||14%|
|Source: IHS Automotive|
These days, even small, inexpensive cars such as the Fiat 500 and Kia Soul can be bought with high-end stereo systems from prestigious brands such as Beats by Dr. Dre and Infinity.
But why can't today's music match the sound of that old-time rock 'n' roll?
It's not the speakers. It's the format.
No matter how advanced the stereo system, it can't do much to improve the low-fidelity sound pouring out of MP3s and streaming Internet radio services such as Pandora and Spotify, says Jeff Poggi, vice president of global sales and marketing at Harman International Industries, which sells speakers under brands such as Harman Kardon.
"All the new media is at a lower fidelity level than the CD was," Poggi says. "That's really the fundamental challenge that the industry is up against right now."
It's fundamental because the sound of music is money. Automakers long have used premium audio offerings, such as branded stereo systems, to sweeten trim packages. Porsche, for instance, charges $2,120 for a Bose stereo in its iconic 911. Buyers of Mercedes-Benz's flagship S-class sedan can now pay $6,400 for a top-of-the-line Burmester sound system. And much of that amplifies the bottom line.
"Out of all of the options you can add into a car, premium audio has the largest profit margin for an automaker," says Mark Boyadjis, a senior analyst at IHS Automotive. "There's not always a lot of cost involved in creating a premium audio system."
But customers who prefer the convenience of low-fidelity formats gain little from such systems. So Harman is trying to meet customers where they are.
Harman's solution is a software algorithm, originally dubbed Signal Doctor and now branded as Clari-Fi, that analyzes music files and restores what was cut when the file was compressed. The system will make its debut in the 2015 Lexus NX compact crossover, Harman announced in April.
Toyota Motor Sales U.S.A.
The algorithm will run whenever a driver plays music through the NX's stereo, which is supplied by Harman's Mark Levinson brand. John McLaughlin, national manager for cross-car-line planning at Toyota Motor Sales U.S.A., said in an interview that Clari-Fi is part of Toyota's future strategy for offering high-fidelity music without CDs.
"CDs and DVDs will go the way of cassette tapes and the eight-track player eventually. It's just a matter of when," he said. "The bottom line is: We've got to prepare the infrastructure for other ways of bringing in high fidelity. And this is part of it."
Harman also sells head units for automotive infotainment systems. Poggi says the company's strategy for Clari-Fi is to integrate it into both amplifiers and head units and market it to automakers with which the company has contracts.
The growing popularity of compressed digital formats is a sore spot for makers of audio systems, who want to support customer preferences but worry that listeners don't know what they're missing.
And it's a lot. While music from a CD flows at about 1,400 kilobytes per second, songs from Apple's iTunes store usually play at 256 kbps. Streaming Internet radio services such as Pandora compress songs even further, to about 64 kbps.
Chop those files in half, and you get satellite radio. To beam down its tunes, Sirius compresses them to 32 kbps -- about 1/50th the fidelity of a CD.
"Satellite radio," Poggi says, "is the worst."
Digital compression has choked off a push toward high-fidelity car audio that began three decades ago, when General Motors offered Bose stereos as an $895 option in 1984 models including the Cadillac Eldorado. Ford Motor Co. followed suit by offering a 12-speaker JBL system in the 1985 Lincoln Continental.
At first, international automakers saw premium audio as an American idiosyncrasy, like chrome or cupholders. But luxury brands such as Acura, BMW and Lexus soon joined in, and automakers and their partners slowly displaced the once-thriving aftermarket.
Speakers in some high-end Volkswagen models now bear the Fender brand, after the maker of the iconic Stratocaster guitar. The hardware comes from Panasonic Automotive. Beats Electronics, the audio company co-founded by rapper Dr. Dre, has a partnership with Chrysler Group.Musical 'fast food'
As a solution for watered-down digital music, Harman's technology has gotten a warm reception from industry analysts such as Thilo Koslowski, a vice president at the consultancy Gartner Inc.
Koslowski, a drummer in a rock band during his youth and self-described audiophile, said he was stunned after giving Clari-Fi a try. "I realized that I had been consuming the musical equivalent of fast food," he said.
But he and other early listeners have warned Harman that marketing Clari-Fi will be a challenge. Harman could train dealers to give car buyers a demo of its system, but getting them to pay for it depends on whether they're able to recognize the difference or care about it.
"You need a customer who understands what a good sound system sounds like," Boyadjis said. "Because of this low-bit-rate music, you don't have many of those anymore."