Come On Feel the Noise: Digital Audio Projector Technology and

In-Stat

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Come On Feel the Noise: Digital Audio Projector

Technology and Equipment

April 2005

Chris Kissel Group: Semiconductor Group

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Table of Contents: List of Tables:.................................................................................................................... ii

List of Figures: .................................................................................................................. ii

Executive Summary...........................................................................................................1

Introduction........................................................................................................................3

Methodology .......................................................................................................................5

Principles of Digital Ventriloquism (Overview of Technology).....................................6

Digital Audio Projector Systems.......................................................................................8 Pioneer PDSP-1...............................................................................................................8 Yamaha YSP-1..............................................................................................................11 Limitations and Non-Limitations..................................................................................12

Room Dimensions ....................................................................................................13 Material Effects ........................................................................................................13 Audio Performance ..................................................................................................14

Using Air to Mix Frequencies.......................................................................................15

Competitive Alternatives.................................................................................................18 What System for What Purpose ....................................................................................18 Wired.............................................................................................................................19 RF..................................................................................................................................20 By Cost..........................................................................................................................21

Digital Audio Projector Market .....................................................................................24

Overall Surround Sound Market ...................................................................................24 DAP Market Projections ...............................................................................................26 DAP Integration into TVs .............................................................................................29 Total Market for DAP ...................................................................................................30

© 2005 In-Stat – Digital Audio Projection White Paper – Confidential i

List of Tables: Table 1. Forecast for the Worldwide Digital Audio Projector Market ............................2

Table 2. Cost of Wired Solutions...................................................................................22

Table 3. Cost of (RF) Solutions of the Kenwood Fineline HTC-S610..........................23

Table 4. Direct Competitions to DAP Marketplace as a Stand-alone Form Factor.......26

Table 5. Potential Stand-alone Units For DAP Applications.........................................27

Table 6. DAP Integration into Video Display Units......................................................30

Table 7. DAP Total Market (Integrated and Non-Integrated) .......................................30

List of Figures: Figure 1. Digital Audio Projection Diagram.....................................................................9

Figure 2. A Comparison of Pioneer’s and Yamaha’s Digital Audio Projectors .............12

Figure 3. Parametric Array to a Simple Loudspeaker Comparison ................................16

Figure 4 ATC’s implementation of the ultrasonic column generator ............................17

Figure 5. Adoption Rates of New Technologies .............................................................25

© 2005 In-Stat – Digital Audio Projection White Paper – Confidential ii

Come On Feel the Noise: Digital Audio Projector Technology, Chips and Equipment

Executive Summary The introduction of the Pioneer PDSP-1 and Yamaha YSP-1 digital audio projectors to the market was made possible by a technology called digital audio projection (In-Stat refers to this technology as digital audio projectors. When the acronym DAP is used it stands for “digital audio projection” or the consumer electronics device, digital audio projector. This technology is also commonly referred to as digital sound projection.) While the digital audio projector, as it is made today, is attached to a home theater system, also referred to as a digital receiver, its long-term success is dependent upon its being integrated, at some point, into video display units.

Digital audio projection is defined as the ability to broadcast surround sound from a single-source unit and offer audio enhancements without additional speakers, speaker wire or power sources. Yamaha’s YSP-1 Digital Audio Projector (G4TECHTV’s Best of Show, CES 2005) employs sound reflections to create virtual sources of surround sound, matching a 5.1 configuration. Pioneer’s much taller, but somewhat narrower, digital audio projector flat box is based on the same technology with a more robust implementation. Both companies are licensees of 1 Limited (also 1 Ltd. in the report), a company located in Cambridge, U.K. The company’s Digital audio projector technology is used to control “beams of sound.”

1 Limited provided the intellectual property (IP) for the first single-source unit that requires no other components for surround sound. 1 Limited invented a 3-dimensional piezo-electric actuator. The significance of the piezo-electric actuator is that it is the basis of Heliomorph technology that is used in digital photography. The piezo-electric actuator moves camera lenses with little power consumption making it an ideal application for digital cameras and cell phone manufacturers. The Cambridge, U.K. company is privately held and has a staff of 36 people only three of which are in non-technical positions.

In-Stat views DAP technology as promising. DAP offers a revenue opportunity in the enhancement of video applications. The form factor is attractive because it will enable consumers who are constricted by wiring or spatial constraints to enjoy surround sound.

© 2005 In-Stat – Digital Audio Projection White Paper – Confidential 1

Digital audio projectors start initially as stand-alone units, but In-Stat forecasts that digital audio projectors will be integrated into the form factor of video display units. The opportunity is good for semiconductor manufacturers.

In-Stat forecasts digital audio projectors to become a $939 million worldwide market by 2010. One striking observation that In-Stat makes is that integrated DAP solutions will be a higher revenue stream than stand-alone digital audio projectors by 2006. In-Stat sees a better market dynamic for integrated DAP when the units can be added onto the form factor of high-end definition televisions at lower average selling prices.

Table 1. Forecast for the Worldwide Digital Audio Projector Market

DAP Application Device & Units in (1000s) 2005 2006 2007 2008 2009 2010 CAGRStand-alone DAP Total Units Sold 47 87 159 288 483 758 75%

Average Selling Point 1,299$ 1,033$ 827$ 658$ 515$ 403$ -21%Total Revenue in Industry (In 1000s) 60,559$ 90,248$ 131,963$ 189,634$ 248,961$ 305,725$ 38%

Integrated DAP Total Units in 1000s - 201 656 1,115 1,567 2,094 N/AAverage Selling Point N/A 688$ 542$ 447$ 366$ 303$ N/ATotal Revenue in Industry (In 1000s) N/A 138,068$ 355,150$ 499,000$ 574,187$ 633,615$ N/A

All DAP Total Units in Industry (In 1000s) 47 288 815 1,403 2,050 2,852 128%Total Revenue in Industry (In 1000s) 60,559$ 228,316$ 487,113$ 688,634$ 823,149$ 939,340$ 73%

% Annual Growth 277% 113% 41% 20% 14% Source: In-Stat, 3/05


Introduction You stand there staring at the fighter pilot action on the large flat-panel screen. You are engulfed by the sound coming from Yamaha’s thundering five-speaker setup, but there are no speakers behind you or to your left or right. In front, mounted under the plasma screen, a narrow elongated flat box complements the aesthetics of the mock living room. It contains Yamaha’s digital audio projector, whose best attribute is its modest but still daunting price of $1,499. Previously, digital audio projectors were only available to consumers in the Pioneer PDSP-1 that carries a $40,000 price tag. Announced in November 2004, Yamaha’s YSP-1 Digital Audio Projector was G4TECHTV’s Best of Show, CES 2005. The YSP-1 employs sound reflections to create virtual sources of surround sound matching a 5.1 configuration. Pioneer’s much taller, but somewhat narrower, digital audio projector flat box is based on the same technology. Pioneer’s system, a two-year-old miracle, carries a significantly higher price tag than Yamaha’s YSP-1. The significant differences between the two systems, 2-D vs. 3-D and the resulting implications, will be addressed in greater detail later in the report.

It should be noted that In-Stat refers to this technology as digital audio projectors. When the acronym DAP is used, it stands for “digital audio projection” or the consumer electronics device, digital audio projector. This digital audio projection technology is also commonly referred to as digital sound projection to many in the consumer manufacturing space. In-Stat prefers to avoid the moniker of digital sound projection since the acronym would be DSP, which would be easily confused with digital signal processors—the muscle behind the audio projection technology.

Both companies are licensees of 1 Limited, a company located in Cambridge, U.K. The company’s DAP technology is used to control “beams of sound.” According to 1 Limited, the technology can usefully be implemented in home theater products, commercial cinemas, PC loudspeakers, and directional PA systems. Yamaha’s and Pioneer’s target markets are primarily the owners of plasma and LCD TV sets. Yamaha is targeting the mid-range home theater solutions and Pioneer the high-end, which would include plasma. It is important to note that users do not require a plasma TV; however, a digital receiver is a requirement. Sound-beam steering is a technology that 1 Limited has developed and refined since 2002.

In-Stat sees DAP as an emerging technology. The form factor of the YSP-1 augments thin screens and the speakerless application is the greatest form factor of them all. In-Stat recognizes that the selling price of any consumer electronics device is likely to go down dramatically (and more steeply earlier in a product’s history than later). As the technology becomes less and less expensive, DAP unit shipments will grow. This growth is augmented by the halo effect created by a commensurate decline in price for complementary products, namely large form factor consumer video displays.

This report discusses how surround sound quality is achieved and compares DAP technology to other audio delivery methods. The report also provides a five-year forecast for both stand-alone and integrated DAP solutions, the anticipated bill of materials and


what semiconductor technologies enable the applications contained herein. In-Stat formally defines digital audio projection as a single-source unit that can deliver up to 7.1 surround sound functionality. Lastly, In-Stat anticipates that DAP as a single-source unit will be incorporated into the form factor of the television itself and will be an important value-added proposition.


Methodology This report started as a set of observations made by an In-Stat Principal Analyst at the 2005 Consumer Electronics Show in Las Vegas. The Yamaha YSP-1 was the G4TECHTV’s Best of Show award winner. From there In-Stat investigated the viability of the product from the perspective of the known qualities of sound, the estimated bill of materials and the evolution of the greater television market and how digital audio projection fits in as an add-on component or integrated solution into televisions.

The technical presentations in the report were based upon the engineering necessities to form a “beam” of sound and the known dynamics of sound. The historical uses of sound beam shaping are in use in military applications. Heterodyning, the effect of mixing two frequencies such as air and sound, is used in underwater sonar applications. Dr. Joseph Pompei, the Founder and President of Holosonics provided information on air heterodyning.

The estimated bill of materials is a combination of what was described to us by 1 Limited and conclusions we were able to draw about the digital signal processors and the ASICs in the unit based on the processing capabilities and form factors of digital signal processors that would be required to achieve the desired functionality. The reconstruction of the chipset in the digital signal processor allowed us to discover that it had to be able to handle 3-4 GFLOPS (billions of floating point instructions per second). The market forecast is derived from the cost analysis of the materials and semiconductor content An overview of digital home video and audio consumer electronics components was derived from In-Stat internal numbers and market sources such as JEITA, the CEA, and external reports. Consideration of the historic rates of then new technologies such as televisions, the Internet, VCR, and rear-projection televisions were used as benchmarks in determining plausible rates of adoption for DAP technologies. Additionally, In-Stat anticipated that as the average selling price of DAP fell, an imperative trend in consumer electronics; the price itself would become an important market driver. Lastly, In-Stat analyzed the potential integration of DAP into various forms of video display.

The tables in the report may not compute exactly due to rounding.


Principles of Digital Ventriloquism (Overview of Technology) Accomplished ventriloquists can “throw their voice” in addition to just “speaking without moving their mouths.” Voice throwing involves a combination of speaking methods, facial expressions, and positions of the speaker’s head—all coordinated to give a believing audience the impression that the sounds come from a distant source. Digital audio projection performs for the audience in the same way. Replacing the talented ventriloquist, the speakers in front of the listener radiate sound energy, but here the similarity to ventriloquism ends. Concentrated sound beams are formed within a DAP and then emitted through an amplifier/speaker array. The narrowness of the beam allows the beam to be bounced off of walls without disruption. Programming accounts for phase delays and the directional quality of the beam steering and the listener receives the auditory effect of 5.1 or 7.1 surround sound configuration. This is the first of two different principles that can be employed in sound projection. Both principles are well known to those familiar with phased antenna arrays and heterodyning, as used in radio communications.

The second method of digital audio projection and the simplest method of directing sound are to use parabolic reflectors. This approach closely resembles directional antennas implemented via phased arrays. Reflectors also work well with directional microphones. A parabolic reflector can generate a beam of sound energy. Aiming a parabolic reflector at an appropriate spot on a wall behind the audience will bounce sound back to the listener, creating, for all intents and purposes, a virtual sound source that doesn’t need bulky speakers and wires. A rationale for digital audio projectors in the living room is that it is preferred over wireless communication. Even with wireless links, AC power, with its attendant wiring, is still required at each speaker location, as batteries are hopelessly inadequate for the power levels required by today’s very inefficient loud speakers.

We also note that we have not touched upon a class of sound processing that belongs to the psychoacoustics category, but introduce it into the report as it illustrates how people interpret sound. Research into the way our brain uses signals to identify sound-source directions, including up and down, has yielded head-related transfer functions (HRTF) in four variables: three space coordinates and frequency. In the context of this report, we can mention the Convolvotron, which was developed for NASA, using two convolvers, each with its own coefficient table (one each for left-ear and right-ear impulse responses). The Convolvotron and similar systems generate sound aimed at a listener’s left ear and right ear, intended to be delivered mostly via headphones.

The application dictates how the principles of sound are employed. The sound principles for a consumer electronics device need not require as many considerations as the science that guides sound emission in concert halls or larger auditoriums. Later in this report, heterodyning is discussed. The commercial applications of air heterodyning include


precise sound patterns from loudspeakers to specific listeners, enhancement of sound effects and museum surroundings where sound could be directed to specific groups while other attendees are unaffected. Holosonics uses the principals of air heterodyning as the technology enabling their Audio Spotlights solutions over these applications. The mixing of air and sound pressure has an adverse effect on intermodulation (IM) at decibel levels of 120-130dB SPL. While accounting for heterodyning is an important concern in larger venues or open-air applications, for home audio the decibel level at which heterodyning changes the non-linear properties of air (120-130db SPL) are impractical (and unpleasant) at that frequency of sound. Heterodyning is cited as an example of digital audio projection. However, unless there is a different implementation of heterodyning, it does not figure to be used in home audio/video settings.

Home audio has many excellent and affordable solutions in the market already. Wired solutions encompass all of the sound standards and speaker configuration (surround sound, 5.1, 7.1, 10.1 and THX) as well as the Dolby technologies (Dolby Pro Logic II, Dolby DTS, and Dolby Digital). Given reasonable engineering efficiency, wired solutions offer sound with no distortion, disruption, nor delay and the sound can be broadcast at significant levels of wattage per channel (some home systems handle 300 watts per speaker cleanly).

However, there were no solutions for settings that cannot accommodate additional wiring, or where there is a lack of power outlets for wireless speakers or where wireless components present problems with interference or disruption. What happens if the architecture or the aesthetic of a room cannot appropriately integrate parabolic reflectors? The problem is the same for renters or for owners of older dwellings; installing speaker wire and speaker mounts may not be permissible or possible solutions. Digital audio projectors produce surround sound quality audio without the inclusion of external components.


Digital Audio Projector Systems 1 Limited (also 1 Ltd. in the report) provided the intellectual property (IP) for the first single-source unit that requires no other components for surround sound. The Cambridge, U.K. company is privately held and has a staff of 36 people only three of which are in non-technical positions. A brief history of 1 Ltd. helps to illustrate how a new technology comes into fruition. Dr. Anthony Hooley founded 1 Ltd. in 1995 with the original idea that the company would make a better loudspeaker using digital enhancements. When the research began, it became clear that the market was moving and the focus quickly went to digital audio projection (1 Ltd. trademarks its product as a Digital Sound Projector). As a direct consequence of needing to improve coil electromagnets in traditional loudspeakers, 1 Ltd. invented a 3-dimensional piezo-electric actuator. The significance of the piezo-electric actuator is that it is the basis of Heliomorph technology that 1 Ltd uses in the digital photography market. The piezo-electric actuator is a low power solution for digital cameras and cell phone manufacturers.

By way of designing a digital loudspeaker, 1 Ltd. had to develop an ASIC that accompanied a digital signal processor that in turn created digital patterns of sound. The foundation of sound beam forming was derived there, but the usage model of digital sound for loudspeakers seemed better applied to home theater. These basic fundamentals of system requirements for digital loudspeakers became the IP of the first digital audio projector—the Pioneer PDSP-1 that was announced in October of 2002.

Pioneer PDSP-1 Pioneer’s PDSP-1 is a rectangular array numbering 254 x 1.2" diameter speakers allowing its affluent owner to efficiently bounce sound off both ceiling and walls, referred to as 3-Dimensional. The diagram below shows the 37.9" x 25.2" x 5.7" PDSP-1, Pioneer’s suggested configuration delivering 5.1 surround sound. The 110.4-pound speaker array remains at its original price of $40,000. Pioneer feeds its 13-speaker-tall array employing 254 individual amplifiers delivering 2W each. Pioneer uses small 1.2" diameter speakers, but these are very special designs, with radial neodymium magnets and very long excursion—hence the price; it obtains lower-frequency response by driving all of these special wideband speakers together. The speaker is functional at a low frequency of 40Hz. The Pioneer PSDP-1 has two analog outputs for subwoofers. The Pioneer PDSP-1 does take the 1 Limited ASIC to its limits, although impressively, the ASIC will support 256 speakers and 8 channels.

1 Ltd.’s approach for the Pioneer PDSP-1 employs a two-dimensional array of speakers. Instead of using several appropriately aimed parabolic reflectors the speaker array can provide results in sound similar in principle to those obtainable in the radio domain by a fixed antenna array’s replacing a mechanically steered one. The fixed antenna’s directional characteristics are obtained by DSP-processed signals summed with delays and amplitudes set to deliver the required directional antenna pattern. The two-dimensional array of speakers (see Figure 1) applies the same principle for sound


projection. Speakers forming an array, being small, radiate spherical waves in all directions away from the 2D array (they are individually “omnidirectional”). Using a large number of speakers to form an array results in higher sound energy radiated forward—perpendicular to the plane of the 2D array. Assuming a large number of small speakers configured as a disk-shaped array, a listener positioned at a point on the line perpendicular to the disk and going through its center, will hear the result of sound waves reinforcing each other by arriving in phase from speakers situated at equal distances from the disk’s center (constructive interference). The sound beam formed by the array depends on the frequency of the sound vs. the size of the array. For low frequencies, the difference in phase arriving from speakers at the periphery, vs. the center, of a small array may be negligible. (At 300 meters/second speed of sound, a 100Hz tone has a wavelength of 3 meters.) Once formed by the geometry of the array and dependent on radiated frequency, the sound beams’ steering is accomplished by applying a matrix of speaker-individual time delays and amplitudes matched to the sound channel that is being projected, such that the direction of the arrival of the sound beam at the listener, after reflection from walls and ceilings, is from behind, to create the virtual sound source. The focal length of the beam is independently selected to produce the required coverage of the listening area, and no more.

Figure 1. Digital Audio Projection Diagram

Source: 1 Limited, 1/05

While this application of the technology is new, neither beam forming nor beam steering is a new technology or application. The transducers and speakers are not new or esoteric either. Reliability is a major factor. The expense on the transducers has to do with what minimum expectations the manufacturer will allow for. As an example, the Pioneer PSDP-1 can handle as little as 30Hz frequencies while the Yamaha YSP-1 can only handle 300Hz frequencies or higher. The speakers have to be of uniform diameter and as they are arrayed, the beam steering is facilitated if the speakers are the same distance apart on the horizontal array as implemented by 1 Limited.


Figure 1 provides a view from above. The simplified diagram uses “rays” to show the principle of digital audio projection: a virtual sound source is formed by using the walls and ceiling to reflect sound back to the listener. Sound is optimized in the required direction by time delays, amplitudes, and phase shifts. Note that lack of linearity in speakers may generate higher undesirable IM if an attempt is made to use the same speaker element to radiate more than one audio channel.

The similarity to a fixed antenna array, however, differs in the audio domain when several sound channels are projected (with appropriate time delays, amplitudes, and phase relationships) through the same individual speakers, due to the nonlinear behavior of the speakers. As with electromagnetic signals, sound channels will not interact with each other as long as they are passed through linear transducers. Nonlinear transducers will cause interaction and generate unwanted IM frequency components (sums and differences of the original frequencies). However, in practice, with careful selection of transducers, such IM effects are negligible at normal listening levels and are inaudible. In 1 Ltd.’s array designs, all the transducers are used simultaneously for all the separate sound beams, giving maximum beam-forming capability with minimum overall array size. The use of small transducers is dictated by two separate requirements: first, the transducers need to be omnidirectional to as high a frequency as possible; second, the spacing of the transducers needs to be small, as otherwise (full-power) “alias” sound beams are produced at high frequencies in unwanted directions.

In summing up sound processing principles, we note there are two distinct components: sound beam forming and sound beam steering. Sound beam forming defines the shape of the sound beam; sound beam steering defines how the beam is “bent” from center perpendicular to implement a radiation angle required to provide surround sound.


Yamaha YSP-1 The technical achievement of the Pioneer PDSP-1 was always acknowledged, however its asking price was prohibitive. Enter the Yamaha YSP-1.

The kudos that Yamaha won for the YSP-1 was not because they were the first to market with DAP; however, the Yamaha YSP-1 was nonetheless a revelation at CES in Las Vegas. The sound emitted impressed the 30 or 40 people stationed within the exhibition room (which had the partition walls to which conventioneers are accustomed) and the sound quality was reported to be excellent at any point in the configuration. What endeared the YSP-1 to the critics at CES was the way in which it aesthetically complimented the plasma wall-hanging unit, the trueness of the sound patterns and the much more pleasing price point of $1499, compared with $40,000 for Pioneer’s offering.

Yamaha’s 40 x 1.6"-diameter speaker array + two woofers (see Figure 2) was designed to provide most of its effect in a fairly flat, almost two-dimensional space originating at the level of the speakers and capable of creating the surround-sound effects by bouncing sound against the walls of the room. The three-speaker-tall 28.7-pound array is an elongated arrangement measuring 40.6" x 7.8" x 4.6", with radiation characteristics in lobes perpendicular to the length of the array. The two diagrams in Figure 2 show examples of the company’s suggested implementation of a 5.1 environment in rooms set up for lateral and diagonal viewing. A 5.1 configuration employs six speakers: front center, front right, front left, rear right, and rear left, plus a subwoofer. Yamaha drives 2W into each of its small-diameter speakers, with 20W used for each internal woofer to deliver frequencies below which the ear-brain is no longer direction sensitive.

Yamaha’s elongated narrow configuration will provide surround sound using lateral walls for sound projection. Pioneer’s digital audio projector employs a rectangular array, allowing it (at a cost premium) to also use the ceiling for sound projection. The speaker quality changes in the Yamaha YSP-1. The lowest frequency that the YSP-1 can handle is 300Hz (opposed to the 30Hz that the Pioneer PDSP-1 can handle). Figure 2 provides Yamaha’s guide for four-speaker surround sound and its 5.1 configuration. Also shown, under Pioneer’s speaker, a 7.1 configuration using walls and ceiling. The diagrams do not show the sound pattern from the subwoofer, which is non-directional.


Figure 2. A Comparison of Pioneer’s and Yamaha’s Digital Audio Projectors

Source: Yamaha and Pioneer, 1/05

Yamaha’s larger diameter (woofer) speakers provide it with better response for the lower frequencies than a number of smaller speakers would permit. Pioneer uses even smaller diameter speakers, but these are very special designs, with radial neodymium magnets and very long excursion—hence the price; it obtains lower-frequency response by driving all of these special wideband speakers together. Yamaha uses separate internal woofers, leaving the medium- and high-frequency ranges to their speaker arrays. Yamaha also provides a subwoofer output, whereas Pioneer provides two subwoofer outputs.

Yamaha’s speaker unit specs include Dolby Digital, DTS (Digital Theater System), and Dolby Pro Logic II compatibility, On-Screen Display, and Night Listening Mode. Three memory locations are available for storing sound-projection settings. An RS-232C interface is provided for customization by third-party vendors and for servicing the unit. Pioneer’s specifications are very similar, showing, like Yamaha’s, close adherence to 1 Ltd.’s intellectual property. They include Dolby Digital, DTS, and Dolby Pro Logic II compatibility, plus video display superimposed on the video signal. Analog sound input is internally converted to 24-bit 48kHz PCM (Pulse Code Modulation). An idea of input frequencies can be obtained by considering PCM at 32kHz and 44.1kHz; CD at 48kHz or 96kHz; Dolby Digital (AC3) at 48kHz; and DTS at 48kHz or 96kHz.

Limitations and Non-Limitations In-Stat investigated the practical obstacles to DAP in homes. Understanding that audio solutions often can be upgraded at a cost, and, while acknowledging that the perception of sound itself has some subjectivity to it, In-Stat addressed potential limitations. Here are the conditions that we thought might be mitigating factors against performance and how digital audio projection compares to other audio technologies. Please keep in mind while discussing limitations; the discussion will focus on the Yamaha YSP-1 2-D type of implementation.


Room Dimensions

While assessing potential limitations for a Yamaha-type implementation, we assumed that the size and shape of a room could create inherent problems – especially with a very large room. The problem would not lie with the sound losing its directionality – there are instances in odd shaped or larger rooms where DAP performed better than conventional stereo systems because of the directional capability – but with phase delays. Distance becomes a factor after the second or third bounce, or after especially long bounces. The sound effect is lost as the path difference between the front channels and the rear channel change the phase delay.

However, the critical acclaim garnered at CES was achieved in a convention hall setting in a walled off area that had no ceiling to speak of. It can be assumed that the great majority of family/living rooms will have a roof and the Yamaha YSP-1 is a two-dimensional solution anyway. The lack of a ceiling is mentioned as it merely differentiates the practical setting of an exhibition hall and the typical settings of home audio/video electronics devices. Additionally, the demo rooms at Cambridge are 20' x 30' and there is no loss of performance there. So, unless a room is unusually large compared to a typical entertainment/family/living room, there would be no expectation for a lapse in performance.

Material Effects

DAP is a single-source component that utilizes directional beams that are bounced off of side and back walls to create the surround sound effect. The assumption was that the materials that the walls and ceilings were made of affected the reflection of the beams. We surmised that sound should act differently if deflected off of brick, wood, drywall, or glass, since these materials have different physical properties. Materials may be flat or less flat and materials may be textured. Materials also have different rates of sound absorption.

For all intents and purposes, the absorption properties and density of the materials of the walls or the ceiling (in 3D applications) make no difference in the real function of DAP. The sound is directional, extremely focused, and acts as a two-dimensional force. The density of materials has no effect on the steering of beams (a pane of glass, a wall with heavy amounts of insulation and a dense concrete wall will act similarly if their surfaces are similarly flat). Absorption matters only when there is no absorption, as in the instance of an open window or door. In that scenario, it is impossible to reflect the focused sound beam. The differences that occur from absorption are compensated for in the equivalency quotient (EQ) between the unit and the remote control.

The degree to which a material is flat is a more significant factor. That a glass wall or window is transparent does not deter the ability of the surface to reflect the sound beams. That glass has a nearly flawless flat surface is important as it makes an excellent reflector of sound. Textured materials are a variable that have to be accounted for. The EQ is


effective until such a time as there is a 20-millimeter (or roughly ¾" indentation in the walls or ceiling). Curtains have the same detrimental effect on DAP performance in living/family room settings. In the case of an unsuitable wall, the beam steering can be done by strategically placing a piece of furniture such as a lampshade or a bookcase. For all materials, the degree of flatness in the walls (or ceiling in the Pioneer PDSP-1) is the more important factor for the effectiveness of the DAP than the density or absorption of the reflecting surfaces.

There are factors within a room that do affect the efficiency of DAP. Large objects between the sitting area and to the side or the back of the walls literally block the sound beams from reaching the listener. Dr. Hooley points out that this problem would be the same in other stereo systems if a person had a stationary speaker hooked up to a corner of the room and had an object in front of it (although the effect to DAP would be to lose directionality while the effect to conventional speakers would be to lose decibels). Also, opened windows within the two-dimensional plane make the solution all but useless.

Audio Performance

Are there other factors that affect audio performance? The density or insulation of the materials did not affect performance. The next consideration is what effect on sound impression would vaulted or acoustical ceilings have. If there was no ceiling, but there was still an enclosed set of walls the listener would lose a maximum of 3dB SPL. (Please note that we are continuing to reference 2-D designs by default). Volume is directly related to sound pressure on the ears (SPL) and beams again are projected in a two dimensional array, therefore the auditory impression by DAP even in a room with vaulted ceilings or in situations where there is no ceiling is affected no more, and arguably less, than conventional stereo systems.

Mathematically speaking, if two watts are assigned to each transducer/speaker and there are 40 speakers in the Yamaha YSP-1, the maximum wattage that can go out on the YSP-1 is 80W. The reason that it competes with more powerful stereo speakers is because the sound is precise and the digital audio projector can send the wattage out in whatever sequences it deems most appropriate (it could send 70 watts of power over one channel per example). The manufacturer suggests the addition of an independent subwoofer that would make it the only non-directional type of sound emitted from the entire unit. Subwoofers necessarily drive bass functions and their purpose is to fill the room with noise; the sound spread is dense and non-directional. The overall mix of the sound is less vulnerable to unwanted reflections from walls and ceilings than regular hi-fi as this is accounted for in the EQ and because of the directional aspect of the sound-beam steering of DAP.

The Yamaha YSP-1 is fully configurable from the remote control. Using the floating-point mathematics one of the dedicated functions of the digital signal processor is to continuously upgrade the optimal broadcast array of beams for surround sound and the strategies are location-based to the position of the remote control. The remote control also has the same functionality as any standard remote control unit. It can increase or decrease volume (in 0.5 decibel increments from 0 to 99.5 dB), the user can vary bass


and the remote control can be programmed to maximize the sound qualities left-right in the listeners’ ear. The remote control also allows for widening or narrowing the beam to fine tune the response and sound quality.

The frequency response from the Yamaha YSP-1 must be at 300Hz or higher per transducer/per speaker or there is a risk of deficiency. To help offset this problem Yamaha uses separate internal woofers letting the speakers take on the higher frequencies. Wireless and RF products in the home theater space have tried to work at lower frequencies, but there is a hole in the response at between 100-300Hz.

Using Air to Mix Frequencies Classical superheterodyne receivers mix the incoming frequency with a locally generated one positioned at a fixed distance (intermediate frequency) from the desired broadcast frequency. There is a rough parallel here in that interpretation of a reflectance of a sound is made in the middle ear. The middle ear needs to overcome the impedance differential of the interface between air and fluid in the inner ear. In receivers, mixing the two frequencies yields “sum and difference” harmonics (the sum and difference of the original two); the difference harmonics are selected by filtering and then used for further signal amplification. Borrowing the concept from superheterodyne receivers, a generator of ultrasound beams can actually place the source of sound, not its reflection, in midair.

Air, as a carrier of sound waves, exhibits a nonlinear response to pressure. 1 Ltd. explains that at very high sound pressure levels (SPL), well above 120–130dB SPL, which would be deafeningly loud at audible frequencies, the pressure differential due to the sound wave starts to become a significant fraction of the static air pressure; only then do these nonlinear effects become significant. The effect is inversely proportional to the cube of IM frequency and thus is very weak at the low end of the audio register. Systems using this principle can work effectively above 300–500Hz. According to Holosonics, the magnitude of the effect is approximately proportional to the square of the IM frequency. The company stated that the ultrasound levels are not substantially higher than 130dB, and that in its products it is employing significantly less than 10% of the energy allowed by US regulators in normal listening.

Two different ultrasound frequencies moving air in the same space will be mixed, generating IM frequencies that include the sum and difference of the original frequencies. Systems using heterodyning to generate local sound (see Figure 3, comparing a parametric array to a loudspeaker) may employ only one or two ultrasound frequencies. In either case, one frequency is used to carry audio components processed to compensate for the air’s nonlinear response. The effect can be obtained by using ultrasound carriers in the range of tens to hundreds of kilohertz to help make the tight beam transducers small enough to be practicable. The frequency-mixing effect of air generates sums of frequencies too high to be heard and frequency differences that can be heard by the human ear. Ultrasound, like audible sound, can be reflected using nearby walls and ceilings. The difference is in the audible sound source: with ultrasound, the audio energy actually originates from the air in areas where loudspeakers would have to be located for


surround sound. Ultrasound can be used to generate audio that envelops a person in a narrow cone of sound, making it impossible for the listener to identify the direction of the audio source or for others to listen to the private communication. The ultrasonic beam, acting effectively as a private loudspeaker, is normally between 5m and 10m in length, its dimensions being much larger than the wavelengths of audio that are produced. The resulting audible field is highly directional, just as if it came from an extremely large loudspeaker.

Optionally aimed by laser beams, sources of ultrasound can deliver strong audio to 60 feet, with audibility extending to 600 feet (product specification by Holosonics Research Labs, Inc.). The transducer is 17.5" in diameter and 0.5" thick, and weighs four pounds. The figure compares a parametric array to a simple loudspeaker. Radiated main and side lobes will change with frequency and speaker size.

Figure 3. Parametric Array to a Simple Loudspeaker Comparison

Source: Holosonics, 01/05

A supplier of ultrasound systems, the American Technology Corporation (ATC) employed an ultrasonic primary carrier frequency in combination with ultrasonic sideband frequencies that correspond to the audio frequencies to be reproduced. In one of its demonstration systems, the company uses a carrier of approximately 50kHz, with ultrasonic sideband frequencies that are spaced from the carrier frequency by values equaling the audio frequencies. ATC’s present product, based on the company’s HyperSonic Sound (HSS) technology, generates audio in the air medium by delivering the ultrasound carrier and sideband frequencies through one transducer to ensure that the airborne signals will align and mix to obtain the best yield of audio energy (see Figure 4). To obtain the energy and narrow beam required, ATC employs an ultrasonic emitter comprising four large-area piezo-electric film transducers configured in a rectangular package.

ATC’s implementation of the ultrasonic column generator shows processing circuitry that can be implemented by digital audio projector engines. Analog audio is sampled, processed, and shaped to compensate for the distortion expected from the air. A modulator circuit is used to combine the processed audio with the carrier frequency.


Figure 4 ATC’s implementation of the ultrasonic column generator

Source: ATC

ATC’s simplified description of its ultrasonic column generator involves signal sampling, and preprocessing for amplitude and audio bandwidth, followed by distortion control—possibly a step that predistorts the signal to compensate for the distortion expected from air—and a multiplier circuit that modulates the carrier frequency delivered by the local oscillator, combining it with the audio signal. The power amplifier may include feedback to help make further corrections to the system and air-response characteristics. ATC’s announced audio technology licensees are iPort Media and Sony Business Europe. The company’s strategy is to expand distribution of existing products, to exploit new technologies emerging from R&D, and to develop new acoustical and electronic technologies targeted at business and consumers.

Holosonic Research Labs, Inc., offers laser-directed ultrasound projectors it calls “Audio Spotlights,” delivering sound to a usable range of 60 feet, audible up to 600 feet. The company has not made public its internal block diagram. Holosonic Research uses one ultrasound carrier combined with audio. The audio quality is acceptable for consumers. Consumer acceptability is based on the Holosonic Research standard of an audio output of 100dB max with approximately 1% typical THD [Total Harmonic Distortion] at 1kHz. The marketing focus of the company, however, has been, until now, on corporate clients, providing them with focused sound for retail displays, commentary attached to exhibits, and special effects for presentations. A list of publicly announced customers can be found at www.holosonics.com/customers.html. Holosonic Research intends to widen its focus to include the consumer living room.


http://www.holosonics.com/customers.html

Competitive Alternatives

What System for What Purpose Using projection of audible sound that can work with available speakers, 1 Ltd.’s approach turned out to be closer to the home-theater application than are systems employing transducers (parametric arrays) delivering sonic heterodyning. Yamaha and Pioneer, two of the known licensees of 1 Ltd.’s technology, have used it to offer digital audio projection for the home. Yamaha’s lowered price brings hope of further reductions that can make audio projection affordable to most consumers.

ATC’s and Holosonic Research Labs’ systems are based on principles enhancing their use in special applications that can take advantage of sound that can be heard only inside a narrow beam—a projection of Maxwell Smart’s cone of silence. The two companies may eventually widen their market horizons by offering aesthetically shaped systems designed for the consumer’s home theater and for the listening privacy of people at home, work, or travel. One-channel ultrasound systems are small and light but will become bigger and heavier when they have to deliver 7.1 configurations plus personal channels.

The principles employed in sound shaping have common aspects: both sound projection and sonic heterodyning radiate sound energy via transducer arrays. Note that the ultrasonic arrays are paralleling the transducers to create a greater-size transmitter to increase directionality rather than using them to steer the radiation. High frequencies can reduce the size of a needed array and the size of its components. Systems employing ultrasound can use transducers with very small diameters, such as piezo-electric speakers. If the creation of virtual speakers for surround sound is targeted, the reduced transducer size can be one of the reasons for the high frequencies employed. On the other hand, if sound must be shaped to obtain a tight beam aimed at the listener, for directed messaging or privacy, the radiated carrier must be ultrasonic, implying short wavelength. To be efficient, the transducers used must be operated near resonance—a requirement that helps reduce their size with ultrasound frequencies. Ultrasound systems don’t require the audio projectors’ main feature, beam steering. At the present state of technology and targeted applications, ultrasound transducers perform their functions by forming only one beam, which cannot be steered or shaped electronically beyond the shaping obtained by the array’s geometry. The systems pay for this luxury, however, by having to compensate for the air’s nonlinear properties.

Both types of systems, audible and ultrasound, interact with air. The heterodyning system relies on interaction with air. It requires high ultrasonic sound pressure levels to achieve its effect. Its ultrasound-to-audio conversion is less efficient than the audible approach, but then its targeted space is narrower. The IMs generated by 1 Ltd.’s technology or by any other audible sound source are parasitic, but they are negligible at normal listening SPLs.


There are different opinions concerning the history of air heterodyning. Holosonics’ Dr. Pompei points out that the history of air heterodyning of sound begins in the early 1960s in underwater sonar applications. It found its applications in air in the early 1980s, as reported by Japanese researchers, whose research was then completed by Dr. Pompei’s work at MIT.

Published material by Holosonics’ competitor, the American Technology Corporation, states that heterodyning was reported upon earlier: One hundred fifty years ago Hermann von Helmholtz was able to hear a higher and a lower frequency when he played two close, very loud, notes on his pipe organ. In the 18th century, according to an article based on an interview with ATC, the Italian composer Giuseppe Tartini reported that sounds of different frequencies produced additional sounds whose frequencies were the difference between the original sounds. ATC’s own history began with the development of the prototype by ATC’s chairman and founder Elwood Norris, which led to the company’s present offerings. Are there earlier indications that people knew about air heterodyning? Were the walls of Jericho toppled using heterodyning to generate subsonics?

Returning to the present: sound steering and forming may engender volume applications that can take advantage of low-cost, high-performance special-purpose engines. Floating- point 24-bit or higher arithmetic, on-chip time delays, and very large bandwidth to external memory are the promising starting points for dedicated engines.

Wired Wired solutions will remain the majority of audio implementations. All of the natural attributes are in the wired solution including familiarity of use and total cost of system implementation, which is a variable that becomes more dramatic, depending upon the aptitude of the consumer as far as installation, is concerned. The standards of surround sound, 5.1, 7.1, and 10.1 configurations, Dolby Digital, DTS (Digital Theater System), Dolby Pro Logic II compatibility and THX were all conceived for the use of wired stereo systems.

Clean and non-impeded delivery of power is guaranteed by wired systems. Gauge width of speaker wire can be adjusted to feed more power to the components. Most home audio systems will work best and most efficiently with 12-14 gauge speaker wires; however, 10-gauge wire and “monster” cable are available if more power (wattage) to the speakers is desired. The objective of wired stereo and digital audio projection are usually at odds too. Digital audio projection relies on the precise beaming of sound waves to create a specific auditory effect, but most stereo solutions try to create an overall sound impression. Beam steering is then designed to focus beams of sound contrasted to stereo where sound waves move out spherically and become less intense with distance. The position of 1 Ltd. is that digital audio projection is less likely to encounter reflective sound emanating from the original sound source. This means that, depending on relative timing, sound waves are less likely to cancel each other out or reinforce one another. Depending upon the cost and complexity of a given unit, the mix of sound in most stereo


alignments, without phase delays, is intended to reach the listener as a wall of sound. Self-evidently, wired solutions have greater versatility in that the system itself can always be adapted with the purchase of different components, the addition of more speaker wire and the realignment of speakers. Sub woofers can drive more power in wired systems than they can in wireless systems, therefore making a deeper bass impression.

No solution is as cost-effective as wired. Top-end radio frequency (RF) systems require a separate RF receiver to receive digital data streams and emit digital sound. Neither RF nor DAP can approach the power per cost and channel that a wired set can.

There is an advantage that DAP has over conventional stereo especially in home theater units. Home theaters are used to broadcast movies or television that is different than music in that dialogue is the dominant audio feature (versus music or special effects). The “thinking” component of digital audio projection means dialogue has much better clarity because the DAP can dedicate and focus more beam steering directly to the listener. The optimization creates a very wide front stage and a better spread is achieved for rear-channels by back and side wall deflections. Beam steering handles unwanted reflections and this reduces comb-filtering effects. There are fewer echoes from room acoustics in DAP than with conventional stereo. DAP will make gains on wired solutions in situations when form factor is an important consideration or when the end-user likes the convenience of a video solution with an integrated DAP.

RF RF has had some successes in home audio and video applications. Wireless speakers have an effective range of 150 feet (according to the standards set by Sony for its product offerings). Wireless headphones are bluetooth-enabled and have a frequency band of 2.4Ghz Frequency Hopping Spread Spectrum (FHSS). There are also neat solutions like the D-Link DSM-910BT, which includes a bluetooth stereo adapter and a bluetooth speaker adapter (the effective range of this product is between 10-30 meters).

RF has some limitations. The technique used by some wireless systems to imitate surround sound includes the idea of reflected and direct sound, and is reasonable conceptually. The audio effect is that sound in concert halls or theater venues does not come from one singular source like a speaker, it does in fact mix with voices or acoustical effects of the room. The problem with this approach is that the sound picks up reflections and echoes. As the sound is not as directional as that in DAP, the sound impression is more likely to be altered or cancelled when sound waves interact.

Wireless does not necessarily mean cordless. Most wireless speakers work best with an electrical power source. When battery powered, a 900MHz speaker can be expected to have a battery life of 3.5 hours, a drawback. Recharging batteries is inconvenient and replacing batteries is another expense. The form factor question is an issue if electrical outlets are unavailable. There also remains the possibility of giving or receiving interference. Wireless stereo components have broadcast frequencies of 900MHz to 2.4GHz and these are the common wireless frequencies.


By Cost Comparing home speaker systems to digital audio projection is an ostensibly difficult task. Proponents of wired, wireless and DAP will point out the cost efficiencies of their solutions and insert the drawbacks of competing systems. If the purpose of the study was to make a precise argument about the cost of sound delivery in home audio and video applications, the charting would certainly be as striated. That being said, there is value in making a comparison from the viewpoint of the minimum expectations of performance from the Yamaha YSP-1.

Our starting point was that the listening room was a standard room that was 12' x 14' and had no special limitations. (For this scenario: The ceiling was flat and not vaulted, that “crawl space” for wiring was not a factor, the walls were perpendicular to each other and the installation of speaker wires and mounts was easy enough that it was not a cost consideration.) To match or exceed the performance of the Yamaha YSP-1 the home theater stereo system or home theater in a box had to satisfy these criteria:

Had to have, at a minimum, a 5.1 configuration

Had to drive at least 80 watts per channel

The total cost of the unit includes all ancillary materials (wires, mounts, etc.)

Able to process Dolby Digital and DTS

Could be connected to DVD, VCR, or CD players at least through the television

The amplifiers had to have low power consumption

The maximum power output had to be close in specifications to the Yamaha YSP-1 2 watts (1KHz, 10% THD, 10Ω) x 40 for the amplifier/speaker. Additionally, the THD had to stay under 10% THD at 80 watts per channel since this is the functionality of the Yamaha matrix.

Shopping on-line derived the price of unit. Shipping costs could vary and are estimated and the price is the best one that we found (that can fluctuate depending upon availability as can shipping and handling charges).


Table 2. Cost of Wired Solutions

FEATURE OR COST ANALYSIS

BOSE 3-2-1 DVD SERIES II HOME THEATER SYSTEM

SONY HOME THEATER W/DVD RECORDER 971002

Feature 5.1 channel surround sound 5.1 channel surround soundFeature 120 volts 50~60 Hz 300W 120 volts 60 Hz 520WFeature Dolby ® Digital/DTS Dolby ® Digital/DTSFeature Dolby ® Pro Logic II Dolby ® Pro Logic IIFeature CD/DVD Player harmonic distortion <.003%Feature sub woofer outlet amplifier multi-channel: 120

Watts x 5 (8 ohms 1 kHz, 10% THD)

Feature (2) Articulated array speaker design

amplifier power output: 120 Watts x 2 (8 ohms 40 - 20,000

Hz, 10% THD)Feature low frequency to all channels Amplified 120 watt subwooferPostage $20.00 $20.00

Cost of S

ystem $999.99 $699.99 100 feet speaker wire (16

gauge)$20.00 $20.00

4-speaker mounts ($10 each) $40.00 $40.00

OVERALL COST OF UNIT $1,079.99 $779.99

Source: In-Stat, 03/05.

The Bose 3-2-1 DVD Series is a comparable solution. This system and the Yamaha YSP-1 drive low frequencies to each channel. The Bose system is a middle to high end application. Both systems support Dolby Digital, Dolby DTS, and Dolby Pro Logic II. The Bose uses articulated arrayed speakers. The Bose application has the speakers positioned to the front left and front right of the listener. Each speaker enclosure has two precisely angled drivers. Digital processing circuitry leaves the impression that there are speakers behind the listener. The Bose 3-2-1 system offers the added value of a CD/DVD player with the receiver.

The Sony system was selected because the THD was similar to the Yamaha YSP-1. The Yamaha is 10% THD over any of the amplifiers. The maximum wattage that any amplifier in the YSP-1 is 80 watts. Each amplifier is rated for 2 watts, but any of the 40 amplifier/speakers can accept the whole maximum wattage of the unit. The Sony HTiB rated the same 10% THD, but did so over 120 watts per channel. The Sony 971002 also had a CD/DVD player recorder that would also playback MP3 format and an AM/FM radio tuner. The Sony and the Yamaha YSP-1 had 24-bit linear PCM decoding.


Table 3. Cost of (RF) Solutions of the Kenwood Fineline HTC-S610

Feature or Cost Analysis The Kenwood Fineline HTB-S610 Feature 7.1 configurationFeature Built-In Amplifier: 100 Watts (Dynamic

Power) Feature Surround Power (Center): 80 Watts

(20Hz )Feature Stereo Power: 80 Watts per Channel

(Left/Right, 1kHz, 0.7% THD, 8 ohms, FTC)

Feature Dolby Digital, Pro Logic II & DTSFeature 150 watts consumptionFeature 100 feet rangeFeature A/V ReceiverPostage $20.00

Cost of System $599.99 Total Cost $619.99

Source: In-Stat, 03/05

The effective range of the Kenwood Fineline HTB-S610 is 100 feet. The THD total harmonic distortion at 1KHz was rated at 0.7% THD. Remember, audio distortion is thought to be inaudible at percentages below 2-3 percent. The application is 100% wireless and the back speakers are cordless (which is unique because the majority of wireless application will still have AC power cords). The common criticism of RF units is that a given frequency is subject to interference. The Kenwood Fineline HTB-S610 operates over four different possible frequencies. What is not specified is the amount of usage that the user will get out of the speakers before the batteries run out of power.


Digital Audio Projector Market The whole enchilada for this nascent technology is whether the DAP is a consumer-attractive value and if the manufacturing and more specifically the technical benchmarks (advancements within the silicon) are as readily achieved in such a way that the cost of DAP is driven down.

To forecast the DAP market, there are four important considerations. The first consideration is the semiconductor content and the cost reductions required to make the price of digital audio projection palatable for consumers. The second consideration is what are the historical adaptation rates of new technologies and how does this pertain to surround sound and its rate of usage. Thirdly, as the average selling price lowers, what products does the DAP enhance and from what competing products does it take business away? Lastly, the DAP as a stand-alone unit will evolve into a value-added feature physically incorporated into the big screen television, flat panel screens (or possibly flat panel computer monitors) and high-definition display models. What will be the average selling prices of the stand-alone DAP and the core design that is built within the form factors of these products?

A small but somewhat important feature of the digital audio projector is that it is its own digital receiver. A CD/DVD player or game box can be attached directly to it. That feature puts DAP directly in the space of home theater in a box system again without speakers or speaker wires. The DAP as it sits today, as a stand-alone device, will have a small number of sales as simply an audio unit because the wireless, cordless advantages are that powerful, but most of the sales numbers forecasted later in the report are contingent upon DAP as a home theater improvement.

Overall Surround Sound Market Figure 5 is a sample of different consumer driven applications and their growth rates. Radio, television, VCR, and cell phones are charted for the U.S. market whereas the number for the Internet was taken as a rate against the population of the world as a whole. Viewed linearly, there seems to be a steeper sweep in years 3 through 5. However, if the chart was put together logarithmically, the adaptive rates would nearly smooth out as the CAGR for VCR (109%), television (109%), radio (91%), and US Cell phones (85%) are nearly one hundred percent. The years that the Internet were sampled, between 1991-1995 exhibited a 44% growth and then, as competition among the ISP and competing quality browsers Netscape and Internet Explorer came to market, only then did the technology become disruptive. Disruption is the key concept involved. A disruptive technology is best expressed as a whole new medium that changes communications itself. There was no product remotely like radio when it came out on the market and television was not only a new application, but with the advent of satellite transmission, the first truly global instantaneous broadcast medium was born. Disruptive technologies tend to double their users each year, however good technologies tend to add 30-40% new business in a given year. As digital audio projection is necessarily a subset of surround


sound, surround sound has a twenty-two year history and its growth has been more indicative of a good technology as opposed to a disruptive technology and has made a steady gain in penetration. DAP is a product enhancement and not necessarily a new communication medium.

Figure 5. Adoption Rates of New Technologies

Adoption Rates of New Technologies

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Year 1 Year 2 Year 3 Year 4 Year 5

Radio (U.S.) Television (U.S.) VCR (U.S.) Internet (%of population 1995) U.S Cell Phones


Home theater in a box units and video/audio receivers are the direct competitors in the space from which DAP hopes to win business. Home theaters in a box (HTiB) are a versatile solution because the system may be wired or wireless and the configurations can start at a 5.1 arrangement, but can later be upgraded to 7.1. HTiB has enough flexibility in the pricing module that it ranges from relatively inexpensive to high-end with advanced features and capabilities. As HTiB is attached to upper-end home video units, and offers the same attributes of sound, it is reasonable to presume that HTiB and the single-source DAP will vie for the same customers.

The difference between home theater in a box and video/audio receivers with DVI/HDMI capabilities is that the home receiver is addressing the receiver only. In this case the consumer can have any combination of speakers, attendant wiring, power supply, and subwoofers. The home receiver is simply a receiver that can receive digital broadcast signals but can integrate into existing stereo rack systems. DAP intersects with home receivers because a consumer sometimes buys a receiver because the receiver is losing performance and is breaking or broken. Often the same conditions that caused the degradation in the receiver can affect the speakers, or, when it comes time to upgrade the receiver, the needs of the buyer have changed and the prospect of wiring is less appealing than it was when the former receiver was purchased.


One good market figure to keep in mind is some of the inflection points involving the Dolby surround sound technology that entered the market in 1982. The differentiation between Dolby surround sound and Quadraphonic sound was that the Dolby surround sound utilized a matrix to mix between the two rear channels, and the system did not have to amplify each speaker independently to be effective. The ceiling for DAP unit sales has to be appreciably below the overall surround sound sales and also below the combined expected sales of HTiB and home receiver. DAP will displace HTiB and DVI/HDMI applications as the prices come down. The table below represents the forecast of sales of these two products that replicate the functions of DAP as a stand-alone single-source provider of surround sound and DAP’s most natural competitors.

Table 4. Direct Competitions to DAP Marketplace as a Stand-alone Form Factor

Device & Units in (1000s) 2004 2005 2006 2007 2008 2009 CAGRHome Theater in a Box 11,000 12,250 13,500 14,500 15,400 16,650 9%

Annual Growth 11% 10% 7% 6% 8%Home Video/Aud Rec. w/ DVI/HDMI 3,300 3,500 3,700 3,900 4,100 4,210 5%

Annual Growth 6% 6% 5% 5% 3%


DAP Market Projections The Yamaha YSP-1 achieved its notoriety as an enhancement to a plasma display screen at 2005 CES. Digital audio projection is currently designed as a 5.1 configured surround sound add-on to several different big screen and display screen units. Its incumbent strength is that it can be added successfully to any high definition television or screen and even if a television is not high definition, DAP can still augment a home entertainment system because its implementation of Dolby Pro Logic II means it will expand a two-channel source (specifically CD) to imitate a 5.1 surround sound channel playback. While the focus of the DAP market will initially be as a value-added component to higher end plasma televisions and LCD displays on a smaller level of adaptation, DAP will appear on CRT televisions. The following table is a five-year forecast of DAP sales across select consumer electronic devices.


Table 5. Potential Stand-alone Units For DAP Applications

Device & Units in (1000s) 2005 2006 2007 2008 2009 2010 CAGRBusiness Projectors 2,900 3,700 4,500 5,300 6,000 6,792 19%% DAP Penetration 0.0% 0.0% 0.0% 0.0% 0.0% 0.0%Units 0 0 0 1 1 1 n/aPlasma 4,225 6,210 7,860 9,467 11,014 12,814 25%% DAP Penetration 0.1% 0.2% 0.3% 0.5% 0.8% 1.3%Units 4 11 23 47 92 161 1LCD 13,912 21,787 29,717 37,359 44,547 53,118 31%% DAP Penetration 0.1% 0.1% 0.2% 0.3% 0.6% 0.8%Units 9 25 57 122 248 444 127%Rear Projector 5,695 7,159 8,502 9,557 10,928 12,496 17%% DAP Penetration 0.5% 0.6% 0.7% 0.9% 1.0% 1.0%Units 28 43 61 83 113 130 41%Units Against vid/aud rec 4 7 13 24 19 15 34%Units For CRT Big Screen 1 2 5 12 10 8 51%Total Units Sold 47 87 159 288 483 758 75%

% Annual Growth 87% 82% 81% 68% 57%

Average Selling Price 1,299$ 1,033$ 827$ 658$ 515$ 403$ -21%Revenues (in 1000s) 60,559$ 90,248$ 131,963$ 189,634$ 248,961$ 305,725$ 38%

% Annual Growth 49% 46% 44% 31% 23%

16%

Source: In-Stat 03/05

The stand-alone applications that In-Stat foresees for DAP in the consumer electronics market are as a compliment to video display units, business projectors and in limited cases as a replacement for home video/audio units. The numbers for the form factors were taken from In-Stat report IN0501847ME for HDTV through 2009 and extrapolated through 2010. The data for home video/audio receivers and business projectors is from In-Stat report IN0401156MI “Visualize This: DVI Rules PCs, HDMI to Control Consumer Electronics.”

In-Stat categorizes plasma displays and LCD displays as “flat panel TVs,” but further segmented the grouping because the form factor of each was an important consideration in the market forecast. The category of rear projectors does not include CRT TVs. The definition of big screen as employed by In-Stat is of a 40-inch or larger diagonal surface. CRT TVs with form factors of 40 inches and over will not experience the same growth that other HDTVs will. There is a debate whether CRT TVs can be classified as HDTV because they cannot define all of the pixels in a 1920 x 1080 resolution. However, despite that limitation many big screen CRT TVs will be sold that are capable of accepting high-definition TV signals. This may be a niche market, but the attractiveness of buying such a product is that you can get such a television at either a lesser price or larger screen size. The audio applications will still be digitally-enabled, and we anticipate that DAP will have some sales into the stand-alone and integrated versions of this form factor.

The compound average growth (CAGR) that In-Stat derived for stand-alone DAP 2005-2010 deserves attention. The CAGR for units sold as video display add-ons is 75% and the accompanying revenue CAGR is 38%. The first dynamic of unit shipments outpacing revenue figures is the result of anticipated lower costs to the silicon content and the idea


that other electronics firms will compete in this product segment and put pressures on production and on margins. The unit sales of DAP as a CAGR are 75%, but bear in mind that the CAGR for digital TVs is 24% for 2005-2010. The technology is an additional application that has a 51% application rate higher than the video display technologies that it enhances (75%-24%). That number is key to understanding the market projections. The expected rate of growth of DAP would be the same rate as the DTV themselves if the technology was neither good nor bad. The difference of 51% is consistent with the traditional 30-40% of good technologies’ CAGR against the market baseline. The adoption rate is consistent with the characteristics of the growth of cell phones and Internet usage, but is not as dramatic as the growth of televisions or VCRs. Remember that the CAGR of stand-alone and integrated DAP starts off slowly until DAP begins to integrate into the televisions themselves.

DAP competes directly against home theater in a box as a stand-alone form factor. The number of home video/audio receivers (Table 5) is a good reference number but does not represent a new application. DAP and home theaters in a box have the same functionality as surround sound for video applications. However, there is a slight differentiation between DAP and home audio/video receivers. The number represented in Table 4 is the times that DAP will be used primarily as an audio player. These instances include situations when the receiver and the speakers degrade at roughly the same rate and the DAP is a better overall solution or when a receiver itself becomes non-functional and a replacement is needed. Lastly, when the audio or video equipment is functional, but a change of venue means that speakers are not a viable form function whereas a DAP would be. The numbers in Table 5 are based upon the form factor of the televisions, but the number of “Units against video/audio receivers” is the estimation of DAP units sold that do not involve the model dimensions of the television as the reason for buying the DAP.

After all of the caveats, the type of television that In-Stat believes would be the best served by DAP is the plasma display. Rear projection television is the next best product for audio enhancement. Rear projection televisions have less depth than standard CRT TVs but are thicker than flat panel plasma display screens. Most rear projection TVs are put on a stand or within a home entertainment console. The DAP rests comfortably beneath the rear projection display unit. (In a 2D digital audio projector the best results are obtained when the unit is placed at the approximate height of the listener). Digital audio projectors will be a significant add-on to LCD units especially at diagonal screen widths of 30 inches or larger).

Table 5 reveals a decreasing selling point of 21% CAGR of the stand-alone DAP. The price decrease is consistent, but a little more aggressive than the anticipated price decrease of DVD players and cable set top boxes over the same time period. However, the price decrease does not stray from the anticipated pricing decreases of plasma and LCD displays (CRT TV will decrease in price but not as forcefully. The CRT TV has had 50 years of refinement). The next question is what monetary value should be assigned to the average selling point? If the Yamaha YSP-1 and the Pioneer PDSP-1―the only two DAP-enabled devices on the market―are averaged together, the ASP is $20,750. For the purpose of the study, only the Yamaha YSP-1 product was considered. The selling price


of that unit is currently $1,299. This is a trickier consideration, as there is no competing product utilizing this technology. Many stereo component vendors and manufacturers of home theater in a box were approached for comment. Yamaha sent an owner’s manual and publicity pamphlet, but offered no further analysis. Then again, the technology is so new that either audio companies are taking a wait and see attitude about DAP or have market plans that are in their strategic best interests not to divulge. The Yamaha YSP-1 premiered in Japan in November 2004 but did not appear before March of this year in North America. Is it fair to anticipate imitators in the next ten months or that Yamaha may improve the product or re-introduce it at a lower price point for the critical Christmas rush? Clearly, both scenarios are possible, but our study assumes that neither will happen—the 2005 figures represented are for the Yamaha YSP-1. The dynamic of the DAP is that price reductions are likely to have some proportion to unit shipments. The anticipated trend is that as costs to manufacture the DAP are driven down, competing companies will see the opportunity and a lesser degree of risk. The highly competitive habits of electronics manufacturers are well-known and the competition itself becomes a driver.

DAP Integration into TVs Audio components represent a major opportunity for TV set manufacturers to offer a competitive advantage. The audio components of a television constitute less than 1 percent of the overall cost of the television. Sharp, for example, has big screen televisions that cost $1,000 to produce, but the silicon content of the audio takes less than $10 in production costs. By improving the sound quality, television manufacturers differentiate their product from that of the competition. 1 Limited is developing an integrated solution for video display units and has begun negotiations with unnamed corporations. 1 Limited anticipates that their integrated solution could be ready and be implemented within a year.

Less technically savvy consumers like the ease of plug and play. By integrating DAP into the flat screen panel or big screen there is one less adjunct for the digital living room. There is a larger point to be made: The ability to incorporate as many features as possible into one component makes interoperability with other components or with home servers much easier.



Table 6. DAP Integration into Video Display Units Device & Units in (1000s) 2005 2006 2007 2008 2009 2010Business Projectors 2,900 3,700 4,500 5,300 6,000 6,792 % DAP Penetration 0.0% 0.4% 0.7% 0.9% 1.0% 1.1%Units 0.0 15 31 48 57 7Plasma 4,225 6,210 7,860 9,467 11,014 12,814 % DAP Penetration 0.0% 0.7% 1.7% 2.6% 3.3% 4.0%Units 0.0 40 133 247 361 506LCD 13,912 21,787 29,717 37,359 44,547 53,118 % DAP Penetration 0.0% 0.4% 1.1% 1.7% 2.2% 2.6%Units 0 94 335 650 974 1399Rear Projector 5,695 7,159 8,502 9,557 10,928 12,496 % DAP Penetration 0.0% 0.4% 0.4% 0.7% 0.8% 0.8%Units 25 36 63 86 99CRT (27" and larger) 48,000 51,840 55,497 59,902 63,350 66,996 % DAP Penetration 0.0% 0.1% 0.2% 0.2% 0.1% 0.0%Units - 26 122 108 89 13 Total Units in 1000s 0 201 656 1115 1567 2094% Annual Growth N/A N/A 227% 70% 40% 34%

Average Selling Point N/A 688$ 542$ 447$ 366$ 303$ Total Revenue in Industry -$ 138,068$ 355,150$ 499,000$ 574,187$ 633,615$ % Annual Growth N/A N/A 157% 41% 15% 10%

% Total Penetration 0.0% 0.2% 0.6% 0.9% 1.2% 1.4%

7


Total Market for DAP The total market for DAP is presented below. One striking observation that In-Stat makes is that digital audio projectors as a stand-alone application will be the higher of the unit shipments sold until 2009 when Integrated DAP becomes the larger of the two segments. In-Stat sees a better market dynamic for Integrated DAP when the units can be added onto the form factor of high-end definition televisions at lower costs.

The explosion of big screen televisions and home theaters is an ongoing trend and, if anything, the rate of growth in this industry is conservative. Much has been made about the price as a driver and the expected semiconductor migration. However, if DAP truly pleases aficionados of home theater, its niche market will follow. If the product does not develop a reputation, there are viable audio alternatives that can satisfy the consumer needs.

Table 7. DAP Total Market (Integrated and Non-Integrated)

DAP Application Device & Units in (1000s) 2005 2006 2007 2008 2009 2010 CAGRStand-alone DAP Total Units Sold 47 87 159 288 483 758 75%

Average Selling Point 1,299$ 1,033$ 827$ 658$ 515$ 403$ -21%Total Revenue in Industry (In 1000s) 60,559$ 90,248$ 131,963$ 189,634$ 248,961$ 305,725$ 38%

Integrated DAP Total Units in 1000s - 201 656 1,115 1,567 2,094 N/AAverage Selling Point N/A 688$ 542$ 447$ 366$ 303$ N/ATotal Revenue in Industry (In 1000s) N/A 138,068$ 355,150$ 499,000$ 574,187$ 633,615$ N/A

All DAP Total Units in Industry (In 1000s) 47 288 815 1,403 2,050 2,852 128%Total Revenue in Industry (In 1000s) 60,559$ 228,316$ 487,113$ 688,634$ 823,149$ 939,340$ 73%

% Annual Growth 277% 113% 41% 20% 14%


Come On Feel the Noise: Digital Audio Projector Technology and

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