HOME THEATERS

TABLE OF CONTENTS

I. INTRODUCTION, METHODOLOGY & PRODUCT DEFINITIONS

II. A US MARKET REPORT

1. Introduction II-1

• Home Audio Equipment: An Overview II-1
• Table 1: World Market for Audio Products (2004-2006): Percentage Share Breakdown of Volume Sales by Leading Companies- Sony, Matsushita, Philips and Others (includes corresponding Graph/Chart). II-1
• Table 2: North American Market for Home Audio Systems (2003-2006): Breakdown of Annual Sales Revenue (in US$ Million) (includes corresponding Graph/Chart) II-2

2. The HTiB Market II-3

• Market Highlights II-3
• HTiB Market: An Overview II-4
• Outlook II-4
• Market Analytics II-4
• Table 3: US Recent Past, Current & Future Analysis for Home Theater-in-a-Box Market Independently Analyzed with Annual Sales in Thousand Units for the Years 2000 through 2010 (includes corresponding Graph/Chart) II-4
• Market Issues and Trends II-4
• Plunging Prices of Digital TV II-4
• Escalating DTV sales II-4
• Demand for Wider DTVs II-4
• Projection TV Drives DTV Market II-5
• Flat-Panel TV Attracts Larger Consumer Base II-5
• In-Home Theatre Systems Erode Demand for Hi-Fi systems II-5
• New Audio System for Home Theaters II-5
• Competitive Landscape II-5
• Table 4: US Market for HTiB (2004-2006): Percentage Share Breakdown of Volume Sales by Major Players- Sony, Bose, RCA (Thomson), Kenwood, Panasonic and Others (includes corresponding Graph/Chart) II-6
• Table 5: Canadian Market for Consumer Electronics (2004 & 2005): Breakdown of Volume Sales by Category- DVD Players, Color TV, VCRs, HTiB Systems, Camcorders, Rear Projection TV, Combination TV and Flat Panel TV (LCD & Plasma) (in '000 Units) (includes corresponding Graph/Chart) II-6
• Displays Market II-6
• Table 6: Global TV Shipments (2003 & 2004): Breakdown of 27-Inches and Larger Units by Type - CRT TV, Front Projection, LCD TV, Plasma TV, RP - CRT and RP - Micro (In '000 Units) II-7
• Table 7: US Market for Home Display (2003 & 2004): Breakdown of Volume Shipments by Type - Analog Direct View, Digital Direct View, CRT RPTV, Plasma TV, Digital LCD TV (In Units) (includes corresponding Graph/Chart) II-7
• Table 8: Consumer Preferences for Future TV Purchases (2004 E) II-8
• Increasing Number of Households Prefer Home Theater Systems II-8
• Table 9: Home Theater Penetration in the US (2001-2005) (includes corresponding Graph/Chart) II-8
• Convenience: A Major Factor II-8
• HTiB: Dominating the Digital Living Room II-9
• Replacement of Old Products with New Ones Fuel Sales Growth II-9
• Korean Electronics Giants to Focus on Home Theatre Market II-9

3. Consumer Behavior II-10

• Buyer Behavior for Audio Systems II-10
• Table 10 : Home Theater Consumers by Age Group: (2005 E)(In %) (includes corresponding Graph/Chart) II-10
• Factors Influencing the HTiB Market II-10
• Types of Home-Theater Consumers II-10
• First-Time Buyers II-10
• DIY II-11
• Old Component Owners II-11

4. Market/Product Trends II-12

• Universal Players: An Extension of DVD Players II-12
• Popular Models of Universal Players/HTiB Systems II-12
• Decreasing Prices Increase Sales II-12
• Table 11: World HTiB Market (2002-2004): Percentage Breakdown of Volume Sales by Type of DVD Device (includes corresponding Graph/Chart) II-13
• Trend Towards Networked/ Converged Audio Products II-13
• New Feature Packed Systems to Lead HTiB Market II-13
• HTiBs Move Towards Increased Simplicity II-14
• DVD Recording Comes to HTiBs II-14
• Table 12: World DVD Recorder Unit Shipments: (2003-2006) (In thousand units) (includes corresponding Graph/Chart) II-15
• Newer Surround Sound Options Coming to the Fore II-15
• Home Theatre Systems to go Wireless II-15
• Problem Facing Wireless Components II-16

5. Product Overview II-17

• Home-Theater-In-A-Box: An Introduction II-17
• Components of a Home-Theater-In-A-Box II-17
• Audio/Video Source (DVD-Audio/Video player, SACD player, LD player, VCR) II-17
• Table 13: US Market for DVD Players (2004-2006): Percentage Share Breakdown of Revenues by Distribution Channel -Discount Retailer, Mass Merchandiser, Specialty Store, Direct Sales and Independent Retailer(includes corresponding Graph/Chart) II-18
• DVD Formats II-18
• DVD-5 II-18
• DVD-10 II-18
• DVD-9 II-18
• DVD-18 II-18
• Table 14: World Home and Portable DVD -Audio Players Market (2003-2006) (Sales in '000 units) (includes corresponding Graph/Chart) II-19
• AV Receiver/Tuner/Amplifier II-19
• Table 15: World Market for Home and Portable DVD-Audio Players: (2004-2006) (Units in '000) (includes corresponding Graph/Chart) II-19
• Surround Speaker System II-19
• Displays: A Major Component of Home Theaters II-20
• An Overview of the Various Display Technologies II-20
• CRTs (Cathode Ray Tube) II-20
• Rear Projection TVs II-20
• Plasma Panels II-21
• LCD Screens II-21
• LCD Projectors (Home Theater) II-21
• Audio/Video Receiver Acts as Control Center II-21
• Multiple Speakers Impart Rich, Room-Filling Sound II-22
• Conversion of Old Entertainment Components into a Home-Theater II-22
• Room Type and Size is not a Limiting Factor for Home Theater Sound II-22
• HTiB Vs. Separates II-22
• An Overview of Surround Sound Technologies/Formats II-23
• Dolby Pro Logic II-23
• Dolby Pro Logic II II-23
• Dolby Pro Logic IIx II-24
• Dolby Digital II-24
• Dolby Digital EX II-24
• DTS II-24
• DTS NEO 6 II-24
• DTS-ES II-24
• THX II-24
• THX Surround EX II-25

6. Distribution Channels II-26

• Specialty Stores II-26
• Department Stores, Discount Stores or Catalog Showrooms II-26
• Manufacturers To Gain Direct Access To Consumers Through Internet Distribution II-26
• Traditional Retailer Services Continue to Play Crucial Role II-26

7. Select Information on Other Markets II-27

• Japan II-27
• Western Europe II-27
• Table 16 : Home Theater Penetration in Western Europe:(2002-2005) (includes corresponding Graph/Chart) II-27
• Italian Home Theater Market II-27
• Home Entertainment finds Favor in Households II-27
• Table 17: Penetration and Installed Base of DVD
• Players in Italy: (2003-2005) (In Thousand Units) (includes corresponding Graph/Chart) II-28
• Price Differentials in Italian Video Market - A Perspective in the Recent Past II-28
• Table 18: Price Differentials of Various Video Sources in Italy: 2000-2002 (In Euros) - DVD Player, DVD Combination, DVD Recorder, VCR II-28
• Table 19: Italian Market for Home Theater Products (2002-2004): Breakdown of Volume Sales by Type -DVD Players Only, DVD Combination (VHS+DVD,) DVD Recorders and Home Theatre Systems (In Thousands Units) (includes corresponding Graph/Chart) II-28
• Asia Pacific II-29
• Taiwan II-29
• Home Theater Market in Taiwan II-29
• Table 20 : Home Theater Products Demand in Taiwan:(2003 & 2004) II-29
• South Korea II-29
• South Korean Home Theater Market II-29

8. Product Innovations/Introductions II-30

• CY Signature Unveils a Range of High-End Home Theater Solutions II-30
• AMX Corporation Launches Advanced Audio/Video Entertainment Systems II-30
• Creative Technology to Introduce Home TheaterConnect DTS-610 II-30
• Samsung Unveils HT-AS601 and HT-AS600 HTiB Systems II-30
• LG Electronics Introduces MyHomNet, a New Digital Home Theatre II-31
• Matsushita Electric Unveils SC-HT03 2.1-channel system II-31
• Denon Ltd Introduces 2.1-channel D-M51DVS II-31
• Pioneer Corp Launches 5.1-channel HTZ-323DVSystem II-31
• Hitachi Rolls Out Home-1, an Entry Level Projector for Home Theatre II-31
• Epson Designs Epson Home 10, a Home Theater Projector II-31
• Philips to Release a MX-6000i DVD home theater system and Streamium TV II-31
• Niro1.com to Unveil Niro System 400 II-32
• Matsushita Electric Introduces SC-HT03 2.1-Channel System II-32
• Denon to Launch 2.1-Channel D-M51DVS II-32
• Samsung to Expand HTiB Range II-32
• Samsung India Launches Wireless Home Theater-in-a-Box II-32
• Samsung's eXpandable Home Theater II-33
• JVC Launches HTiB with DVD Recorder II-33
• Product Innovations/Introductions in the Recent Past II-33
• Sony Unveils the DVD Dream System Range II-33
• Altec Lansing Unveils Powered Audio System II-33
• Onkyo Launches the Stress Buster II-34
• Denon introduces the 2-Speaker, 5-Channel HTiB II-34
• Samsung Introduces New 'Advanced Home Theater' II-34
• Philips Launches HTiB with DVD Recorder II-34
• Pioneer to Launch HTiBs with Universal Players II-35
• Philips Develops Nexperia II-35
• HTiBs with Multiple Functions II-35
• Panasonic Enhances HTiB Lineup II-35
• Pioneer to Unveil High-Performance
• AV Multi-Channel Amplifier II-35
• Sharp Launches Two New DVD Home TheaterSystems in Japan II-36
• Panasonic Launches HTiBs with DVD-Audio II-36
• Yamaha to Launch DVD-Audio HTiBs II-36
• Samsung Launches HTiB Systems II-36
• Motorola Launches the DCP501 II-37
• Tripath and APEX Launch Digital Amplifier basedHome Theater System II-37
• LG Introduces DVD Combi for Home Theater II-37
• JBL Cinema ProPack 600 Launched II-37

9. Recent Industry Activity II-38

• SLS International Takes Over Evenstar, Inc. II-38
• Home Theater Store Acquires Sounds Like Music Inc II-38
• Mitsubishi Develops New Technology
• for Home Theatres II-38
• Duocom Starts Home Theatre Division II-38
• Industry Activity In The Recent Past II-39
• Aiwa to Rejuvenate its Image in the US II-39
• Marantz and DENON Merge to form D&M Holdings II-39

10. Focus on Select Global Players II-40

• Bose Corp (US) II-40
• D&M Holdings (Japan) II-40
• Hitachi Ltd (Japan) II-40
• Kenwood Corporation (Japan) II-41
• Koninklijke Philips Electronics NV (Netherlands) II-41
• LG Electronics Inc (South Korea) II-42
• Matsushita Electric Industrial Co Ltd (Japan) II-42
• JVC (Japan) II-42
• ONKYO Corp (Japan) II-43
• Pioneer Corporation (Japan) II-43
• Samsung Electronics Co Ltd (South Korea) II-43
• Sanyo Electric Co Ltd (Japan) II-43
• Sharp Corp. (Japan) II-44
• Sony Corporation (Japan) II-44
• Aiwa Co Ltd (Japan) II-45
• Yamaha Corporation (Japan) II-45

III. COMPETITION

• 1. Alco Holdings Ltd. (Hong Kong) III-1
• Table 21: Annual Sales Comparison by Geographical Region: 2003-2004 (In HK$ million) III-1
• 2. Apex Digital, Inc. (USA) III-6
• 3. Bose Corporation (USA) III-8
• 4. Boston Acoustics, Inc. (USA) III-13
• 5. Cambridge SoundWorks, Inc . (USA) III-15
• 6. Crestron Electronics, Inc. (USA) III-21
• 7. D&M Holdings, Inc. (Japan) III-25
• D&M Holdings US, Inc. (USA) III-26
• Denon Ltd. (Japan) III-27
• Denon Electronics (USA) LLC (USA) III-28
• 8. Daewoo Electronics Co., Ltd. (Korea) III-30
• 9. Eastern Asia Technology Ltd. (China) III-35
• 10. Epson America, Inc. (USA) III-36
• 11. Genelec Oy (Finland) III-38
• Genelec, Inc. (USA) III-43
• 12. Himage Holdings Ltd. (China) III-45
• 13. Hitachi Ltd. (Japan) III-47
• Table 22: Annual Sales Analysis: 2003-2005 (In ¥ billion) III-49
• Table 23: Annual Sales Analysis By Segment: 2004-2005 (In ¥ billion) III-49
• Table 24: Annual Sales Analysis By Geographic Region: 2004-2005 (In ¥ billion) III-49
• Table 25: Annual Sales Analysis by Business Segment: 2003-2004 (In ¥ billion) III-50
• Table 26: Annual Sales Comparison by Geographic Region: 2003-2004 (In ¥ billion) III-50
• 14. HKC Worldwide Electronic Co., Ltd. (China) III-55
• 15. Infinity Systems, Inc. (USA) III-57
• 16. Kenwood Corporation (Japan) III-59
• Table 27: Annual Sales Analysis: 2003-2005 (In ¥ billion) III-60
• Table 28: Annual Sales Analysis by Business Segment: 2004-2005 (In ¥ billion) III-60
• Kenwood USA Corporation (USA) III-65
• 17. Kinyo (USA) III-66
• 18. Koninklijke (Royal) Philips Electronics NV (The Netherlands) III-67
• Table 29: Half-Yearly Sales Analysis: 2004-2005 (H1) (In € billion) III-71
• Table 30: Half-Yearly Sales Analysis by Division: 2004-2005 (H1) (In € billion) III-71
• Table 31: Half-Yearly Sales Analysis by Geographical Region: 2004-2005 (H1) (In € billion) III-72
• Table 32: Annual Sales Analysis: 2002-2004 (In € billion) III-72
• Table 33: Annual Sales Analysis by Division: 2003-2004 (In € billion) III-72
• Table 34: Annual Sales Analysis by Geographical Region: 2003-2004 (In € billion) III-72
• Philips Consumer Electronics North America (USA) III-84
• 19. Lexicon (USA) III-85
• 20. LG Electronics (South Korea) III-87
• Table 35: Annual Sales Analysis: 2002-2004 (In Won trillion) III-88
• Table 36: Annual Sales Analysis by Segment: 2003-2004 (In Won trillion) III-89
• Zenith Electronics Corporation (USA) III-95
• 21. Matsushita Electric Industrial Co., Ltd. (Japan) III-97
• Table 37: Annual Sales Analysis: 2003-2005 (In ¥ trillion) III-100
• Table 38: Annual Sales Analysis by Segment: 2004-2005 (In ¥ trillion) III-100
• Table 39: Annual Sales Analysis by Geographical Region: 2004-2005 (In ¥ trillion) III-101
• Table 40: Annual Sales Analysis by Segments: 2003-2004 (In ¥ trillion) III-101
• Table 41: Annual Sales Analysis by Geographic Region: 2003-2004 (In ¥ trillion) III-101
• Panasonic - Matsushita Electric Corporation Of America (USA) III-108
• 22. Mecmar, Inc. (Taiwan) III-115
• 23. Mitsubishi Electric Corporation (Japan) III-116
• Table 42: Annual Sales Analysis: 2002-2004 (In ¥ billion) III-118
• Table 43: Annual Sales Analysis by Business Segment: 2003-2004 (In ¥ billion) III-118
• Table 44: Annual Sales Analysis by Geographic Regions: 2003-2004 (In ¥ billion) III-118
• Mitsubishi Electric & Electronics USA, Inc. (USA) III-123
• 24. Motorola, Inc. (USA) III-125
• Table 45: First Quarter Sales Analysis: 2004-2005 (Q1) (In US$ billion) III-127
• Table 46: First Quarter Sales Analysis by Segment: 2004-2005 (Q1)(In US$ billion) III-127
• Table 47: Annual Sales Analysis: 2003-2004 (In US$ billion) III-127
• Table 48: Annual Sales Analysis by Business Segment: 2003-2004 (In US$ billion) III-128
• Table 49: Annual Sales Analysis by Geographic Region: 2003-2004 (In US$ billion) III-128
• 25. Nakamichi Corporation (Japan) III-154
• 26. Niro1.Com, Inc. (Japan) III-156
• Niro1.Com USA, Inc. (USA) III-157
• 27. Norcent Technology, Inc. (USA) III-158
• 28. Onkyo Corporation (Japan) III-159
• Table 50: Annual Sales Analysis: 2002-2004 (In US$ million) III-159
• Onkyo China Ltd. (China) III-164
• Onkyo Europe Electronics GmbH (Germany) III-165
• Onkyo USA Corporation (USA) III-167
• 29. Pioneer Corporation (Japan) III-168
• Table 51: Annual Sales Comparison: 2003-2005 (In ¥ million) III-169
• Table 52: Annual Sales Comparison By Segment: 2004-2005 (In ¥ million) III-169
• Table 53: Annual Sales Comparison By Geographic Region: 2004-2005 (In ¥ million) III-169
• Table 54: Annual Sales Comparison By Segment: 2003-2004 (In ¥ million) III-169
• Table 55: Annual Sales Comparison By Geographic Region: 2003-2004 (In ¥ million) III-170
• Table 56: Quarterly Sales Comparison: 2003-2004 (In ¥ million) III-170
• Pioneer Electronics (USA), Inc. (USA) III-175
• 30. Samsung Electronics Co., Ltd. (South Korea) III-179
• Samsung Electronics America, Inc. (USA) III-185
• 31. Sanyo Electric Co., Ltd. (Japan) III-190
• Table 57: Annual Sales Analysis: 2003-2005 (In ¥ trillion) III-192
• 32. Sharp Corporation (Japan) III-196
• Table 58: Annual Sales Analysis: 2003-2005 (In ¥ trillion) III-198
• Table 59: Annual Sales Analysis by Segment: 2004-2005 (In ¥ trillion) III-198
• Table 60: Annual Sales Analysis by Geographical Region: 2004-2005 (In ¥ trillion) III-198
• Table 61: Annual Sales Analysis by Segments: 2003-2004 (In ¥ trillion) III-199
• Table 62: Annual Sales Analysis by Products: 2003-2004 (In ¥ trillion) III-199
• Table 63: Annual Sales Analysis by Geographical Region: 2003-2004 (In ¥ trillion) III-199
• Sharp Electronics Corporation (USA) III-207
• 33. Shenzhen Mizuda Electronic Co., Ltd. (China) III-208
• 34. Shenzhen Richtec Industry Co., Ltd. (China) III-208
• 35. Sherwood America, Inc. (USA) III-209
• 36. SIM2 Multimedia SpA (Italy) III-211
• 37. Sony Corporation (Japan) III-214
• Table 64: Annual Sales Analysis: 2003-2005 (In US$ billion) III-216
• Sony Australia Limited (Australia) III-221
• Sony Corp of America (USA) III-223Table 65: Annual Sales Comparison: 2002- 2004 (In US$ billion) III-224
• 38. Thomson RCA (USA) III-226
• 39. Thomson SA (France) III-230
• Thomson Consumer Electronics (USA) III-237
• 40. Toshiba Corporation (Japan) III-238
• Table 66: First Quarter Sales Comparison: 2004-2005 (Q1) (In ¥ billion) III-241
• Table 67: First Quarter Sales Comparison by Segment: 2004-2005 (Q1) (In ¥ billion) III-241
• Table 68: First Quarter Sales Comparison by Region: 2004-2005 (Q1) (In ¥ billion) III-241
• Table 69: Annual Sales Comparison: 2002-2004 (In ¥ billion) III-242
• Table 70: Annual Sales Comparison by Business Segent: 2003-2004 (In ¥ billion) III-242
• Table 71: Annual Sales Comparison by Geographic Region: 2003-2004 (In ¥ billion) III-242
• Toshiba America, Inc. (USA) III-247
• 41. Tripath Technology, Inc. (USA) III-252
• 42. Victor Company of Japan Limited (JVC) (Japan) III-254
• Table 72: First Quarter Sales Analysis by Segment: 2004-2005 (Q1) (In ¥ billion) III-255
• Table 73: Annual Sales Analysis: 2002-2004 (In ¥ billion) III-255
• Table 74: Annual Sales Analysis by Segment: 2003-2004 (In ¥ billion) III-255
• Table 75: Annual Sales Analysis by Geographic Region: 2003-2004 (In ¥ billion) III-256
• JVC Company of America (USA) III-258
• 43. Yamaha Corporation (Japan) III-262
• Table 76: First Quarter Sales Analysis: 2004-2005 (Q1) (In ¥ billion) III-264
• Table 77: Annual Sales Analysis: 2002-2004 (In ¥ billion) III-264
• Table 78: Annual Sales Analysis by Product Segment: 2003-2004 (In ¥ billion) III-264
• Table 79: Annual Sales Analysis by Geographical Region: 2003-2004 (In ¥ billion) III-264
• Yamaha Electronics Corporation (USA) III-267