OTHER TECH

Track 2: Mr. Blue Sky

Every dark cloud has its silver lining, and those CDs are nothing if not silver (with rainbow light reflections to boot). One slight statistic might offer encouragement. Pali Research's Rich Greenfield notes that CD sales in the first quarter of 2006 were down only 5.5%, compared with 9% in the first quarter of 2005 - a slower rate of decline than expected.

Plus, at least a few manufacturers are still banking on the CD's survival. Jeff Talmadge, Denon's director of product development and systems integration, says that his company is considering bringing to America a high-end CD player like the one Denon sells for $3,800 in Japan. (All of Denon's current U.S. players also play DVDs.) "There's still a very loyal two-channel market," Talmadge says. "We might bring back a CD player in the $1,000 to $2,000 range. We get requests for it all the time."

Sony - a co-creator of the CD along with Philips - also stands by the format. "Although portable and mobile CD player sales have declined somewhat, it still represents a substantial portion of the business," says Allan Jason, VP of marketing for personal audio and mobile products. "In particular, the car CD player has continued to evolve to become a convergence product that also supports MP3 playback and provides integration and control for digital music devices."

Philips has faith in the format, too - at least for now. "We believe the compact disc will be around for at least another 5 to 10 years," says Dr. Sorin G. Stan, the company's technology cluster manager for audio, video, and data-storage applications. And for certain business uses, the format has no equal. With its cheap cost of manufacture, "You can glue a CD onto a magazine," notes Stan. "That business model cannot be replaced by hard disk or solid-state."

JVC is similarly supportive. "We still see the format as viable," says Steve Howcott, the company's general manager of consumer audio. "There's still an audio customer out there who likes high fidelity and the bandwidth that CD gives you."

The final removal of the nails from the CD's coffin comes from Paul Bishow, VP of marketing for new formats at Universal Music Group's eLabs, which investigates and develops new technologies for the music business. Says Bishow, "Even with CD sales slowing, and the new online business models growing dramatically, CDs are still a driving force for the music business and will be for the foreseeable future."