Analysis of data demonstrating the slowing DAB radio receiver consumer market in the UK and statements by industry stakeholders that appear to contradict this evidence, written by Grant Goddard in January 2009.

1. DAB RADIO: UK RECEIVER
MARKET IS DEAD IN THE WATER
GRANT GODDARD
January 2009

2. DAB radio receiver unit sales fell by 10% year-on-year in the final quarter of
2008 in the UK, jeopardising the digital platform’s future as a mass market
replacement for analogue radio. This is the first quarter to have recorded
negative year-on-year growth since DAB sales records began six years ago. It
marks a significant setback for DAB stakeholders who had invested in a six-
week marketing campaign during the run-up to Christmas which promoted the
DAB platform heavily on BBC and commercial radio.
DAB RADIO RECEIVER SALES: QUARTERLY
39
53
183
111
102
134
510
245
205
294
681
338
287
308
796
382
299
363
964
490
357
366
865
162
153
179
121
101
119
5
17 13
4
18 21
28
19
1
-10
3834
40
0
250
500
750
1000
2003Q2
2003Q3
2003Q4
2004Q1
2004Q2
2004Q3
2004Q4
2005Q1
2005Q2
2005Q3
2005Q4
2006Q1
2006Q2
2006Q3
2006Q4
2007Q1
2007Q2
2007Q3
2007Q4
2008Q1
2008Q2
2008Q3
2008Q4
-20
0
20
40
60
80
100
120
140
160
180
200
quarterly DAB receiver sales ('000) [left axis] year-on-year change (%) [right axis]
[source: Digital Radio Development Bureau]
The Digital Radio Development Bureau, the trade body charged with
promoting the DAB platform, issued a press release today stating that the
“one ray of sunshine in a gloomy Christmas season for retailers was DAB
digital radio”. Its statement failed to mention the negative growth experienced
in what is traditionally the most critical quarter of the year for DAB radio sales.
Retail data collected by GfK for the DRDB clearly show the declining growth
rate of DAB radio sales having started in the second quarter of 2008, a trend
that is likely to have been further exacerbated by the ‘credit crunch’.
However, this disastrous sales performance has not prevented those UK
companies who are pushing the DAB platform from continuing to talk up the
success of their technology. Imagination Technologies, the parent company of
the Pure Digital brand of DAB radio receivers, today announced “record
export growth for 2008” and that it “had more than tripled overseas sales in
the year ending 31 December 2008”. Hossein Yassaie, Chief Executive of
Imagination Technologies, said: "Our strong overseas growth is further
evidence that DAB digital radio is gaining traction worldwide, and that the
transition to digital radio is inevitable."
However, overseas markets account for only 15% of Pure Digital sales (in the
half-year to end October 2008), so why did Imagination Technologies feel it
worthwhile to issue a press release for a relatively insignificant revenue

3. stream? It is probably because Imagination has to convince Lord Carter that
the government should back DAB radio technology as part of his
recommendations within the forthcoming 'Digital Britain' report. Imagination
Technologies has bet the farm on DAB becoming a successful, global
technology. If the UK government does not decide to force radio listeners to
migrate to DAB technology, Imagination could lose its shirt.
Imagination Technology’s interim results, published six weeks ago, admitted
that revenues from its Pure Digital DAB radio receivers were up only 2% year-
on-year, a result it attributed to “the downturn” in the UK market, which still
accounts for 85% of its global sales. Chief Executive Hossein Yassaie said
there had been a “UK slow-down” of DAB radio receiver sales and noted that
“the introduction of lower price radios and the onset of the recession meant
that the increase of the UK DAB market was less than 5%”. Pure Digital
Marketing Director Colin Crawford said this week: “Our [DAB] sales at
Christmas were good, though a little bit down on last year.”
Disappointing sales figures seem only to have encouraged the DAB
protagonists to push the boundaries of their government lobbying beyond the
limits of truthfulness. In its latest annual report, Imagination Technologies
claimed that “DAB has reinvigorated the now rapidly growing UK radio market
and effectively replaced analogue radio”. The latter statement is untrue.
According to industry data, only 21% of radio receivers sold in the UK during
the last twelve months were DAB, the remaining 79% being old fashioned
analogue. The overwhelming majority of radios in use in the UK remain
analogue, and DAB is nowhere near having “effectively replaced” them.
10,678
10,611
10,657
10,550
10,169
9,892
9,495
8,062
7,978
7,854
7,906
8,140
8,209
8,227
8,030
951
1,051
1,208
1,407
1,493
1,566
1,575
1,680
1,734
1,761
1,824
2,006
2,114
2,174
2,180
0
2,000
4,000
6,000
8,000
10,000
12,000
Q12005
Q22005
Q32005
Q42005
Q12006
Q22006
Q32006
Q42006
Q12007
Q22007
Q32007
Q42007
Q12008
Q22008
Q32008
analogue radio unit sales ('000) DAB radio unit sales ('000)
UK RADIO RECEIVER SALES: FOUR-QUARTER MOVING AVERAGE
8% 9% 10% 12% 13% 14% 14% 17% 18% 18% 19% 20% 20% 21% 21%
DAB receivers as percentage of total receiver sales
[source: Digital Radio Development Bureau]

4. Another corporate victim of over-enthusiastic government lobbying for DAB is
Frontier Silicon, whose Chief Executive Anthony Sethill was quoted in a
company press release issued in December 2008 as saying: “Digital radio is
here to stay, with DAB sets outselling analogue models by six to one”. Once
again, the industry data demonstrates this statement to be a blatant untruth,
and simply part of a desperate campaign by a clutch of inter-connected
companies to convince the government that DAB technology is already a
‘success’ in the UK.
Frontier Silicon is a privately owned UK company which describes itself as
“the world’s leading supplier of innovative semiconductor, module and
software solutions for digital radio and connected audio systems”. Its
electronic modules are in 80% of all DAB radios, making it “the number one
supplier to the DAB/DAB+ market”. In 2003, Imagination Technologies took a
17% equity stake and £1.25m of loan stock in Frontier Silicon. Imagination
has an 80% share of the worldwide market for the intellectual property on
DAB chips, which are then incorporated into Frontier Silicon’s modules.
However, in 2008, Imagination’s stake in Frontier Silicon had to be written
down from £7 million to £3.6 million, likely a result of slowing DAB take-up.
Another of Frontier Silicon’s ten investors is 'Digital One', the owner of the
UK’s only national commercial radio DAB multiplex. Digital One is controlled
by Global Radio Ltd, the UK’s largest commercial radio group, owner of one
national station, dozens of local stations and with stakes in the majority of
local DAB multiplexes. For Imagination Technologies, Frontier Silicon, Digital
One and Global Radio, a decision by the UK government to implement a
forced consumer migration to DAB radio would have a hugely beneficial
impact on their financial performances. For Imagination, which reported its
first profitable year in 2007/8 (£1.88 million pre-tax profits), it might even turn
the company’s forecast 2010/11pre-tax profit of £11.84 million into a reality.
More than a decade ago, the idea of a few bright sparks in the government’s
Department of Trade & Industry was that DAB radio technology could be
quickly made a hit in the home market, take-up would then spread globally,
and DAB would become a hugely profitable technological export for the UK.
This dream continues to be espoused by Intellect, the trade association of the
UK technology industry, which told Lord Carter in December 2008:
“The UK is the home of the major chip manufacturer of DAB silicon, as well as
two leading receiver manufacturers and, as such, is uniquely positioned to
benefit from the potential expansion of DAB not just in the UK, but globally.
We believe that this example of high value manufacturing could make a
substantial contribution to the UK’s future prosperity………….”
Unfortunately, the dream is not working out as planned. DAB take-up in the
UK market has proven laboriously slow and is in danger of being superseded
by newer technologies. Worse, overseas markets have shown little interest in
DAB. In Europe, only Denmark has a DAB market as developed as the UK’s.
Globally, Australia is about to launch DAB but the largest market, the US, has

5. chosen a different digital radio standard. Several countries have experimented
with DAB and since abandoned the technology.
With overseas markets looking less likely to prove a source of significant
export revenues, the UK technology companies pushing DAB have become
increasingly desperate to ensure that their products at least succeed in their
home market. Hence their desperation to persuade the government to force a
consumer switchover from FM to DAB. The average household owns six
radios, and a government-backed FM switch-off will force all six to be
replaced with shiny, new DAB radios. That’s a lot of potential revenue for a
select number of UK technology companies.
© 2009 Grant Goddard
Published by Radio Books
http://www.radiobooks.org
http://www.grantgoddard.co.uk