Digital radio priced into competition

Digital radios priced at under £100 could be in the shops by Christmas following reductions in the size and price of key components.

Texas Instruments and British software firm RadioScape predicted the cost reductions after developing digital audio broadcast (DAB) receivers, a key component of digital radios, at a cost of just £30. The new receivers, cost between 35 and 40 per cent less than existing hardware-based technologies.

The two companies confirmed they are in talks with mass-market manufacturers to bring the cheaper radios to the high street, but refused to say which manufacturers.

Robin Shephard, head of sales and marketing at RadioScape, said the cheaper receivers would be a huge boost to the digital radio market in the UK, which until now has suffered poor consumer uptake. "Nine months ago people were asking whether digital radio would take off," he says. "People now realise it's very cost-effective. There is huge interest in the new technology."

But analysts remain sceptical about the mass-market appeal of digital radio. One leading analyst said: "It's like digital TV. The biggest hurdle is the huge market-base of analogue radios already out there: what is going to make the consumer buy a digital radio?"

Digital radio has been available in the UK since 1995, but the take-up of the service has been low, partly due to the high cost of digital receivers.

The cheapest digital radio on the market is the Psion Wavefinder, selling at £199, which works only when connected to a computer.

Another key factor holding back digital radio is the failure of car manufacturers to install digital radios in new cars.