The entertainment options for motorists today are positively dizzying.

There was a time when a simple radio with one speaker provided all the listening pleasure a traveler could want — once the auto industry convinced the road-going public that music, news and talk shows could enhance the driving experience, rather than pose a distracting safety hazard.

The first factory-installed radio, according to Visteon Corp., arrived in 1929, had no volume control, had one horn-shaped speaker mounted to the doorpost and was so big it required reconstruction of the dashboard.

Today, the term “radio” has gone the way of the Victrola, replaced instead by the high-fidelity ring of “stereo.”

Remember 15 years ago when the compact disc player was a strange, fascinating device that made old music sound new? In '02, more than 80% of new cars and trucks sold in the U.S. were equipped with this new-fangled contraption, according to Ward's data. Many in-dash CD players are capable of holding up to six discs at once and are replacing the cumbersome magazines that not long ago were so big they had to be placed in the trunk.

Factor in the arrival of MP3 players, power amps, graphic equalizers, digital-signal processing, subwoofers and MiniDisc players, and it all has made for a veritable feast for the auditory senses in a few short years.

Yes, there are many technologies duking it out for the hard-earned dollars of sound-savvy consumers, and nowhere is that competition more fierce than in the sector that started the revolution of in-car entertainment more than 70 years ago: radio.

The tried-and-true technology that was born with fuzzy AM, then cleaned up its act with the first stereo FM broadcast in 1961 is poised for a technology showdown as two rival formats attempt to lay claim to radio broadcast supremacy.

In one corner is satellite radio, dominated by XM and Sirius, both of which have significant buy-in from auto makers and offer more than 100 channels of high-quality coast-to-coast digital sound, most of it commercial free, for between $10 and $13 a month.

Ford Motor Co. is offering Sirius satellite radio as a $329 dealer-installed option on 10 different '04 models, including Ford Thunderbird, Mustang and Explorer; Mercury Mountaineer; and Lincoln Navigator and LS.

Meanwhile, General Motors Corp. has some 400,000 '03 models on the road equipped with XM satellite radio and expects the service to be in 1 million GM vehicles by the end of March. The number of GM models offering XM will balloon from 25 in '03 to 43 in '04, covering 80% of its U.S. sales volume.

The outlook for conventional radio, broadcast locally, may appear bleak in the face of such heavenly competition, but purveyors of traditional AM/FM have a formidable trick up their sleeves: high-definition radio, known by its initials as “HD.”

Radio station owners have spent millions in recent years converting their properties to transmit signals in digital, rather than analog, formats. Listeners have been unaware of this transition because the signal doesn't sound any different on their existing receivers.

This fall, Kenwood U.S.A. Corp. is manufacturing 1,000 car audio units believed to be the first equipped to receive HD radio signals. Those units will be installed in vehicles immediately for field testing, according to iBiquity Digital Corp., the sole developer of the HD radio format.

Based in Columbia, MD, iBiquity licenses the broadcasters to use the format and the radio producers, such as Visteon, Delphi Corp., Panasonic, Alpine and others, to incorporate the chip necessary to decode the HD signal. Kenwood will begin selling the car audio units on the aftermarket in January, shortly after the Consumer Electronics Show, which has featured the technology for a number of years, iBiquity reports.

What's in store for consumers equipped with these new receivers is nothing short of remarkable. HD signals make traditionally muddy AM broadcasts sound like FM and FM stations sound like CDs. The sound quality matches that of satellite radio, which costs at least $10 a month.

Officials from iBiquity and the National Association of Broadcasters (NAB) say HD radio represents a new era in signal transmission and ensures that conventional — and consequently, free — radio will not only survive but thrive in the future.

“Every other communications medium is moving to digital, whether it's computers, television, cell phones, cable TV. We don't want to be yesterday's technology in tomorrow's world,” says Dennis Wharton, senior vice president of the NAB, a Washington-based lobbyist representing TV and radio stations.

“I think digital radio is a given,” Wharton says. “The only question is how quickly. That's something the market will decide.”

Wharton contends that many Americans listen to the radio for local information, including school closings, traffic and weather. Satellite radio is set up for nationwide service, leaving local content largely uncovered.

Whether both satellite and HD radio can survive remains to be seen.

For audiophiles, satellite radio, which offers everything from BBC to BB King, is alluring. “There are people who are fed up with commercials and like the customization of satellite radio, and they're happy to pay a premium for it,” says Frank Viquez, director of Automotive Electronics Research at Allied Business Intelligence Inc. of Oyster Bay, NY.

Viquez says commercial radio generally offers 20 minutes of advertising per hour, compared with six minutes per hour for XM. Sirius, which costs $13 compared with $10 for XM, maintains a commercial-free format. He expects satellite radio to be offered free for the first three months on many new vehicles — much in the way General Motors rolled out OnStar — but he sees consumers buying in much more readily than they have for OnStar.

“Once people listen to it, they don't mind paying for it,” he says. “It's transparent compared to OnStar, where people were afraid to push the button.”

Meanwhile, the intricacies of HD radio may be lost on consumers, Viquez suggests. “There will be a steep learning curve for consumers as to what the benefits are of HD radio,” he says. “It must be bundled into the cost of the car and given as a standard feature. For a person buying a car next year, it will be bad enough figuring out the difference between Sirius and XM let alone getting the dealer to explain what HD is.”

Although a self-confessed fan of satellite radio, Viquez doubts whether satellite radio can drive conventional AM/FM out of business. “There will always be people not willing to pay for radio,” he says. “They either can't or refuse to pay for it.”

As of the end of August, iBiquity reports 231 radio stations were licensed to carry HD signals. By the end of 2004, the number of licensed stations nationwide is expected to reach 645, meaning that 80% of the U.S. population will have access to HD radio broadcasts (up from 57% currently).

In Detroit, three stations have been piloting HD broadcasts for several months, and several more will be online with HD broadcasts by early 2004.

Later in 2004, iBiquity says at least one auto maker will install the first HD radio units as original equipment in new vehicles, for '05. The radio supplier will be Visteon, which reports the contract is with a European OEM for the North American market. Visteon, an expert in audio systems, has been in the market with digital signal processing since 1995.

Nick DiFiore, Visteon's senior manager-electronic product development, says he expects HD radio to saturate major U.S. markets within two years. “Eventually, analog will get phased out everywhere in the U.S.,” DiFiore says, expecting the transition within 20 years.

DiFiore sees strong acceptance of HD in urban areas where radio interference often can be a severe problem. “HD eliminates interference because digital broadcast has error correction built in” and compensates for data that has been lost, he says. The cost to auto makers converting from analog to HD radio will be minor, he says.

Wharton, of the NAB, says as consumers discover the benefits of HD radio, he expects them to swap out their analog tuners for digital units. “You need to buy a receiver to experience the full glory of HD radio,” he says. “I think cars will drive this migration at first, and then what will fall in line next will be home radio equipment.”

Still, '04 brings with it several new vehicles sporting satellite radio. The Acura RL sedan offers both XM and a voice-activated navigation system as standard equipment. The new Chrysler Pacifica offers Sirius satellite radio, courtesy of Delphi.

In Europe, the transition from analog to digital also has taken hold, as digital radio now is available in Germany, the U.K., Belgium and Denmark, reports Robert Bosch GmbH, which owns radio producer Blaupunkt GmbH.

Stephan Rehlich, head of marketing for Blaupunkt, says his company has sold 25,000 units of its first-generation Woodstock digital car radio, each for about E500 ($555), and that within five years most European consumers will accept digital radio as the successor to conventional FM radio.

Still, Blaupunkt, like others, is positioning itself for both HD and satellite radio. Within the next year, Blaupunkt says it will be on the market in the U.S. with a satellite radio receiver.

U.S. Installations — Sound and Entertainment Systems

Navigation System AM/FM Stereo AM/FM St. Cassette AM/FM St. CD Player AM/FM CD/MP3 AM/FM St. CD Changer AM/FM St. Cass./CD AM/FM/Cass CD Changer
2002 Domestic Lt. Truck 38,109 583,001 868,695 2,272,508 46,034 1,475,870 2,166,264 686,144
% TOTAL 0.5 7.2 10.7 27.9 0.6 18.1 26.6 8.4
2002 Domestic Cars 10,986 95,307 1,038,271 2,191,077 0 955,886 1,404,855 219,497
% TOTAL 0.2 1.6 17.6 37.1 0 16.2 23.8 3.7
Source: WardsAuto.com