Apple's new 16.7Ib iPod speakers may not be the most portable of its products, but do signal a new battle in the living room - and it's not just with Microsoft.

A Wall Street Journal report confirms that with the success of digital music player - well, iPods - sales of traditional stereo systems are being savaged.

Home audio makers feel the hurt

"Last year, retail sales of home audio equipment, including stereo system components and surround-sound rigs, dropped nearly 18 per cent, to 10.2 million units, according to market-research firm NPD Group," the report explains.

"In the same period, sales of portable digital players like Apple's iPod more than tripled, to 22.4 million units in 2005, from 7.1 million in 2004," it added, citing figures from the Consumer Electronics Association. Another statistic shows that 34 per cent of US consumers use a computer as their primary playback system.

The move is leading audio manufacturers to begin to introduce elements that support digital music devices, with traditional mainstays such as Denon, Bose or Harmon Kardon already offering external speakers for iPods and other players.

Is 128K really HiFi?

Many stereo makers have also begun working with new technologies designed to improve the sound of digital music files.

Apple defines quality music as songs in AAC format encoded at 128k. In contrast, uncompressed audio as stored on a CD has a bit rate of 1411.2k.

While Apple's choice of file is satisfactory to many users, who can't hear the difference, some audiophiles complain at lost nuances and warmth within compressed tracks.

Musicians also complain that digital music lacks features such as 5:1 surround sound support, and are angry that with technology available to make downloadable music available in an uncompressed format, industry leader Apple persists in maintaining its 128k dictat.

Apple builds, claims its market

Delivering digital sound externally is clearly a major market mover in the iPod accessories industry. Analysis from NPD claims that 26.5 per cent of spending within the iPod add-on market is for speaker systems.

"If you're an iPod accessories maker, Apple's announcement has to make you nervous,' Rob Enderle, principal analyst for the Enderle Group told the Chicago Tribune. "The accessories market is clearly very lucrative, and Apple will be getting more aggressive.'"