Radio is the hot tech frontier

Parrot's new Bluetooth-enabled desktop radio, the DS 3120, can serve as a complete digital music hub for the iPod generation.

Cue Acoustics is building its whole business around the Cue R1, our CES correspondent's top pick in the radio crowd.

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LAS VEGAS (FORTUNE Small Business) -- Get ready for what has got to be the all-time greatest sleeper of a tech trend: Radios, I kid you not, are making a comeback in 2008.

And we're not talking iPod-like portable thingies, but big, expensive desktop radios. Mark my words, they'll be downright cool in the coming year. Best of all, charting this new radio frontier is a fleet of innovative small businesses.

Radio has been rocked in recent years by a digital twister. The sector has faced down not one, but two competing satellite radio services, XM Satellite Radio (XMSR) and Sirius Satellite Radio (SIRI). It is also grappling with the rollout of new HD Digital Radio technologies, as well as the explosion of radio content on the Web.

But this new generation of desktop radios, taking its introductory bow here at the 2008 International Consumer Electronics Show (CES), is making great hay out of an odd confluence of factors.

The consumer electronics landscape is suddenly - yes, we can say it - rather bland.

There is no major new platform like, say, a Sony PlayStation 4 or a Microsoft Xbox 720 to dominate the discussion. Instead, this CES is all about the details: which configuration of liquid crystal displays will sell next holiday season, or what will be the bit rate for the rumored broadband iPhone? So in the absence of big news, the healthy niche of quality radios created by Bose Corp., Cambridge Sound Works, Tivoli Audio and many others is suddenly important.

The timing is perfect. Radios have wound up in the slip-stream of the ever-popular iPod. iPod buyers are an anomaly in the consumer tech world: They only start to spend money when they buy the thing. Parrot Inc., the Austin, Texas, consumer electronics maker, says each iPod purchase results in roughly $200 in additional spending on cases, earphones, docking stations and more. Consequently, just about every traditional gadget maker, from Denon to Altec Lansing, is building in features that essentially turn its units into peripherals for the portable player.

Big new table radios also benefit from a new generation of ubiquitous, low-cost home wireless standards. Until recently, wireless audio in the home was strictly limited to pricey, high-end systems such as the Sonos - but that's changing. Apple's new Leopard operating system supports the Bluetooth streaming media format, which allows for transmission of content over any enabled device. Meanwhile, everyone from Intel to the USB consortia is expecting the new Windows Home Server to create a new generation of wirelessly enabled - so-called "casually connected" - audio devices for the home.

"The desktop radio is being seen as an early beachhead in the home networking wars," says Edward Valdez, president of Parrot, which is showing a new Bluetooth-enabled wireless radio, the DS 3120 (suggested retail price $250), here at CES. "Home networking has been difficult to explain to the market. So the radio is seen as a form factor that the market can understand. "

Radios are feeling a strange brand of love radiated by the public's growing hatred for complex electronics. Innovative new models take full note of consumer distaste for too many features and difficult-to-operate equipment. Most new desktop systems, like the new line from Sonoro Audio ($289), sport ultra-simple designs with a half-dozen controls and few functions. It doesn't hurt that the device, which the Koln, Germany-based 25-employee firm is launching in the United States this week, looks like something you would buy at a better furniture store.

But my pick of the new radio litter comes from tiny Somerville, Mass.-based Cue Acoustics. This three-person, self-financed startup is betting its entire future on a radio: the Cue R1 Radio ($399). The R1 is the brainchild of Cue's president, industrial designer Samuel L. Millen. It takes great advantage of the latest in miniaturization of audio components to deliver a radio of utmost quality and good looks. Millen has built the Cue with four - count 'em, four - independently amped channels at 25 watts each. That's a borderline ludicrous 100 watts of power for a radio the size of a small shoe box.

There is no denying the results. The unit uses advanced tuner technology that makes it easy to control the high-quality Philips radio within. The whole package is wrapped in an attractive black enclosure that supports an iPod dock on top.

"We are betting that a beautiful looking, beautifully sounding radio will be a rifle shot in the market," Millen said. "Even better, it only has three buttons. Anybody can run it."

The units being shown this week aren't the only radios making news. National Public Radio and Harris Electronics announced a new standard for radios for the hearing impaired starting in 2008. That's right, a radio for the deaf. And Grundig (Eton) is shipping a new radio be to used in emergencies, the FR 1000 Voicelink.

At this rate, what's next? The return of horse-drawn carriages?