Philips Electronics Inc. said Thursday it will launch an Internet radio system in the U.S., enabling users to choose from more than a thousand radio stations around the world with a mini stereo system.

The unit, about the size of a large boombox, can function without a personal computer, though it needs a broadband connection, either through a digital subscriber line (DSL) or cable.

The company unveiled the system at the Consumer Electronics Show in Las Vegas, saying it is the first "true audio convergence product combining the Internet with a well-established audio product."

The unit is expected to sell for around US$500 and will be available in the third quarter of this year.

Not PC-Bound

The Internet audio hi-fi system features 240 watts of power and has a three-CD changer and dual cassette decks, and can also be used as a playback device for MP3 files stored on home PCs. Users can sort music by genre, region or language. Since the device, called an FW-i1000, is connected to a broadband outlet, it is always on and offers high-quality audio, Philips said.

Through a licensing agreement with iM Networks Inc., Philips said it is offering iM's tuning service to its customers for free. Users get access to "Best of Planet" content on the iM band, plus thousands of Internet radio stations around the world. Philips executives said the system is the first of its kind.

"It's different because ours is a true mini-system," Philips' spokesperson Lori LeRoy told NewsFactor Network. "We're taking a type of audio product Philips is very well-known for and has a long history with and adding the Internet radio component."

"You don't have to do anything on your PC," LeRoy added. "It also allows you to take Internet music out of your PC and play it anywhere. You don't have to be tied to your computer."

Help for the Homesick

Philips, based in the Netherlands, said it is introducing the system in the U.S. because of its high broadband penetration rate. It said it plans to introduce the system in Europe next year.

"The growth of Internet radio has created a consumer demand for devices that can access and play Internet radio," said Philips' spokesman Andy Mintz.

"It is estimated that more than 3.5 million college students listen to streaming audio each week. Other studies show that Internet radio usage has more than doubled since 1999."

Studies have shown that as many as 66 percent of Internet users in the U.S. listen to online music once a week. Philips also pointed out that millions of foreigners living in the U.S. are willing to pay to listen to radio stations from their home countries.

Booming Industry

Online music is a booming industry, and most media companies are making a push in the market. AOL Time Warner is planning a music subscription site, and the five major record labels all have various alliances involved in some way.

Internet portal and media network Yahoo! last month said it plans to buy Webcasting company Launch Media Inc. for $12 million to add to its existing properties.

Philips on Buying Spree

One of the world's largest electronics companies, and the biggest in Europe, Philips has been on an acquisition spree lately. Earlier this week it agreed to acquire Marconi's Medical Systems in the U.S. for $1.1 billion.

That deal, expected to be closed in the fourth quarter of this year, will make Philips the world's second largest manufacturer of medical diagnostic equipment, such as X-ray and ultrasound equipment and magnetic resonance imaging systems.