Registered: 21/05/1999
Posts: 5335
Loc: Cambridge UK
My understanding is this:
SDMI isn't relevant to the car player, because music is copied to it from a PC, not from another digital audio device. This process is specifically excluded from SDMI regulations by the Home Recording Act. Since the car player cannot be used as a source for digital audio recording (at least, not with any software that we supply) this isn't a problem either.
In any case, SDMI is a legal issue which affected empeg in exactly the same way as S3.