By Lisa Johnston
New products on display at the American International Toy Fair, held in N
Convergence — yes, the word that in the late 1990s became chic to the point of abuse — is again in vogue as new pocket-sized devices are being spawned that deliver any combination of capabilities.
These devices can't be easily categorized because you have PDAs that call, phones that game and both that play music. Then there are phones that take pictures, digital cameras that play music and gaming devices that show movies.
The most important, most fundamental change is the infusion of entertainment capabilities into the mobile phone platform. Recent reports have shown industry players are experiencing a working convergence, as they align with one another to deliver combo devices: Motorola and Apple are partnering on an iPod-style mobile phone; Nokia is dancing with Microsoft to enable consumers to play songs and ringtones on their phones using a version of Microsoft's media player; and Sony Ericsson is working with Sony to develop a digital-music-playing phone that will carry the audio-renowned Walkman brand.
Far beyond the impact on lifestyle, this movement toward converged telephony and entertainment changes things. It changes the way we all think about mobility. It changes the core attributes and technologies that are required to deliver the new mobile experience. It even changes which industry players can deliver in this new paradigm, particularly in the area of accessories. All of these shifts pose a real challenge for retailers. And it presents opportunity for those who solve it well.
Applications such as MP3 playback, games and videos — all of which used to be associated with computing and home entertainment — are quickly becoming key differentiators in the marketing of mobile phones and their cousins. Accessories, from colorful faceplates to travel kits to power adapters, have long helped to personalize and optimize the mobile phone experience for consumers — and boost margins and average basket-value for retailers. However, the converged devices will demand a new category of accessories that deliver premium audio performance, comfort and ergonomics, industrial design prowess and a strong entertainment brand. Headsets are one such example of an accessory that will require dramatic change in order to deliver on the promise of mobile entertainment.
Today, a good headset makes the mobile phone experience more convenient. A better headset makes communication more comfortable and comprehensible. Perhaps the best headsets have even become a way for people to express their interpretation of 21st century fashion.
Tomorrow, they ought to be fashionable enough that market segments other than technophile road warriors actually find them fashionable. They should be wireless — but still interference-free, secure and able to last as long as the phone battery. They have to instantly transform from an able communication device to a convincing entertainment device. They need to deliver stereo sound worthy of the phone's playlist. And, they must fit well enough to enjoy wearing them throughout Ray Charles' “Genius & Soul,” not just a quick check of voice mail.
The engineering challenges in manufacturing such multifaceted gems are significant. Refined acoustic technologies that optimize voice clarity as well as provide the range, richness and responsiveness of high-quality stereo audio will be developed by a select set of audio experts. And getting that same performance from wireless technologies such as Bluetooth adds complexity that will reduce the field further.
The retailer challenge is enormous, too. If they haven't already, stores ought to deal with layout and traffic-flow issues that include: if and how mobile phones are adjacent to PDAs and nearby MP3 players, and perhaps even close to digital cameras or portable gaming. Retailers need to sort out where to place and how to market this growing category of converged entertainment/communication devices. Perhaps there are lessons in how a multifunction category grew out of the dedicated printer, fax and copier product lines, though that evolution may have been less radical.
Part two of the retailer challenge is in locating and marketing accessories for mobile devices, especially if they address more than one platform or specifically complement converged devices. Clearly, buyers of Bluetooth-enabled, MP3-playing, picture-taking smartphones see the value in such premium capabilities. They will surely see the value in high-end accessories such as wireless stereo headsets that make the most of those capabilities —but only if they understand their choices and the impact on performance.
Salesperson training is critical. Reps need to understand that if someone wants performance with music, a standard $20 one-ear headset will not suffice. In-store merchandising is essential. A point-of-purchase display that details a device's features, and maps it to appropriate accessories that can help deliver enhanced value, can be a great selling tool. Finally, the accessories need to be presented alongside the devices for which they're designed. If not, only the most educated consumers will be able to make the connection, and those consumers may be more likely to buy online.
Challenge is opportunity. More powerful devices demand more technically sophisticated accessories. And more sophisticated accessories command higher prices, making them more lucrative for retailers and vendors —while ultimately delivering a worthy experience for customers. Time and again, consumers have proven their readiness to reach into their wallet to purchase value-added accessories for their mobile devices. As mobile devices offer more every-minute entertainment value vs. everyday communication value, consumers will spend accordingly. The Consumer Electronics Association is projecting a $10 billion accessories market in 2005.
Progressive retailers will be aggressive in how they position — and how they market — the converged devices and accessories. They'll recognize that the infusion of entertainment is a fundamental change to the phone category and the players involved. And, they'll ensure that their customers are educated before they make their accessories choices — because ultimately, the educated customer in this mobile entertainment world will spend more in order to live more.
This TWICE webinar, hosted by senior editor Alan Wolf, will take a look at what may be the hottest CE products at retail that will be sold during the all-important fourth quarter. Top technologies, market strategies and industry trends will be discussed with industry analysts and executives.