Family Radio Service Growth May Boost GMRS Sales

By Amy Gilroy -- TWICE, 7/24/2000

Family Radio Service (FRS) sales continue to skyrocket, leading suppliers to anticipate that demand will spill over into the more powerful General Mobile Radio Service (GMRS) segment, as users seek longer range and better-quality service.

FRS radios are flying off store shelves to the tune of 8-12 million in single-unit sales this year, up from 4 million in 1999, according to suppliers. The growth will continue in 2001 but at a somewhat slower pace, with Cobra anticipating a 12 percent gain next year.

Two new market trends will affect FRS sales, say industry members.

First, consumers are seeking a broader communication range beyond the 2 miles afforded by FRS. For that reason, suppliers are beefing up their GMRS offerings, hoping to step up consumers to the more powerful, and more costly, radios.

Secondly, suppliers are beginning to offer FRS base stations, which plug directly into an AC jack to serve as a home intercom system when used with portable FRS radios placed in the garage or upstairs rooms. New base stations are being offered by Maxon, Motorola and Unwired.

In GMRS, Audiovox, Cobra, Kenwood, Maxon and Motorola offer models, while Midland, and Unwired are looking at shipping new models in the future, and Uniden said it is considering re-entering the category.

GMRS radios are similar to FRS but have a more powerful output of 2-5 watts vs. 0.5 watt for FRS and a broader range of up to 5-7 miles.

The drawback to GMRS is that customers must fill out a form upon purchasing the radios and send it to the FCC, thereby registering as a GMRS user. Also, newer GMRS radios cost between $120 and $400 each, while 14-channel FRS radios begin at $39 each.

On the plus side, some consumers are willing to pay for the extra power and range, and suppliers say that GMRS could capture about 10 percent of sales this year.

"We could have launched GMRS in 2001, but the demand for performance is significantly greater than most of us anticipated, so we felt the need to aggressively go after GMRS now," said Ralph Etna, VP of the Audiovox consumer goods group.

"I would ex-pect that 10 percent of the market in 2001 is easily attainable for GMRS," Etna added.

Kimberly Lovelace, Motorola director of global business development, said 10 percent might be slightly high, but her company continues to see steady gains in GMRS sales.

The consumers asking for GMRS tend to be enthusiasts, said Etna, explaining, "It's the serious camper, kayaker or hunter, those people who need that additional range and performance."

Second-time buyers are also expected to step up to FRS.

"It's going to add a new tier to the whole business," said Cobra senior VP Tony Mirabelli. "The people using FRS will look for more range and better features, and that will be doable with GMRS."

Maxon, which has sold GMRS for eight years, said sales of the products have increased by more than 15 percent in the past year. "A lot of people are graduating from FRS because they want a little further range, better voice clarity and faster channel scanning." national sales manager Steve Koch.

Jack Cassidy, Uniden product planning manager, noted that his company offered a GMRS radio a few years ago, and said, "We also feel people are starting to look beyond the range of FRS. We have no plans on the table right now to proceed with GMRS, but it's something we could always do."

Another reason the market is turning to GMRS is that suppliers are looking to boost margins by offering higher-end product.

Larry Richenstein, president of Unwired Technology (formerly Laral Group), said FRS prices have dropped close to 50 percent from a year ago, when a 14-channel FRS was at $79 to $99, and they now sell as low as $39.

"Margins are dwindling," said Richenstein. "We're looking at a mass-market item. Very few major retailers are not including at least one FRS every week or two in their circulars. With that kind of exposure, the retailers are trying to squeeze the manufacturers and margins are approaching what is almost an unacceptable level."

While some suppliers are adding specific features to FRS to counteract price erosion (such as radios or compasses), Richenstein said that GMRS is the best way to beat low margins: "Our approach hasn't been to put features in which raise the price without that feature having a mass appeal. When you start talking about GMRS with increased range, then I certainly think there is value."

Suppliers also noted that as GMRS becomes more popular, the FCC may waive its registration requirements as it did with CB radios.

Audiovox's new GMRS-1525 is a combination FRS unit with 2 watts of power and a 5-mile range. It has seven FRS channels and eight GMRS channels. Other features include built-in voice activation (without headphones) at a suggested retail price of $120 each.

Maxon is debuting the GMRS-50, which claims a 5-watt output and a 7-mile range. It comes with nine GMRS channels and seven FRS channels, and it ships with battery, antenna and charger. Estimated retail price is $399.95 each.

Another new turn taken by the FRS market is in base radio stations, which are similar to portable FRS units, but can plug into an AC jack. Consumers are expected to use them (along with portable models) as intercom systems between rooms in the home or in a cabin on vacation while the kids are out hiking.

Unwired was first to the market this summer with the UFR-BS10 14-channel base station with 38 subcodes. The unit plugs into the AC wall jack and has voice activation and confirmation tone at an estimated street price of $59.

Motorola just added base-station capability to all three of the models it previewed in January. The company launched a CommPort docking station that ships as a standard feature with all NiMH-based Motorola FRS models. The CommPort plugs into the wall to double as a battery recharger and intercom with VOX.

Motorola's three new 14-channel FRS models include the T6300 with 38 privacy codes, built-in clock, alarm, stopwatch, NOAA weather alert and a vibration alert.

The T6300 has an additional filter called Quiet 6000, which can be set to eliminate chatter from all FRS models except Motorola 6000 radios.

"So if you're at Disney World and using these radios where there are a lot of other FRS radios in use, you can turn on this option and hear only the T6000 radios," said Lovelace. "So it's another filter beyond the privacy codes."

Model T6310 adds an FM stereo with headset, and the T6320, available in October, is similar to the T6300 but adds a digital compass, altimeter and barometer.

Suggested prices are $139, $169 and $179 each, respectively, for the T6300, T6310 and T6320, which ship with NiMH batteries and CommPort Docking Station. The FRS units also come in AA battery versions (without CommPort) at $129, $149 and $159 each (in that case, the docking station can be purchased separately at a $49 suggested retail price).

Maxon said it will debut at CES a base station with an extendable antenna and AC plug that allows for a constant 0.5-watt output so the user doesn't have to worry about running out of batteries. Estimated price for the base station will be $149.

Also at CES, Maxon plans to show new FRS accessories, including headsets designed to work with motorcycle helmets and bicycle helmets.

Other new products entering the market are focusing on the additional features such as FM radios and weather alert, as well as compact size.

Audiovox began shipping a new ultra-compact 500 series that includes the 560FM-2 with FM radio. All but one of the 500 series models include Dual Watch, a feature that allows users to transmit and receive on one channel while monitoring another channel.

Cobra is releasing several new models, including the microTALK 115 with AM/FM radio and sport headphones. Users can listen to the radio, and when an FRS call comes in, it will override the stereo so they can receive their messages. The 14-channel unit has a backlit display at a suggested retail price of $89.

Connair is shipping its model FRS250SLV splash-resistant FRS 14-channel unit with 532 privacy codes. The unit is available in two colors at $79 per pair.

Kenwood's new models include the UBZ-AM14 entry-level 14-channel unit with 38 privacy codes at a street price of $74.95 per pair.

The step-up model is the UBZ-GM14, which adds a weather channel and vibration call alert. It also has an accessory port for use with audio headsets, and it has an optional re-chargeable battery. Street price for the UBZ-GM14 is $59.95 each.

Midland is de-buting two 14-channel models that are water resistant and have a built-in battery charger and pager button. At the top of the line is model 75517, a unit that offers 1,694 code channel combinations, weather reception, and voice activation (without a headset) with 36 settings, including six levels of sensitivity and six levels of delay

The 75517 comes in Champagne Gold at a retail price of $79.95 each. It is joined by the 75509, a more basic model that has voice activation with nine settings at $49.95.

Panasonic's new phones that began shipping in May are touted as having a unique private talk feature. Users can hold the radio up to their ear as they would a normal phone, press a button on the models KX-TR320 or KK-TR325, and the incoming messages are then heard only by the listener (rather than broadcast out loud to everyone within hearing distance, as is typically the case).

Uniden's three new 14-channel models have a backlit LCD, scan and keypad locks. The basic model FRS 300 comes in a two-pack at $79, plus a $10 rebate. The model FRS 500 adds 38 privacy codes, VOX and vibrate alert at $59 per radio, and the 550W adds weather-channel access. The 550W will ship in August at $99 per pair, plus a $10 rebate.