Car Amp Supplier Ranks Expected To Swell In 2000
By Amy Gilroy -- TWICE, 8/23/1999
As they look to boost profits, at least three specialty suppliers are expected to join the mad rush into the car audio amplifier market next year.
Esoteric Audio, JL Audio and Lightning Audio plan to debut their first amplifier lines in January at the Consumer Electronics Show, and Boston Acoustics is rumored to be eyeing the market as well.
Leif Blackmon, Boston Acoustics business manager for the mobile group, would not confirm or deny an entry into amplifiers, but said that "anyone not looking at the amplifier market would be foolish."
Amplifier sales are expected to grow by approximately 25% this year in dollars, surpassing subwoofer gains of approximately 15%, suppliers said. According to published reports, Port Washington, N.Y.-based research firm Intelect ASW claims amplifier unit sales are up 19%, again surpassing subwoofers, which were up 14% in units as of the first half this year compared to the same period last year.
Average selling prices of car audio amplifiers rose 5%, and retailers say amplifiers can still command margins of 40%, making them more profitable than head units.
"Everybody wants to be in the amp market," stated Robert Graham, VP of the Mobile Electronics Retailers Association (MERA) and president of Breakers Mobile Electronics, Oxnard, Calif.
"The consensus is there is not much money to be made on head units, and amps and speakers are the categories where the profits are," Graham said.
"It seems that everyone wants a piece of the pie," said John Brumbaugh, buyer for BrandsMart, Kansas City, Mo. "You take a dealer like ourselves that does well with JL, and they are thinking, `let's make some amplifiers and the dealer will probably buy them.' "
In addition, the high-end amplifier market is undergoing a strategic shift as traditional amplifier companies expand beyond the specialty dealers (as in the case of market leader Rockford Fosgate) or into other product areas.
"When the time came for us to expand, the likely choice was electronics [including amplifiers]," said Bart Deal, sales director for Esoteric Audio. "The upper end of the amplifier category has changed over the past two years. Electronics and amps were characterized by a handful of dedicated American manufacturers that really catered to the specialist. All of those guys have changed their strategies, which has left a hole. So there's an opportunity for someone to create a really specialized high-end product."
In January, Rockford Fosgate began selling amplifiers through Best Buy and also debuted a new lower-priced amp line. Precision Power Inc. (PPI) also expanded deeply into subwoofers and other speakers.
Now several speaker companies and one manufacturer of connection components (Esoteric Audio) are hoping to capitalize on the shifts by offering "unique products tailored to the specialist."
Esoteric Audio took the bold step of luring three of PPI's top engineers to join its staff. Sales director Bart Deal said the company hired Dr. Stephen Leigh, Keith Harbough and Dan Boorzone approximately three months ago, and called the crew "an award winning team in the industry, which we hired to push the limits of design and technology like never before. The world will see the result of this opportunity in January."
Esoteric would not divulge product information prior to CES but said it is expecting to open on September 1 a 21,000-square-foot manufacturing and distribution facility in Phoenix, Ariz., for its new electronics line.
"We could have purchased another company but we decided to do it ourselves to make sure we did it correctly. By doing so we make ourselves more important to our dealers," explained Deal, who said Esoteric Audio has been doing extensive research including focus groups with its current dealers and that it plans to enter at the high end of the market.
JL Audio announced it would enter the amp market earlier this year with more information to become available by CES. "We are committed to having a line of car audio amplifiers in the year 2000," said president Andy Oxenhorn. "It is an absolutely natural progression for us. We know what's required to make our speakers work properly, and we're going to make sure our amplifiers are the same."
Lightning Audio also confirmed it will enter the market next year, with product to be unveiled at CES.
Retailers have mixed feelings on the outlook for success for the new amplifier companies, and many claimed that the market is already crowded and that brand-name loyalty is fierce.
Breakers' Graham, for example, said, "It's a mixed bag for me, it's a little bit confusing. There are probably one or two who are going to come to market and make it."
Another retailer specialist said privately, "We like it when a subwoofer company makes subwoofers and an amp company makes an amp, and we don't necessarily like to see them crossing over. And what's happening now is everyone wants to make everything. I like when we can sell MB Quart subs and Esoteric Audio wire and PPI amps. So sometimes we just have to say no to a supplier who is expanding."
Several retailers agreed with one Midwest dealer who claimed, "A sixteen-year-old kid wants the brands his buddies have. They have to have the Rockford amp and JL woofer, and if he shows up with a different brand it's tough. The coasts are a bit more open-minded, but in the Midwest people don't like change. It's the same as if a kid shows up in Payless tennis shoes, it's just not Nike."
Among new products debuting in amplifiers recently are the first car audio amplifier from Cerwin Vega and two high-end models from Xtant.
The Xtant models - 603x and 604x - are designed for competition and include built-in balanced line technology, variable speed fan, protective wiring, and multiple built-in crossovers. The three-channel 603x is rated at 2 x 75 watts plus 1 x 150 watts at 4 ohms, or 2 x 150 watts plus 1 x 300 watts at 2 ohms. The four-channel 604x is rated at 4 x 75 watts at 4 ohms, and 4 x 150 watts at 2 ohms. Both have suggested retail prices of $999 each.
At the low-to-mid end of the spectrum are two new models from Jensen: The KA3 and KA5 are two- and four-channel high-current bridgeable amplifiers, which each have an additional subwoofer output. The KA3 offers 125 watts RMS at 4 ohms, 200 watts RMS at 2 ohms, and 250 watts at 1 ohm. The high-current section offers 50 and 75 watts RMS at 4 and 2 ohms, respectively. The KA5 manages 150, 250 and 300 watts RMS at 4, 2 and 1 ohm, respectively, with a high-current section similar to the KA3. Suggested retail prices are $279 for the KA3 and $399 for the KA5.
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