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On PCs, Internet Radio

12/18/2006 02:00:00 AM Eastern

TWICE: Does the future of the component and system business lie in networked devices that use Ethernet or no-new-wires networking technology to distribute music throughout the house?

Bales: Yes, networked devices will be a large factor in the consumer component and system business. Will traditional audio and CE suppliers leave music networking (via Ethernet and no-new-wires networks) to PC and IT brands? No way. It's too easy to incorporate, at the minimum, "client" technology into existing components, speakers, systems and TVs. It's already happening. The HD game console is several years ahead of anyone in this area and, while very popular, we do not believe it will become the primary source device for network entertainment.

Sonos-type devices are popular but do not replace the home theatre "Big System." We are already seeing a resurgence in "audiophile" type two-channel listening in Europe and Asia with Internet music and portable audio connectivity being a key feature. Powerline and Bluetooth technologies are still viable future solutions.

To their credit, PC and IT brands have brought new and exciting "source" technology and business models to the CE industry but will not dominate the Ethernet (music or video) application or product offerings in the future.

Bente: The ability for components to not only deliver outstanding picture and sound quality but to be able to deliver it anywhere in the house and from any source, including the Internet, is without question the future of the component business. We have seen a remarkable uptake in whole-house entertainment solutions, and we will indeed see more. Our own solutions will address not only the flexibility required to be in the right place at the right time, but will do so in a manner free from the clutter of menus derived from PCs, and computer jargon.

Klipsch: Yes, it is a very big opportunity. We think it is extremely important for consumers to be able to access all of their stored content from anywhere in their house. A few companies have already started to work on such projects, and I believe many more will follow suit.

No, I do not think that traditional audio suppliers will leave this task solely up to PC and IT brands. Our industry is already focused on developing such solutions.

TWICE: Do you foresee much consumer interest in streaming Internet radio stations, or accessing subscription streaming services such as Rhapsody, through their home audio components and systems?

Bales: Absolutely. The Internet is just another source of entertainment and A/V content. Consumers will begin to realize that this content can easily find its way into the living room and multi-rooms throughout their homes. We believe it's a key component in the future of the CE industry.

Bente: Absolutely. Variety, as they say, is the spice of life. Listening to the same music station that I enjoyed on my holiday in Spain while at home or at work carries with it the memories of the vacation…hey, what's bad about that?

Klipsch: Yes, absolutely. When people have their content on their computer, the ability to stream to various devices throughout a home is huge.

TWICE: Do you foresee much interest in audio components or systems that download (not stream) music directly from Web sites without a PC intermediary?

Bales: This is an extremely interesting and relevant question. It really speaks to consumer behavior patterns and how dependent they have become on their PCs for managing Internet music content. Our recent consumer focus groups showed a clear indication that there will be what I have termed "PC separation anxiety" when consumers are offered a non-PC method of purchasing, managing, distributing and even listening to internet music content.

While we do believe that direct downloads and CE A/V "servers" with built-in HDD will become more popular, consumers still want to have the PC option and will need to see for themselves that a CE product can be as easy to use as a PC before they would consider losing the PC as their primary tool for Internet content. Heavy PC users will probably be very happy with the benefits of an audio client CE product.

Klipsch: This is questionable. It would depend on ease of use and the visibility level that is delivered while downloading and accessing the hard drive.

Bente: As long as the quality is there, I see no reason why most folks won't want components that download music without reliance on a PC. Let's face it, PCs remind people of work. Components remind people of entertainment.