twice connect
careers

Audio Roundtable: You Can Hear Us Now

12/20/2010 12:01:00 AM Eastern

NEW YORK — A slowly reviving economy, demand for
HDMI connectivity options to HDTVs and Blu-ray players,
demand for connections to music stored on smartphones
and PCs, and growing demand for old-school two-channel
audio — updated to connect to new audio sources —
are driving up component-audio sales.

That’s the consensus of marketers polled by TWICE for
a “virtual roundtable” in which they responded to questions
by email. Here’s what they are thinking as the year
ends and the industry prepares for International CES:

TWICE: How did component audio sales fare at the
retail level in 2010, and what’s the outlook for 2011?

Tom Sumner, Yamaha: Component audio sales turned
around in 2010. Of course, you could postulate that part of
the reason is comparisons over a pretty gloomy 2009, but
we are seeing growth in A/V receivers and speakers that
has been pretty consistent each month. We believe there
are a couple of key reasons for the growth. One is that
as flat panels have gotten flatter, and the sound has finally
come to the point where consumers can’t stand it. Audio
has become a must to purchase with new TVs just to hear a
newscast, let alone enjoy a music or sporting event.

The other factor is there is some pent-up demand as
consumers have updated their TV, Blu-ray player or settop
box and find that their old A/V receiver
that still works doesn’t have the connections
and features they need for their new system.
Part of this is related to 3D, but so far this year
(though November 2010), 3D is not yet a major
purchase factor, and most of the pent-up demand is from
all the consumers who purchased all those flat panels
over the past few years.

Streaming content is clearly one factor that is growing
demand for our products and will continue to drive business
in 2011.

Wireless is also a trend that is moving customers,
and we believe it will continue to grow business in 2011.
Having content that you can wirelessly stream from your
phone or your computer is
compelling.

Al Baron, Polk: Despite
the weak employment picture
and stagnant wages, there
seems to be a healthy appetite
for consumer electronics
and component audio at levels
well above last year’s. It’s
logical to assume that consumer
demand for products
that allow them to stream
audio from digital players, computers, smartphones and
games is helping to drive sales of more traditional components,
such as speakers and receivers, that offer new
ways to enjoy digital audio and video.

No matter what, innovative companies will continue to
adapt and reconfigure products to adapt to the new ways
people receive audio.

Bob Weissburg, D&M: Industry sell-through has been
up over the past year for the past seven months [as of November].
After a down year in 2009, consumers are back in
the market to upgrade their audio and video gear. I believe
that there have been several factors driving growth, including
increased demand, excellent value in the market, and new
technology features such as networking, HDMI 1.4a, iPod
connectivity and room-correction technology from Audyssey.

At D&M we have seen a nice lift in sales over the $1,000
price point, which indicated that consumers are still demanding
the complete A/V experience and new features.
We have had great response to the [Apple] AirPlay feature found on select Denon and Marantz AVRs and desktop
music systems. This is a clear indication that consumers
want to hear their music content from their iTunes collection
aggregated to their main entertainment system, enabling
the AVR as the “hub” of the networked home.

2011 should be another year of increased sales in home
audio as new innovation and technology is introduced at
new price points and form factors to create renewed interest
and demand.

Russ Johnston, Pioneer: According to NPD data, the
industry experienced a decline in unit sales year over year
in the multichannel A/V receiver category every month for
over three years. However, this trend has turned around
and since March, 2010, the industry has experienced
growth each month vs. 2009.

The key contributor to this growth is the advent of 3D
TVs and the need to upgrade to audio components that
can pass the 3D signal via new HDMI standards. Along
with 3D connectivity, more than likely the consumer will
also be gaining HD Audio Decoding, Internet connectivity
for access to streaming services, and possible connectivity
to their smartphones.

For the past two years, Pioneer has more than doubled
our market share due to our quick introduction of new
technologies such as HD Audio Decoding and HDMI 1.4a
for 3D compatibility. Pioneer has [also] led the way in appealing
to consumers who are passionate
about their Apple lifestyle.

To drive growth in 2011, we are looking at
ways to expand our Apple connectivity even
further. We also believe that more and more
consumers will look to build a connected home with home
networking and home automation features.

Additionally, the popularity of the iPad has helped create
more consumer interest in home-theater control and
whole home automation. App-based control is really a hot
topic when looking for receivers that control and provide
easier setup.

Mark Casavant, Klipsch: Component audio sales in
2010 have stabilized since 2009. 2011 should remain stable
as consumer spending gradually
recovers. However, we
don’t consider component
audio sales as robust. The
economy certainly has had
its effect, but consumers’
discretionary dollars have
been funneled to new flat
panel televisions and mobile
devices. Fortunately, outof-
the-box audio quality for
these products is severely
lacking as these products become smaller and slimmer.

TWICE: Is two-channel stereo listening through components
undergoing a revival?

Sumner: We are seeing some increase in two-channel
components. We hope that some nostalgia for a time
when people actually sat and listened to music will drive
some quality two-channel sound. And we have some
hope for that trend on these shores as we are seeing that
behavior happening in Europe and seeing growth there.

Baron: Two-channel is at the foundation of our business
and remains a solid profit generator for our category. However,
each year it becomes easier to add high-performance
multichannel audio to even the most basic and compact
systems, and at affordable prices. We find that our SurroundBar
models are especially popular among end users
who are looking for something more than simple two-channel
audio but would rather not set up a full 5.1 speaker array.

Weissburg: The two-channel market has grown nicely
for us with increased demand for integrated
amplifiers, separate components, CD players,
turntables and even phono cartridges. Many
people are rediscovering their music again and
reconnecting with great sound. I see this trend
continuing for the foreseeable future. The passion
for music and the experience that only a
great sound system can provide exists in every
generation. As more dealers promote twochannel
audio, it will continue to grow.

Johnston: We have experienced some improvement
in our two-channel system sales but
not enough to call it a revival yet. Our specialty
retailers have redirected their efforts from lowermargin
flat panels to two-channel audio systems
by converting demo rooms to re-engage with
this category. Some have reported success and
more importantly feel like they are teaching a
new generation what quality sound is all about.

Casavant: Music listening in general is easier
today through, for example, portable/mobile
devices and music streaming services. Access
to content has never been easier, so the trends
show increasing consumption. This leads to
more music product sales from headphones
to speakers. Two-channel audio is everywhere,
from whole house to headphones, so, yes, we
anticipate more demand in 2011.

PHOTOS
Nationwide PrimeTime 2014

Scenes from Nationwide PrimeTime buy fair held in

ProSource Meeting Filled With Optimism

San Antonio — Optimism reigned at ProSource’s

Ingram Draws 500 To Spring Vendor Expo

Scottsdale, Ariz. — Ingram Micro Consumer

CEA Holds ’14 Digital Patriots Dinner

Washington — CEA held its annual Digital Patriots’

8 Technology Accessories For a Greener Earth

An Earth Day review of Earth-friendly products, by

BrandSource Shows Diverse Product Selection

BrandSource’s Summit show at the Marriott World

Scenes From Toy Fair

By Lisa Johnston