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Mobile Suppliers Outline 12-Volt’s Future

6/03/2005 12:31:00 PM Eastern

For the first time in the two years that autosound suppliers have puzzled over a shift in 12-volt sales, some are now offering a clear vision of autosound’s future in this new era of sophisticated dashboards, online music downloading and iPods.

Several suppliers say the 12-volt market will take a sharp right turn, not only in new products, but in distribution and in marketing to a different core demographic.

“I would predict there will be more innovation in mobile electronics over the next five years than there was in the past 15 years,” said Alpine’s marketing VP Steve Witt, adding simply that more innovation is necessary to stay in business.

All suppliers contacted said the 12-volt after-market business model of replacing components will change. The alternative will be a platform of adding A/V servers or portable digital media players to OEM systems. Streaming media will also become a key pipeline into the vehicle for entertainment, suppliers said.

Several market indicators point to the end of the head unit-replacement business model.

A CEA study found that 15 million vehicles will have either an electrical or physical deterrent to aftermarket products between 2003 and 2008, amounting to 22.3 percent of the top 60 vehicle models sold during that time.

CEA also predicts factory unit shipments of in-dash CD players will decrease nearly 10 percent by 2008, while shipments of portable music players will increase nearly 50 percent during the same period.

Rather than using the CD player as a music hub, Alpine envisions autosound systems that allow streaming media into the car, which is stored on some digital device. Streaming services could include “XM, Sirius, HD Radio and heaven knows what else,” said Witt. But he added that content will also be carried into the car by the user, in some fashion — such as on an iPod-like device. Witt said, “We feel certain this is the way it’s going,” and, “It will occur over a time frame of about five years.” He added, “I am confident the aftermarket will stay ahead of OEM on this.”

Kenwood agreed that in five years after-market products will support some type of “music delivery” system and will integrate with OEM systems. Car electronics VP Keith Lehmann said the future involves “figuring out as many ways as possible to add after-market electronics into a vehicle through the use of a portal or transport-less head unit with interconnectivity both hard wired and wireless.” He said, “There is credible technology to do this.” Some components to Kenwood’s system could involve a personal media player or connectivity through Bluetooth or Wi-Fi. But Lehmann was very clear that the system of the future should be able to connect all digital media to the car, rather than a single type.

This model is consistent with the view of analyst David Linsalata of IDC, Framingham, Mass., on the future of handheld consumer electronics products. Although some predict many CE functions will combine into a cellular phone (such as music storage and navigation), Linsalata said the future is not so much in combining products but in connecting them more easily. “The communication between devices is going to increase. The ability to easily move file media or enterprise content from your PC to PDA or mobile phone or TiVo or TV — that is where we see a lot of this going. It’s not as important to have one device that replaces all other devices. It has to have your devices communicating seamlessly with each other.”

For autosound, this may result in not only a product shift, but a new overall consumer base. Car audio has already seen a number of demographic shifts throughout its history. Panasonic’s mobile electronics group manager Rob Lopez notes, in the 1990s, “We saw a reduction in the 30- to 45-year-old consumers who were finding their OEM sound systems adequate. At the same time we saw a new trend occurring toward the bass boom era. We were getting a lot younger consumers with more disposable income, and they were interested in heavy bass, high power and trick installations,” he said.

Lopez sees the next wave encompassing both age groups. With the introduction of satellite radio, navigation, iPod interfaces and rear-seat entertainment, 12-volt will appeal to an older demographic. He explained, “The new wave of consumer is more sophisticated and more computer savvy and so they are looking for ways to interface more electronics in a vehicle. They want to connect their HDD player, their cellphone via Bluetooth … Their lifestyle is now more about multitasking and they expect their electronics to do more than play CD.”

Sony says it is already adapting its products to new “music acquisition and listening habits” by allowing 11 of its new head units to playback ATRAC music directly downloaded from its Connect online music service, according to mobile electronics general manager Andrew Sivori.

A shift is also occurring at retail in consumer electronics in general, and in autosound specifically. Lehmann points to the consolidation of CompUSA and the Good Guys. He adds, “In the next five years we’ll see the advent of the warehouse and membership clubs. They will command a larger share of overall retail, and Wal-Mart is expanding, so that will factor into everyone’s strategy.” (See TWICE, May 23, p. 32.) He and others also pointed to the increasing sophistication and popularity of Internet Web sites.

At the supplier level, many brands are strengthening the weak links in their lineup to be more competitive. “We all realize that the pie in 12-volt is not necessarily getting any bigger,” said Clarion’s new retail sales VP Dean Hutto, adding, “I think there’s going to be some consolidation among some of the second- and third-tier vendors.”

Clarion, with its strength in head units, is aiming to boost its presence in video, amplifiers, speakers and navigation.” Audiobahn, conversely, with strength in speakers and amplifiers, just introduced its first in-dash line of CD players. “We are making a serious foray into the dashboard, including navigation in the future,” said general manager Ray Windsor. He added, “most companies have expertise in either amplifiers or speakers or in head units and are either really good at one or the other and we will be successful in all.”

New suppliers may also emerge to capitalize on the new trends in digital music and storage. “These companies surfaced because they saw a niche in the market for high-powered systems for the bass-hungry consumer. So, I expect in the next five to 10 years, we’ll see another surfacing of companies that provide more interfacing and connectivity in the car,” Lopez said.

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