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Russound, vNet Prepare Broad Product, Program Launch

7/26/2010 12:01:00 AM Eastern

Newmarket, N.H. - Russound
and Colorado vNet are rolling out new products and programs while maintaining
their separate market identities and putting the finishing touches on revised distribution
strategies, executives said during a day-long presentation to the trade press.

From left: Colorado vNet sales and marketing VP Petro Shimonishi, Russound CEO Charlie Porritt, Russound president Maureen Baldwin and Russound marketing director Rich Guida

Privately held
Russound rescued Colorado vNet last October from closure and has been combining
key vNet and Russound business functions, excluding sales and marketing. During
that time, vNet has also been replacing its Colorado-based inside sales force
with independent reps, expanding the brand's independent installer base in a
controlled manner, bringing to market most of the products in the previous management's
roadmap, and preparing additional product and program initiatives.

 vNet's planned new products include an iPad
app that dealers will sell to consumers to control vNet's IP-based Vibe multi-room-audio/home-control
system, which distributes content over an Ethernet network. The brand is also
developing an upgraded wireless-RF dimming system, its first line of
custom-installed speakers, its first component amp controllable from Vibe's in-wall
touchscreen/amps, and a new 7-inch in-wall touchscreen/amplifier.

vNet's new
programs include downloads of customizable flyers, online training to replace
three-day courses in vNet's Colorado facilities, online demo tools on You
Tube,  and online training on the basics
of lighting control and home automation. The latter is designed for dealers
before they go through the process of becoming authorized vNet dealers.
Lighting basics will become available in August, followed by additional courses
over the following four months.

For its part, Russound
significantly cut back its roster of distributors and recently added AVAD, the
nationwide distributor of custom-installed products, to reduce pricing pressure
and leverage AVAD's marketing prowess and dealer support. Russound primarily
uses distributors to reach installers and sells direct only to some accounts.

In other
initiatives, Russound is launching new online webinars to better educate dealers
about the retrofit potential of the company's recently launched IP-based Collage
Media and Intercom system, which uses a home's existing power lines to distribute
audio and control signals around the house. Collage was designed to reduce installation
time and end-user costs in retrofit applications and expand dealers' potential
client base to owners of existing home.

Collage's
acceptance has been "pretty good," but the company believes the new webinars,
which will supplement existing ones, will accelerate sales by focusing more on educating
dealers about the value and sales potential of the system rather than on the technical
aspects of the technology used, said product manager Walt Zerbe. Collage, he
explained, can reduce the installed cost of a retrofitted four-room system to
$5,250 with only four hours of installation from $13,000 for a traditional
hardwired system. One of the webinars will provide sales-building marketing tips
on how to find potential retrofit customers.

Another Russound initiative
is a new website for dealers and consumers. Among other things, the site focuses
on the sale of systems rather than individual products, provides multilingual
support, simplifies navigation, and provides more dealer support.

While it rolls out
these initiatives, Russound is preparing to launch a wide selection of new
products from now through the end of the year. Those products include a second
C-series multizone controller/amplifier, a new in-wall touchscreen, a new
rock-speaker series, the brand's first full series of two-channel amps and a
new two-channel local-source amp.

Russound is also
launching the first outdoor speakers in its Acclaim 5 series of speakers to
address what it calls the "next zone" in multizone audio. A firmware update for
its TCH1 Touchpoint system, which enables iPhone and iPod Touch control of its
R-Net multizone-audio systems, will allow for iPad control and add new features.

For its Collage
system, the company plans a firmware upgrade in the coming months to add the
Radiotime Internet-radio-station aggregation service to the on-demand Rhapsody
music service. Internet music sources are accessed through Collage's in-wall amplified
keypads, which incorporate RDS FM tuner and ability to stream music from
network-attached storage devices.

The Russound and
vNet product and program plans are part of a long-term effort by the company "to
evolve into the modular, net-connected world" whether using hardwire, powerline
or Wi-Fi as the pipeline to distribute digital content around the house, said Michael
Stein, research and technology senior director. In just a few years, he
predicted, "almost any music, movie or TV show ever produced will be immediately
available" in the home through a personal area network, local area network or
wide area network.

In the nearer
term, the key goal is to grow both brands by leveraging each other's strengths,
executives said. To grow, Russound must integrate control of lighting,
thermostats, security and other home systems into its multi-room-audio keypad
and touchscreen controllers, said CEO Charlie Porritt. "vNet will help us take
that step," he said, pointing to in-wall vNet touchscreens that control
vNet-branded wired and wireless lighting-control systems as well as other-brand
home systems.

In turn, the vNet
brand benefits from Russound's seasoned management, business acumen and
contract-manufacturing experience to deliver bulletproof products, said Petro
Shimonishi, vNet's sales and marketing VP.

For the past nine
months, Russound has been consolidating many vNet business functions with its
own, including accounting and purchasing, said Russound president Maureen
Baldwin. vNet shipping will also transition to New Hampshire, added Shimonishi,
but engineering and tech support will remain in Colorado, as will a training
facility, which will supplement Russound's own East Coast facility.

In another
transition, vNet has signed up eight rep firms to date to cover about 90
percent of U.S. geography and will hire additional reps in time for the CEDIA
Expo to cover the remaining U.S. territories, Shimonishi said.

With the rep
additions, vNet has been adding dealers in a "slow and smart" manner, having
started with less than 300 active dealers at the time of its acquisition and putting
on 75 new dealers since January, Shimonishi said. The vNet and Russound dealer
bases overlap little, and 27 percent of vNet's dealers are electricians and
electrical contractors, she noted.

For these dealers,
vNet plans a variety of new products, but the brand is
dropping plans for a Wi-Fi-equipped tablet, given the rise of Wi-Fi-equipped iPhones
and iPads as a means of controlling home systems, Shimonishi said. The brand is
also dropping plans for a multi-room Vibe video server, in part because the
brand sees video servers being supplanted in the future by cloud-based
on-demand video services and because the server's soundtracks couldn't be
amplified by the amps built into Vibe touchscreens.

 For details on Russound's product plans, see
accompanying story
.