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Shapiro Predicts Growth, Challenges In EHX Speech

3/30/2006 08:51:00 AM Eastern

Orlando, Fla. — There are plenty of opportunities and challenges for retailers involved in custom installation of CE products, and the custom installers themselves, over the next several years as more digital technology takes hold.

That was the focus of Consumer Electronics Association (CEA) president/CEO Gary Shapiro, during a keynote address at the spring EHX Show that opened Thursday morning at the Orange County Convention Center, here.

Shapiro was joined on stage by Gary Yacoubian, president/COO of MyerEmco Audio Video and chairman of CEA’s PARA division, along with David Epstein, founder and president of Sound Solutions and vice chairman of CEA’s TechHome division.

Shapiro noted to the installer and retailer audience that, while the digital revolution is being led by digital television, which will surpass analog TV sales in 2006 according to CEA forecasts, “The digital revolution extends beyond DTV. It extends to you. For example, multiroom audio equipment sales are up to 19 percent to almost half a billion in 2005. This includes in-wall, on-wall and in-ceiling speakers as well as controllers, keypads and distribution amplifiers.”

He noted that consumers “want all things digital, and broadband services are driving the digital home and connectivity markets today. Broadband households are quickly becoming the norm, and it is very possible that dial-up Internet connections will be a thing of the past by the end of the decade.”

Shapiro quoted new CEA broadband research finds that broadband access is in 43 million American households. “This is huge considering that according to the FCC there were a mere 1.8 million residential and small business broadband customers back in 1999. It’s a fact — broadband spurs CE product ownership. So, what’s in this broadband equation for you? More business. Broadband has unleashed a wave of interest in new products meant to utilize fast Internet connections. Products many of you sell and install,” he added.

Broadband subscribers are twice as likely to want an HDTV, are more likely to own a home theater system and, Shapiro stressed, “Other opportunities exist for DVRs, distributed audio systems, home theater systems, home security systems and home networking.”

And he noted that the convergence between devices, especially “the melding of digital devices and digital content delivery. Digital home entertainment networks allow you to take content anywhere, anytime.” Shapiro added, “This is a promising new business opportunity for integrators, installers and retailers. It demonstrates consumers want for digital home entertainment environments.”

Shapiro then showed a video which illustrated, in his words, “a distinct consumer learning curve. Some consumers were very aware, even capable of creating their own connected home components, while others are not.”

To get a view from the field Shapiro invited Epstein on stage, whose Sound Solutions custom installation company has been in business for 28 years. When asked by Shapiro what some of the biggest challenges are being faced by home builders, integrators and installers, Epstein mentioned several.

One was the multitude of technologies that builders are required to incorporate and support in their designs, whether they have the expertise or not, in a profitable and low-risk way. “This is where systems integrators can be invaluable, from the construction phase all the way through to the sale of the home, and, with ongoing support, resulting in a win-win-win situation,” Epstein said.

For integrators and installers staffing is a major challenge. Finding, developing, training and maintaining qualified personnel are “especially critical for operation of a business that is as complex, technical and ever-changing as our industry is.”

Integrators and installers must understand what to sell their customers as well as careful bidding and controlling costs are crucial, Epstein said. And as vice chairman of CEA’s TechHome division, he stressed that it can help provide useful information. (For more visit www.techhome.com.)

MyerEmco’s Gary Yacoubian then joined Shapiro on stage to discuss challenges being faced by specialty retailers as more digital products take hold of the marketplace. He said that the role of specialty retailers “is to demonstrate the promise of the technologies, then to provide expertise in design and installation, thus fulfilling the promise of those technologies. If we lose sight of that role, there really isn’t a whole lot of reason for us to exist!”

As the marketplace becomes more challenging, “We are finding that not only are the technologies changing, but the suppliers of those technologies change, as well. Some of are traditional partners are not always the first, or the best suppliers of new technology.”

Yacoubian noted that iPod was rejected by the special channel when it was introduced “much to the subsequent regret of many of us” and that specialty retailers “run the risk of being ‘off to the side’ of the most exciting developments in CE, unless we seek out and actively embrace new technologies that come from sources and spaces less familiar to us.”

He said that Myer Emco’s sales strategy to sell products that support connection in the home comes with the realization that “we cannot execute the vision of fulfillment of residential CE technologies unless we fully embrace IP-based networking platforms, at least as they pertain to the residential space. To that end, we are building a sales and installation infrastructure to complement our CE expertise that will allow us to fully configure residential networks.”

Yacoubian has called on his chain to develop the same expertise in home networking “as we have shown [consumers] in conventional audio and video products. We expect to be up and running with this early in the second half of this year.”

All of these trends provide specialty retailers with great opportunities if they can explain to consumers and get excited about “the newest and coolest technologies that hit the marketplace.” Yacoubian added, “The digital transition has been a watershed of opportunity for the specialty channel. After all, we have a multitude of exciting new products with demonstrably superior performance, and lots of confusion and misinformation surrounding them! What’s not to like?”

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