Dealers Debate IT Move Into CE Market

By Alan Wolf On Mar 8 2004 - 8:00am




A/V dealers are becoming a quick study in connectivity as they gird for the coming convergence of IT and CE.

But aside from bridging the knowledge gap, their greater concern is the recent entry of PC stalwarts, Gateway and Dell, into traditional CE waters — along with their micron-thin margins and disruptive retail pricing.

Those were among the issues tackled by a CE Retail Panel, moderated by TWICE, which was conducted at the Consumer Electronics Association's 2004 Winter Summit held here last month at the St. Regis Aspen.

Panelists included Michael Abt, president of Abt Electronics; Bjorn Dybdahl, president and founder of Bjorn's Audio Video; Murray Huppin, president of Huppin's Hi-Fi and One-Call.com; and Bob Lawrence, executive director of the AVB/Brand Source buying group.

While the dealers decried the low price points of direct sellers' high-end products, the panel was divided on whether to fight fire with fire by direct sourcing their own goods, particularly flat panel displays, from factories in Asia. Lawrence and Abt saw opportunities in possibly offering their own or off-brand opening price point alternatives, while Dybdahl and Huppin voiced concerns over brand recognition and quality control.

All were in agreement, however, on strong consumer demand for products ranging from high-end audio receivers, digital cameras, camcorders, and micro-display TVs. Pending availability of the latter, which vendors say should be in abundant supply by the fourth quarter, the panelists were also optimistic about the sales outlook for 2004 in general and the holiday selling season in particular.

Other highlights of the Summit included a presentation on "Hot CE Trends" by CEA industry analysis director Sean Wargo, and a keynote address by management consultant and author Dr. Jackie Freiberg.

Wargo described digital imaging as a "stunning category" that enjoyed a 60 percent sales spike in 2003 and pointed to MP3 players — of which 10 million units were sold last year — as the growth engine in audio, a category which saw unit shipments soar 21.5 percent in 2003.

Nevertheless, Wargo said CEA needs to help the trade-up consumers to sound systems that better match their HDTVs. Comparing component audio to fine wine, he noted that "Consumers are investing in a fine meal with their high-end displays. Why serve a Coke with that?"

Wargo also announced that CEA would begin outsourcing its Market Activity Reports and Analysis program (MARA), in order to focus more on analytical research and to provide better customer service to members. To that end, Wargo has added Steve Koenig to the team as senior manager of industry analysis.

Separately, Freiberg, co-author of smart management guides "Guts!" and "Nuts!," said common traits shared by successful businesses leaders include a willingness to "blow the doors off business-as-usual," and the desire to make employee satisfaction and empowerment their No. 1 priority, even over their customers.

But the highest Summit highlight, literally, was Aspen's surrounding ski slopes, which attendees took to in droves.

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