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Denon Targets 10% Growth, Top AVR Share In ’08

Dana Point, Calif. — Denon is targeting a minimum 10 percent sales gain in the 2008 fiscal year ending next March and expects to gain top A/V receiver (AVR) dollar share for the first time during the period, company executives said here during a national rep event.

To achieve those goals, the company:

  • plans to be first to offer Audyssey’s Dynamic Volume technology, which appears in all 10 new AVRs starting at a suggested $299. The technology maintains a consistent volume level and flat frequency response when a TV program cuts to a commercial, when a TV channel changes, when video sources are switched and when a movie or TV soundtrack transitions to softer or louder passages. The technology also automatically equalizes sound to maintain flat response when a program transitions to louder or softer passages, and it maintains an enveloping surround-sound experience during softer passages.
  • pushed key AVR features down to lower price points, with the starting price of Dolby TrueHD and DTS HD Master decoding falling to a suggested $599 from $1,199. The 1080p up-scaling feature starts at $599 instead of $849.
  • expanded its Blu-ray selection to three SKUs with a $749-suggested Profile 1.1 player with 24 fps output, HDMI 1.3a, improved load and play times and decoding of all Blu-ray surround formats. It ships in October to join a current $1,999 player and a $1,199 Blu-ray transport, also offering those features. Additional players planned for introduction later in the fiscal year will include the brand’s first Profile 2.0 models.
  • further accelerate rising sales of eight networked-audio devices introduced last year by launching online sales training to support the devices and offering a floor-standing demo station and shelf talkers to clarify the network concept to consumers. Denon wants to place the demonstrators, equipped with flat-panel monitors, in a couple hundred storefronts at its own expense. Expanded distribution after a late launch will also boost sales, the company said.
  • encourage retailers to “put audio in the forefront in the store” and no longer treat it as a video attachment to be mentioned after a TV is sold, said senior sales and marketing VP Joseph Stinziano. “We will attempt to drive this change” with training, POP material and advertising, he said, particularly trade advertising to installers to reach a new generation of people who are selling audio to consumers.

In the AVR segment, the three pillars of the segment’s product and marketing strategy, Stinziano said, are:

  • connectivity, or compatible connections to other products via HDMI and other connections, including Ethernet,
  • ease of use and enjoyment via such technologies as Dynamic Volume and basic HDMI CEC, which Denon is adopting for the first time. It appears in all 10 new AVRs and in the new Blu-ray player.
  • and reproduction of audio and video as the artist intended, thanks to such technologies as compressed-audio restorer and automatic room-acoustics correction.

In the previous fiscal year, Denon benefited from a strong AVR lineup and its entry into new categories, such as the company’s first virtual surround bar, universal remotes, iPod-docking networked music systems and iPod-docking digital media adapters, Stinziano said. Nonetheless, a rocky economy and late shipments of multiple products yielded a small decline in Denon sales during the fiscal year ending March 31, he said.

Stinziano forecasts a minimum 10 percent sales gain in the current fiscal year, however, for several reasons including improved product availability, more Blu-ray SKUs, improved Blu-ray availability and Blu-ray’s impact on AVR sales. “Our AVR sales improve when Blu-ray is in the stores,” Stinziano said.

Perhaps a more critical factor in Denon’s sales forecasts is the company’s expectation that its AVRs will gain share in the sub-$1,000 price range because of improved competitiveness. “Above $1,000, we’ve always been No. 1 in dollars,” he said. “Below $1,000, we had a very good year last year, but this year we’ll get better compared to the competition.”

Already, he said, NPD statistics showed Denon besting Yamaha in AVR sales for the first time in February and March 2008. In fiscal 2007, Denon put its second-place AVR dollar share at 20.1 percent, and it’s targeting a 23 percent share in fiscal 2008 ending next March, Stinziano said.

Denon also forecasts industry-wide factory-level sales gains of 2 percent to $735 million in receivers and amps in calendar 2008 and a 113 percent gain in optical disc players to $856 million, including Blu-ray disc players.

Executives from Denon and parent D&M Holdings declined comment on reports that D&M’s largest shareholder plans to sell its 49 percent stake in the company. D&M also said its financials for the fiscal year ending March 31 will be released in a matter of days.

In other developments, Denon:

  • expanded its virtual-surround sound bar selection to two models with a lower priced model at $$499, joining an $1,199 model.
  • launched its first noise-canceling headphones, priced at a suggested $299. It joins about 15 other headphones lacking noise cancellation.
  • switched to Sirius-ready capability from XM-ready capability in lower priced AVRs.
  • added dual XM/Sirius-ready capability for the first time to AVRs, but only at higher price points.
  • did not expand HD Radio to additional SKUs beyond two current high-end AVRs at a suggested $2,499 and $5,200, and a $699 tabletop networked music system.
  • carried over three AVRs to join its 10 new models.
  • said it is considering a Blu-ray player that will play multichannel DVD-Audio and SACD discs.
  • expanded compatibility of AVRs with its optional ZigBee-based wireless-RF remote to models priced down to a suggested $599.
  • and said it plans POP materials for Audyssey’s Dynamic Volume feature.

In Blu-ray, demand has exceeded Denon’s expectations, but the company will catch up with “the majority of demand” by August or September, Stinziano said. 

The new Blu-ray model, like its two companions, support Bonus View, Deep Color, SD cards, and decoding of all Blu-ray authorized surround formats but lack xvYCC support and AVCHD playback. The new model offers the same features and internal construction quality of the $1,999 player but uses a single-layer steel chassis instead of a multilayer steel chassis, and it uses a molded front panel instead of aluminum.

The 10 new AVRs include five models in the company’s big-box-oriented Retail Home Theater series. All are priced from $299 to $1,199. Shipments of the first models begin in July.