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Sony Tightens ES Distribution Strategy

LOS ANGELES — Sony will limit
distribution of its high-end ES series
of A/V receivers and Blu-ray players
to custom installers and A/V specialty
retailers while prohibiting telesales and
sales over the Internet.

Sales through will
also come to an end.

Sony executives drew a sharp contrast
between their new distribution
strategy and the policies of competitors
who are broadening distribution
and expanding Internet sales.

The changes were announced here
in conjunction with the introduction of
a new 2010 ES lineup and the July 1 replacement
of a unilateral pricing policy
with a more flexible minimum advertised
price (MAP) policy. The MAP
policy makes it possible for installers to
pass through dealer-cost reductions announced
after a customer contract is
signed but before a product is delivered
to finish off a months-long install.

All three new ES multizone A/V receivers
(AVRs), priced from a suggested
$1,099 to $1,999, are believed by
Sony to be the industry’s first AVRs
with embedded Ethernet hubs to connect
TVs and Blu-ray players to the Internet.
They’re also Sony’s first with
3D-ready HDMI 1.4a inputs and outputs
with Audio Return Channel,
Dolby Pro Logic IIz post processing
to add front-height channels, and an
iPhone/iPod Touch app. The app controls
AVR functions, including multizone
functions and connected sources,
from anywhere in the house if the
AVRs are connected to the home network.
An Android-smartphone version
of the app is in the works.
Other features, such as IP-Ethernet
control and embedded DLNA-certified
network client, have expanded
throughout the line, and other features,
such as two HDMI outputs, expand to
more models from only one.

With the new models, Sony is expanding
embedded DLNA-certified network
clients to all three models from one to
stream music, video and photos from a
networked PC. The top model also serves
as a DLNA server, a feature that last appeared
in the 2008 ES lineup.

The new $399-suggested ES Blu-ray
player will be the first in the series with
built-in Wi-Fi, iPhone/iPod app and
Quick Start startup time. It is 3D-capable
out of the box and is the first ES single-
play Blu-ray player with IR input.

All new ES products are due in August,
except for the top-end AVR,
which is due in September. They’ll join
a carryover $499 two-channel receiver
and $1,899 400-disc Blu-ray megachanger,
which lacks 3D capability but
features IR input.

During a press briefing, the company

• previewed its first 3D front projector,
a non-ES model due sometime this
year. The prototype used in a demonstration
delivered 3D in 720p, but the
finished product will deliver 1080p 3D.

• introduced a mainstream-series
$799 AVR that is the company’s first
mainstream AVR with Ethernet hub.
It sits at the top of the mainstream-series
AVR line.

The ES distribution change “will help
reinvigorate” the specialty and custom
channels, reward those installers and
specialists “who have been loyal to Sony
for many years,” and provide an opportunity
for ES to expand its custom/
specialty dealer base, said Brian Siegel,
VP of Sony’s home A/V group.

“ES has been for the past few years
essentially widely distributed” and
available through “many national accounts”
and Internet sellers, Siegel said.
A/V specialists and installers, he continued,
have said ES offers great products and programs but that the previous
distribution strategy “made it
easier to do business with other manufacturers.”

Sony ES “should be the No. 1 AVR
brand in the specialty channel, and this
[distribution strategy] is a way to do
that,” Siegel asserted.

Although the company is tightening
ES distribution, it will continue to use
distributors to fulfill shipments to ESapproved
dealers and installers, Siegel
noted. Sony will continue to manage
the dealer/installer accounts centrally.

Regarding MAP policies in general,
Siegel said dealers view them as a positive,
especially when MAPs are similar
to suggested retails. ES’s shift to
MAP is part of a corporate-wide move,
he added.

The new policy prohibiting Internet
sales will begin with the new 2010 models,
allowing time for inventories of previous
ES models to be sold out through
Internet channels. Under that policy, ES
dealers aren’t allowed to sell online but
can continue to use the Internet to promote
ES and educate consumers about
ES advantages, Siegel noted.