Your browser is out-of-date!

Update your browser to view this website correctly. Update my browser now


Home Systems Seeing Up & Down Year

Home theater in a box (HTiB) sales will turn around in the second half, but sales of compact stereos will continue to slide, marketers said.

In the HTiB market, suppliers attribute the expected turnaround in part to stabilizing average selling prices and growing interest in higher priced models, including a pair of 2.1-speaker virtual surround systems from Denon and one from Thomson.

Likewise, Klipsch/Jamo president Paul Jacobs forecasts flat unit sales and falling dollar sales in HTiBs priced at $500 and less, but he expects high-performance alternatives to do “quite well.”

Sony also forecasts HTiB growth, in part because of styling that “has caught up with flat-panel displays,” said Phil Abram, Sony’s home A/V marketing VP.

At Thomson, worldwide A/V VP Dan Collishaw found industrywide first-half sell-through falling at a high-single-digit rate in units and dollars, but he expects a second-half rebound to deliver full-year unit and dollar growth of about 5 percent to 7 percent.

Despite the drag on sales, prices have been stable after a 2004 falloff caused by an onslaught of $99 systems from major brands, Collishaw added. In 2004, dollar sell-through was roughly flat on unit growth of about 7 percent, he said.

Through A/V specialty stores, however, average selling prices (ASP) actually grew in 2004 and will grow again this year, D&M’s Weissburg said.

The unit-volume sweet spot will remain at $99 to $299 for most suppliers, Thomson’s Collishaw said, but marketers see opportunities for step-up sales, including 2.1-channel virtual surround systems from Denon and Thomson. Connectivity with iPods and other-brand MP3 players will also stoke step-up demand, as will wireless music distribution, suppliers said.

For the most part, however, wireless networking won’t fulfill its potential until 2006 or later. “The complexity of networking in general is still fairly high,” said Thomson’s Collishaw. But “it’s clearly coming.” Added Klipsch’s Jacobs, “Networked audio’s takeoff year will be 2006 or 2007.”

Another wireless technology that hasn’t lived up to its potential, Collishaw claimed, is wireless surround speakers, in part because retailers don’t do the demo. In addition, it raises retail prices by about $100.

Panasonic, on the other hand, is bullish on wireless surrounds now that it has shipped a $199 wireless option [before $50 mail-in rebate] to add wireless-surround capability to three of its new HTiBs. Optional wireless doesn’t force consumers to pay for it if they don’t want it, said national marketing manager Jim Kiczek.

Stereo systems: In two-channel systems, unit sales are slipping a bit, but dollar volume is way off as consumers shift to lower priced systems, said Sean Wargo, CEA’s director of industry analysis. The reason, said Collishaw, is consumers’ penchant for buying HTiBs, which cost more. “In 70 percent of homes, the primary audio system is in the living room along with the TV,” Collishaw said in explaining that people want one system to perform two functions: music playback and home theater playback.

First-half sell-through, he said, declined in the high single digits, but the decline will slow in the second half to 1 percent or 2 percent for a full-year drop of 3 percent to 4 percent. In dollars, full-year sales will likely be off by 15 percent.

Growth is limited to price points of $119 and down, Collishaw continued. At $149 and up, packing in more amplification isn’t generating the step-up sales that it used to.

As a result, suppliers are turning to other features to boost ASPs. Panasonic, for example, sees step-up opportunity in its $399- everyday five-disc micro-system bundled with flash-memory portable and 1GB SD memory card. It’s targeted to time-pressed consumers who need only press one button to transfer songs from five discs to the portable.