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iPod Speaker Systems Adapting To iPhone

iPod speaker-system suppliers are sharpening their focus on iPhone-certified models to stay competitive in a recession-resistant market, and some vendors plan to pay more attention to $199-plus models to drive up average selling prices.

Suppliers are adopting one or both of these strategies at a time when the iPhone is trumping the iPod in percentage unit growth (see story, p. 6) and average selling prices have fallen 11 percent year over year for the six months ending February, to about $79, The NPD Group found.

Retailers, too, are focusing more on iPhone-certified models, suppliers told TWICE. In fact, top retailers, including Best Buy, are requiring Works with iPhone certification in the docking systems they sell, suppliers said.

Apple’s Works with iPhone certification assures consumers that their iPhone will receive calls even while docked and that music playback will be free of cellular interference even if the phone radio is in standby mode waiting to receive calls.

Currently, about half the speaker-dock SKUs priced at more than $100 and currently on the market are certified as Works with iPhone, and only about 20 percent of speaker docks at or below $99 bear the certification, suppliers told TWICE.

Going forward, Altec Lansing said all of its products will be Works with iPhone-certified, and Klipsch will supply its first Works with iPhone speaker dock in July. Brands such as Logitech and iHome already offer several certified models.

For Klipsch, it took 10 months to receive iPhone certification for the updated iGroove SXT, which ships in July. Klipsch didn’t want to tamper with a successful product design, so it spent many months tweaking the current SXT. “Every product is a different shape with different metal, so every one is an antenna in a different way for interference. Anyone who created a product design from the ground up for Works with iPhone had an easier time than taking a design that was already on the market,” said product marketing director Don Inmon.

The new Works with iPhone iGroove will offer improved sound performance at the same market price of $149.

Logitech agreed that getting Works with iPhone certification is a challenge. “Yes, it was a very difficult process when the iPhone first came out, but now we know how to design for it,” said Doug Ebert, Logitech’s global product manager for digital music.

Despite the challenges, suppliers are turning to iPhone certification to remain competitive in a market that remains a relatively recession proof and stable arm of the audio market.

Retail-level unit sales of iPod-docking speaker systems were up 3 percent year-over-year during the six-month period ending February 2009, according to NPD.

Dollar sales, however, fell 8 percent for the period as a result of an 11 percent decline in the average selling price, to about $79, NPD found.

Generally speaking, the popularity of the $149 price point gave way to the rising popularity of the $99 price point, and few products have managed to stay afloat at $199, suppliers said.

Suppliers talk of a “black hole” between $149 and the $300 mark — a peak price dominated by the Bose SoundDock, but some suppliers are taking up the challenge and aiming their research efforts at $199. Logitech called the price point an opportunity for a lifestyle tabletop with superior sound quality, and Klipsch said it is planning a new product at $199.

In other new products, Klipsch plans a high-end clock radio, internally known as the “ClocDoc,” to ship possibly in the fourth quarter.

Altec Lansing is focusing on wireless technology with its Octiv Air wireless iPod sound system, which soft-launched in late December without advertising and is just now being promoted. The 80-watt speaker system with FM radio reproduces iPod-stored music transmitted via 2.4GHz wireless from an iPod docked in a wireless-equipped tabletop cradle located closer to the end user.

The system’s introductory promotional price is $299, and the standard suggested retail is $399.

iHome will ship its previously announced 100-watt iP1 tabletop system in June or July at a suggested $299. In early May, the company will also ship a previously announced iP41 travel alarm clock using NXT’s flat-panel speakers at $79.99. Both are Works with iPhone certified.