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New iPod Speakers On Way As Market Recovers

NEW YORK — A modest recovery
has taken hold in sales of iPod/iPhonedocking
speaker systems, boosting dollar
volume for the year to date following
last year’s dollar decline, marketers
told TWICE.

They expect the rebound to continue
as an improving economy and secondtime
purchases encourage step-up sales
and as suppliers launch iPad-docking
speaker systems to the market in the
second half.

The growth is welcoming to suppliers,
including Philips Consumer Lifestyles,
Eton, and Spectra Merchandising —
that have launched or plan to launch
new products and to companies such as
Edifier, which is entering the U.S. market
for the first time.

NPD Group statistics show dockingspeaker
sales rising at 8 percent in both
units and dollars during the first four
months of the year, an improvement
from last year when dollar sales fell despite
rising unit sales, marketers said.

During the past six months, unit and
dollar volume have been rising, whereas
dollar volume fell through late last year
despite rising unit sales as consumers
traded down during the recession and
retailers trimmed prices, said Roy Carpenter,
customer marketing director
for Philips Consumer Lifestyles.

Philips forecasts an industrywide 5-
percent gain in dollar volume in 2010
and a unit-sales gain of 10 percent at
the retail level, in part due to household
penetration rate expected to grow to 35
percent by the end of 2010, up from 28
percent at the end of 2009.

In last half of 2009, about 45 percent
of buyers were repeat buyers, he noted,
and current owners of lower price models
are trading up, encouraging Philips
to launch a Fidelio series of speaker
docks focused to a greater degree on audio fidelity and priced up to a suggested

Bernice Cramer, Altec Lansing’s marketing
and product management senior
VP, has also seen consumers stepping
up, although many are still focused on
low-priced models because of the nation’s
economic turmoil.

“We have seen a modest recovery from
last year with unit and dollar sales both
up in the mid to high single digits,” Cramer
said. That’s due in part to what she
called a “mild recovery of sales in the higher
price bands.” Nonetheless, she said,
like other CE product sales, iPod-speaker
sales have been influenced simultaneously
by “higher sales of more expensive
items” on the one hand and simultaneous
“price erosion and the strengthening
of some lower ASPs” on the other hand.
“The dual trends, she explained, reflect
“the cautious return of higher income or
higher disposable income shoppers” as
well as “frugal and battered consumers in
the broader market.”

Demand for speakers certified as
Works with iPhone is also driving
sales, given rising iPhone penetration,
she said.

Penetration of speaker systems certified as Works with iPhone will continue
to rise, added Spectra Merchandising
marketing VP Kirk Lamb, because
“as of April 15, all new docking speaker
systems can apply for Apple’s approval
only if they include Works with
iPhone.” Existing iPod speakers previously
approved as Made for iPod “can
still be produced and sold, but certainly
we will see a phase-down of this basic
category in the coming year,” he said.

The iPod/iPhone speaker market,
he said, has certainly reached maturity,
and “the growth that was being seen
in the category several years ago is simply
not there, but the overall continued
popularity of the iPod, and more recently
the iPhone, continue to keep this
important category very much alive.”

The market, he contended, “remains
strong for models where innovation and
special features are being delivered to the
consumer as part of the overall package.
Strong design elements are also keeping
the market alive and inciting renewed interest
in the category for consumers who
are open to replacing an existing speaker
system with something fresh and new or
that offers a step-up in quality.”

Something fresh includes a growing
number of iPod/iPhone speaker systems
that accept free downloadable
apps to add additional speaker-system
functions when loaded onto a docked
iPhone or iPod Touch. “The features
that these apps bring to the category
are opening up a whole new experience
for the consumer,” he said. They include
clock radio functions, custom EQ
settings, and in the case of a Spectraplanned
iPad app, access
to a subscription-based music service
that gives users Internet-streaming
access to their music collections.

The launch of the first iPad speaker
docks will also stimulate the market,
but Altec Lansing’s Cramer expects a
surge in products to occur late in the
year or early next.

Because the iPad features “a different
form factor with different use case than
just the iPod, though there is natural
overlap, we are working on new solutions
to enhance the experience for sound and
other functionality,” Cramer continued.

One challenge is not to design a product
that works with the iPad’s tabletstyle
form factor, but another is to design
a 30-pin connector compatible not
just with the iPad but also with the iPod
and iPhone.”It’s not as simple as you
might think for one dock to do the job
of three,” she noted. “You have to manage
both the physical differences — you
don’t want the iPad to cover the drivers
— as well as the electrical differences.” A
docking speaker, she noted, won’t charge
an iPad unless it’s designed for the iPad.

The minimum requirement for charging
an iPod/iPhone is 1 amp, and for the
iPad, it’s 2.1 amps, Spectra Merchandising
told TWICE. The audio and composite-
video pins for iPod, iPhone and
iPad are the same, the company added.

However long it takes for the expected
surge in iPad speaker systems to arrive,
Spectra’s Lamb said “the accessory
market for the iPad, including speaker
systems, should continue to add fuel to
the iPod/iPhone/iPad accessory fire.”