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HES’s Ristow: Embrace Connectivity Now


Connectivity is now where
HDTV was in 2001 and independent retailers “need
to embrace it … and take advantage of these new

That’s what Jim Ristow, executive VP of Home Entertainment
Source (HES), the A/V specialty division
of the BrandSource, told his members at the group’s
Summit, held here on Presidents’ Day weekend.

Independent retailers need to “diversify” into new
product categories and embrace change, such as
the “250 million Trojan horses” — tablet PCs and
smartphones — that they can use to connect their
customers to new or more robust connected home
systems. HES members must be “integrators that
sell A/V. Products that are commodities are not the

Ristow said that HDTV can no longer be relied
on as the only driver of independent retailers’ businesses.
At International CES this January, all the talk
and product news was about “connectivity, wireless
capabilities and content.”

Ristow cited Consumer Electronics Association
(CEA) statistics that HDTV sales peaked in 2008
and that average selling prices (ASPs) have been
down in double digits since then, meaning, in effect,
“We have to sell 25 percent more units to get the
same dollars we got the previous year.”

Ristow noted that independents must take “a new
approach” and that profitability can’t just be on “each
piece of hardware” which is getting smaller, but the
“total profit on each project.”

So Ristow cited existing and new categories
that independent retailers can emphasize and take advantage of in the new era of connectivity.

On the established side of the business, home audio
ASPs are up 8 percent in the past year, according
to CEA, with revenue up 27 percent due in part
to 3DTV. Multi-room A/V systems, which were down
dramatically two years ago, are on a double-digit
growth curve now, and wireless systems are up 30
percent, all strong categories for HES-type dealers.

Ristow stressed that new categories that many
dealers don’t currently carry — smartphones and
tablet PCs — will be keys to future growth.

He noted, again from CEA stats, that an estimated
200 million smartphones will be sold in the U.S. from
2008 until the end of this year and that “17 million tablet
PCs were sold in 2010, and it is estimated to double
in 2011, and not all of them will be sold by Apple.”

Ristow noted that tablets can “provide solutions for
all of your customers” if you work with them on it. He
reminded HES members: “iPod was supposed to be
a major problem when it was introduced, but now how
much of our business is now based on the distribution of
digital media? How much business do we do off of this?”

He said the 250 million consumers who have
smartphones and tablets “provide us with a huge opportunity.
Only 2 percent are using those devices for
full home audio or lighting.” The devices are “not just
phones, for email or for GPS. They are home controllers.
And it becomes personal.”

And with content “coming from the cloud with Netflix,
Google TV and a litany of platforms,” there is a new
entertainment ecosystem that “consumers can get for
$16 a month.”

The home entertainment ecosystem is quickly including
“tablets, smartphones and PCs, where they
want their content to move when they want it.”

While HES members will “continue to pull a lot of
wire” Ristow recited a list of products, and services
HES should provide: Skype; HVAC; media streaming;
shades/blinds; home security; content delivery; wireless
zones and wireless speaker systems; and “higherticket
fashion headphones.”

He noted, “We are A/V specialists that integrate
and integrators that are A/V specialists,” that can understand
and “easily demonstrate” the many aspects
of the new connected marketplace that independent
A/V retailers now compete in.