Media Centers, Wi-Fi Revolutionizing Retail And Lifestyles

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TWICE:Tweeter's new prototype store in Las Vegas suggests that the company is betting on the media server as the heart and future of home entertainment.

Judy Quye,Tweeter: We've made a partnership with great brands, both HP and Microsoft. We have to provide the venue for the customer to vote on whether they want to use an open architecture or a more traditional architecture to bring digital media into their home. It's not about making a bet. It's about providing all the options and solutions.

As kids who've been breathing technology right out of diapers move into being purveyors and purchasers of the products we sell, we need to understand what they're looking for. We look at it as a petri dish opportunity to understand where the buying public is going to go with the possibilities. We're excited about the partnerships.

TWICE:How does CompUSA foresee the future of distributed A/V?

Tony Weiss,CompUSA:Having a media hub is obviously very important to where things are going to go. Having all the different components and products associated with distributing the solution is one thing. The tricks to getting the consumer to adopt are ease of use and how you distribute and manage content. Neither of those things is easy today. That's ultimately what will get that technology to become more mainstream in the consumer's home: making the product easier for the consumer to use and finding more effective ways to distribute content — audio, pictures, video — across the home.

What we're seeing today, at least in our business, is a significant number of consumers making purchasing decisions that are media center enabled, so they're ready for the future. Only a percentage of them are taking advantage of all of the benefits that are there. A significant piece of our mix in both our assortment and our sales at CompUSA is made up of media center PCs, both on desktop computers as well as portable mobile laptop technologies.

We're seeing two angles: the traditional home and the college dorm room. During back-to-school, we saw significant impact from media center technologies for the dorm room, where people could watch the television as well as distribute music and do it in a very compact form or fashion.

Don Carroll,Radio Shack: You're seeing a lot of these things being driven generationally by say, 25- to 35-year-olds who have the disposable income and are not afraid of the technology. They're adopting it early. They're the ones leading the marketplace. I don't think it's a fourth-quarter trend that's evolving. It's a trend from two years ago that we'll have for the next five to 10 years, this migration to digital technology.

Rubin: If you understand that the digital libraries are growing, you understand the need for some kind of interface to it. That's one thing media center provides. It's interesting to see so much of the music moving to the PC these days. Is it a coincidence that home audio component sales are going down? There's some convergent competition there.

A lot of consumers don't understand the notion that the music doesn't have to physically reside where I'm enjoying it. That's a conceptual shift that's going to take quite a few years for people to understand.

Doug Moore,Circuit City: Our point of view is that Americans have their highest love affair with the television. The PC, although it's taking on aspects of being entertainment-driven, is still a device that they merely like a lot. The passion in the business is going to gravitate toward the living room and what happens there. You've seen it with the key global vendors who have shown up in the living room that weren't there before.

Whatever opinion that we have about the business and where it's going, the only thing I'm sure about is we're probably wrong. I just don't think we know. We have to continue to catch consumers where they are, put them in position to take advantage of whatever's available at the moment, and keep moving that business just a few feet in front of where they want to be so they continue to move toward it.

I don't know how each of us here will participate in that, but that's our job. Products that you see at CES are often way out in front of the consumer. They generally have to be revised or put back to where the consumer is willing to pay for whatever it is.

The debate about where the action is is healthy. It may be biased by where your heritage is. Obviously, we started as an audio/video retailer. We have a bent toward that. We still believe that the TV and an American on the couch is the most obvious thing to think about when you think about what might happen here.

Quye: Tweeter believes that success will come from finding ways to untangle the consumer's mind through the store experience so they can understand how to take these technologies into their homes and lives. Our new retail prototype is a combination of notional spaces where you see complete distributed entertainment solutions built on the partnerships we have with HP and Microsoft.

The center of the store is the design center, so that the consumer can look at building their electronics home or life as more than one component. I like to think about it like furnishing a home. You start with one room — the room you're going to use the most — and put your investment there and build on it over time. Consumer electronics is very similar. We found that the whole design layout of your home, car, work and life is important. Our goal in the store is to help people see how to put that together and show them some “wow” experiences, not only from home theater but in the living room, kitchen, bathroom, game room, kids' room — you name it.

There's less merchandise than you're familiar with in a retail store because it's more about education, understanding and relationships. It's a lab for us — a place for us to learn about the technology and the customer response so that we continue to run with the industry as it changes.

Jim Ristow,Home Entertainment Source: That's what we're talking about: the early adopter, the solution, the start-to-finish — not just the manufactured technology, but putting it into the consumer's house and making sure they can understand and operate it.

As independent specialists, that's basically what the roots of the Home Entertainment Source dealers are. We had dealers putting demo houses within their stores in the late 1980s and early 1990s, and offering distributed audio and these types of solutions. Now we're seeing companies like Tweeter and some of the others who are on this panel, and some who aren't, go into that whole category. Where this concept becomes mass market isn't very far around the corner.

Rubin: It's interesting to see how these demonstrations and the need to get it in front of the consumer has been driven by new entrants coming in from the PC side, with mixed degrees of success. You've had Apple doing it in its own stores. You've had Gateway trying it in its own stores and maybe now working with many of you here to do it in your stores. Dell with its kiosks, HP with Tweeter — I think all the PC guys, as they look to try to bridge that gap between productivity and entertainment, understand that there's a lot of education to do.

Sadowski: I think the bridge truly is wireless technology. There's always going to be a robust business in installation. That will continue to be an addressable minority of the households. But the American family and entertainment products purchaser has been spoiled with products that are easy to set up and use. Where businesses like add-on audio — a perfect example — have not been successful is where they're very complex, with spaghetti factories of wires behind them that nobody even wants to understand. Wireless technology is a fundamental bridge to losing all of that and taking whole-house control systems out of the realm of the custom installer and the multi-thousand-dollar installation and into the realm of the $99 wireless router. We're not there yet. It doesn't work that well yet and people don't understand it, but it will work really well and simply very soon. People will understand how to do it because people are putting wireless networks by the millions out there in their homes. That will be the bridge.

The last point is that the software for control systems that had cost thousands of dollars and required hundreds of hours of custom programming is changing rapidly. There are new core control software technologies out there by some very aggressive start-up companies, one of which Tweeter is working with. They're going to change the control side of it.

The control software coming way down in price and complexity and the wireless connection will be the bridges to mass acceptance of this. I believe that it's on the verge of mass acceptance in a very small number of years.

TWICE:That will further lower the barrier to entry for any guy working out of his trunk. Won't that be disruptive to CEDIA-type installers and integrators?

Sadowski: Traditional installations are not coming down a lot in price. That customer's always going to be there. There's always going to be the customer who wants the media room and sophisticated control functionality. The core software is going to bring the price of the control functionality down, but the home installation business is going to be very healthy. It will never become a total mainstream product. I'm talking about what will be very good for the traditional retailer, in that people can pick up a box that is a solution: wireless, doesn't require installation and will do a lot.

Carroll: That's what will reach the mass market: plug-and-play, in a box, and you pick it up and walk out. That may be the death of the independent installer, but I think we have other retailers that have a reputation for professional quality installation. If someone's going to spend $4,000 to $5,000 on a home entertainment system, they're going to want it done right.

Quye: I see the ease-of-use boxes that you can plug in, but when you put those all together in your room even today, you have six remotes on the coffee table. There's do-it-yourselfers, and there's do-it-for-me's. There's plenty of do-it-for-me's out there and a lot of do-it-yourselfers who get started and then say, “Forget it. Come on in and do it for me. Give me the ease of use of a single remote, and show me what that can look like in my life and my home.”

Ristow: You'll see commoditization in installation, but for the early adopters, whatever the newest, latest, greatest is will need more than the mass-market solution. We see huge growth for our channel. We think we're at the tip of some huge technology changes and adoption by our type of customer. It'll help everybody at this table as it goes down in price.

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