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What's New in Home Audio? Kurt Scherf,
Parks Associates |
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CE Pro, October 2001
Was Shakespeare referring to "late adopters"? Regardless of whether you believe that his judgment of a non-music aficionado is too harsh, it is clear that, among certain influential 16th century observers music appreciation was considered a fair judge of a individual's character. Now half a millennium later, it is evident that, although much in the world has changed, our perceptions of the importance of music at home may not be that far removed from days of yore. In fact, industry trends are pointing to a not-too-distant future where a household without high-end music storage and distribution capabilities may very well be the exception rather than the rule. On a macro level, it's abundantly evident that audio products are hot. According to the Consumer Electronics Association (CEA), sales of audio products, including home and automobile solutions, topped $8 billion in 2000. Whether it's a professionally installed multiroom sound system with in-wall speakers, a structured wiring solution that ties legacy sound equipment into the home network, or audio servers that consolidate audio content from the Internet and existing music collections, year 2001 trends in home audio point to a continued expansion of this particular sector of the home systems marketplace. At the micro level, the reasons for the widescale introduction of new products and systems aimed at audio are becoming clear. Consumers, hungry for high-quality audio solutions, are going to be the main drivers for these products. "I think it's the customer demographic that's driving this business, because they're interested in having high-quality audio throughout the home," says Stan Shields, business manager for the Custom Solutions Group at Bose Corp. (Framingham, MA). "People in the market today grew up with hi-fi ears. A few years ago people might have tolerated not great audio, but today it's expected." Mike Braithwaite, Marketing Manager for Crestron Electronics Inc. (Rockleigh, NJ) agrees with this assessment. "We do see a positive growth trend for multi room audio and video, because people have been growing up with music and movies," he notes. "It is very natural to them, and they want it in everywhere they are." Cross-Market Opportunities: Home Control and Home Audio "We entered the home audio and video business because we felt it had been underserved by traditional AV manufacturers," he said. "We want to make it easier for people to enjoy all of the latest in technologies, not to be overwhelmed by the vast sea of configurations, and complexities that accompany these advances." To this end, Crestron now offers such products as the CNX-PVID8, which delivers video from up to 64 separate video sources like DVD players, DSS receivers, tuners, VCRs and cameras into as many as 32 separate rooms and areas. This component, Braithwaite notes, is one part of the Company's Crestron Home™ solution for distributing audio, video, and control throughout the home. On the flip side, the last few years have seen players traditionally associated only with audio turn to home control as a way to expand their revenue base. Officials with Sonance (San Clemente, CA) are extremely enthusiastic about the synergies between home control and home audio applications. "The interesting thing about home automation and home networking is that it creates the need and the capability for more speakers in more places," says Mitchell Witten, the Company's Vice President of Marketing and Product Planning. To this end, Sonance recently entered into the home control marketplace with an IR based system called Sonance Navigator and a browser based system called Navigator Network. The advantage to installers from one provider for both home audio and home control is self-evident, remarks Witten. "Many installers prefer to work with one manufacturer as much as possible," he notes. "It allows them to build better relationships with customer service, tech support and R&D which builds trust and confidence. Adding these products to our offering has certainly proven this to be true." Structured Wiring Makes an Impact "If you've been staring at the market for a few years, it's becoming pretty clear that structured wiring by itself is not the 'killer app,'" says Mark Schmidt, Vice President of Sales and Marketing for Home Director Inc. (Morrisville, NC). Schmidt says that a major challenge that his company has selling structured wiring's value simply beyond distributing phone and video in the home. "We've got to go beyond 'wire and can,'" he notes. Entertainment - and in particular audio applications - is one key growth area. "The whole notion of what a home network means to a consumer changes radically with the introduction of entertainment applications," he continues. "Audio is one of those areas that's very, very significant." Home Director has a background in packaging whole-house audio solutions with its structured wiring solutions, a bundling that Parks Associates finds will increase as structured wiring itself becomes more prevalent. For example, in a 2000 survey among 696 U.S. home builders, we found that the percentages of homes being pre-wired for high-end entertainment solutions increases dramatically with the installation of a home networking solution (see Figure 1).
Schmidt anticipates that the Company will see continued growth of multiroom audio packages sold in conjunction with structured wiring systems (he estimates that the take rate for a multiroom audio package, typically with in-wall speakers from manufacturers such as Sonance and Niles, is approximately 20% of the high percentage of homeowners who opt for special home networking and audio options from Home Director). To supplement these offerings, and to extend Home Director's reach into consumer entertainment applications, Home Director will supplement these offerings with new solutions that include AudioPoint™, which allows consumers to - among other applications - leverage the Ethernet backbone to connect legacy sound equipment (stereos, receiver, etc.) to the network to stream music. The Company is also releasing ControlPoint™, a "residential gateway" that includes 6 GB of storage and networking technologies to store and deliver an array of content within the home. This, according to Schmidt, is a serious effort to go after a market segment of true audiophile households. "We are really after consumers who know what digital music is, and those who can't live without it," he notes. Verizon Connected Solutions (Beltsville, MD) has experienced similar demand for home audio applications sold in conjunction with its structured wiring installations. Jeff Sproat, Product Manager for Verizon Connected Solutions, estimates that the take rate for a home theater package is one in five structured wiring customers. The take rate for a four-room multiroom sound system, he estimates, is probably one in 15 customers. With these offerings, Sproat says that they can meet the audio and video demands of many of Verizon Connected Solutions's customers. However, he notes that the Company's core competency is not in high-end video and audio installations. To this end, they offer pre-wire packages for higher-end audio and video solutions and then partner with integrators in the Company's footprint who can offer these higher-end solutions. "After the customer moves in to a pre-wired home," Sproat says, "an A/V integrator can come back and install anything that the customer is looking for." Centralizing Audio Content in the Home
"Our target consumer for this product is predominantly males, tech-enthusiasts between the ages of 25-45 with a yearly income of $50,000 or more," says Petro Shimonishi, Marketing Strategy Manager for Kenwood USA Corp. (Long Beach, CA). Kenwood has recently released what it calls an "entertainment hub," a digital music player called the Kenwood Sovereign Entré™. This device, to be sold as a complement to existing and future Kenwood Sovereign products, includes a huge hard drive (20 GB), as well as a CD player/ripper, and other goodies that should sate the needs of even the most ardent audiophile. What does Kenwood see as opportunities down the road? "For the future, we are looking to be able to allow the user to seamlessly wirelessly transfer their MP3 content from a home server to the car," says Shimonishi. She notes that, at present the technology and copyright issues to manage such a capability are not yet solved. In the long run, Kenwood is confident that the entertainment space will move to a whole-house media server type product, which she refers to as the "media furnace." Bose's Shields agrees, saying the his company expects the home audio market to ramp up even more once these mass-storage devices come to market. With all the other high-tech wizardry discussed in the context of discussing audio in the home, it would be remiss to ignore the role of the home computer. The question of what kind of role the PC will serve as the digital media hub for the home is not without at least some debate and controversy. Bose's Shields, for example, notes that, although the PC - with its robust processing power and storage - is conceivably a good platform for a media server, he doesn't believe that the average consumer has the time or patience to figure out how it's going to work. "The early adopters are all over it, but it's not clear to me that it's going to be the answer for the rest of consumers," Shields averred. However, the view from Intel Corp. (Santa Clara, CA) is markedly different, according to Brian Fravel, the Company's Consumer Desktop Marketing Manager. With the emergence of Windows XP and the release of PCs with Pentium 4® processors, Fravel indicates that - more than at any other time - the PC is primed to be the centerpiece of the home entertainment network. "I think that music has made it to the mainstream where people realize that the PC is a very valuable and flexible device for music content," he said. Once emerging technologies such as wireless 1394 become available, Fravel indicated that the value perception of the PC as an entertainment hub will increase in the eyes of consumer. For example, by installing RF nodes on the PC and on existing legacy equipment, music and video can be streamed. "If I've got some sort of device that I can put on the back of my existing stereo, my PC, which is now my digital jukeboxes, can be connected for very little effort," Frave notes. "I can start playing wherever and whenever I want." Given Intel's push into home entertainment, are we likely to see the PC serving as the centerpiece of a high-end and custom installed home audio system? Easily, said Fravel, given certain conditions. "The PC, obviously with the processing power and the storage capabilities, can store some pretty high quality content," he notes, which should make it an ideal platform for doing this. "As long as you're not using some sort of proprietary technology to the speaker, you can always do it." Regardless of whether the home uses a dedicated media server or a PC to store and distribute audio and video content, the development of software to coordinate how the a user accesses the multimedia bits is critical in ensuring that the end-user experience is optimized. One company pursuing these kind of software solutions is Mediabolic (San Francisco, CA). According to Jeremy Toeman, the Company's co-founder, Mediabolic's product enables a family to have a dedicated digital media device, such as a media server, that stores an entire family's music, video, and photo collections. "Best of all, the end-user experience is ideal," Toeman adds, "as our technology feature automatic networking discovery that completely eliminates all hassles when connecting multiple products in and around the home. An ideal solution fully enables consumers to leverage the lean-back and lean-forward activities they want to have in different rooms in their homes." The bottom line, of course, in all of this, is providing new market opportunities to distinct segments of this industry, mainly dealers/installers and home builders. The participants in this article assert that their solutions are doing just that, both in making the installation of high-end audio products easier and driving new revenue streams. "Digital products naturally encourage the sales of add-on components, including new portable devices, incremental storage capacities, and upgraded software components," notes Mediabolic's Toeman. In addition to added revenue for the install through up-sells, he notes that his Company's technology will make it that much easier for the installer to integrate the products and systems within the home. "The best part about these types of technologies is that they are designed for virtually any type of home configuration," he stated. "By leveraging discovery, for example, an installer just needs to bring the network into every room, and the devices themselves are able to find the rest of the media in the home."
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