What it takes to launch a new media format

JupiterKagan’s Michael Gartenberg has a great post about the three elements needed to successfully launch a new consumer media format. He concludes that neither HD-DVD or Blu-Ray measures up.

-avi

Full disclosure: I created the diagram that Michael uses to illustrate his point back when I was an analyst at what was then called JupiterResearch and he was my Research Director; it was for a report on next generation audio formats.

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Samsung Blu-Ray Launch Did Not Impress

Samsung_bd_1I attended Samsung’s Blu-ray Disc player launch this evening at the Samsung Experience in New York and came away disappointed. There were several things wrong with the launch, starting with the fact that it was off by ten days (the players won’t actually be available for sale until the 25th):

  1. Samsung’s prepared remarks were overwraught, telling us over and over again how much we would be blown away by Blu-ray, and to prove this they showed a cheesy video and a few movie previews that, quite frankly, weren’t all that impressive on the pair of Samsung DLP TVs at the front of the venue.
  2. Samsung boasted – several times – about how they were the first in the world to launch the product. This may be true (though, technically, the actual launch is still 10 days away). But Blu-ray follows HD-DVD’s launch in the market. There was no discussion of that elephant in the room whatsoever. No comparisons, no predictions, no explanations of why consumers will choose Blu-ray. Nada. It was like HD-DVD not only didn’t beat Blu-ray to market, but that HD-DVD doesn’t exist in the first place.
  3. Finally, we were shuffled off to a side area that was intended to look like a living room. Nothing was done to acoustically isolate the "room" – actually just curtains – so the sound bled in from both the Terminator 2 demo in the other "living room" and the loud music in the main area. Thus, audio quality was impossible to evaluate. This was a shame, because the super-exciting video clip we saw earlier had promised AMAZING sound!!! demonstrated in the video by little helicopter outlines flying out of the speakers and INTO THE GUY’S EARS!!! AMAZING!!!
  4. The "living room" was equipped with another 50" (or perhaps 60") Samsung DLP. On the one hand, this is the sort of setup a consumer might have in their home. On the other hand, if you’re really trying to create an immersive experience to show off the player’s capabilities, wouldn’t you want to go with a larger, more immersive image from a front projector?
  5. Finally, the demo… The demo group I was in was shown a segment from 50 First Dates. I like the movie, so I had high hopes, especially since this is not standard T2/Fifth Element/Anything-By-Pixar demo material – it’s a romantic comedy. If 50 First Dates is better in HD, then anything is.

    50_first_datesIt started off well – Adam Sandler by himself on a boat with beautiful Hawaiin scenery in the background, all in clearly higher resolution than DVD and more saturated colors than is typical for DVD. Then, the sound mysteriously went out (the Samsung rep blamed the glitch on a Samsung A/V receiver). By the time sound was just as mysteriously restored, the cinematography had moved to a close up of Sandler’s face, then flashbacks, then a soft-focus shot of Drew Barrymore. None of this was enhanced by HD. Then a longer sequence leading to Mr. Sandler asking Drew whether she recognized him at all. This sequence, too, did not appear to be much improved from a DVD. While the background scenery really popped in one scene, based on this experience, I’d have a tough time recommending the Blu-ray "experience" at all.

Now, it’s certainly possible that the sound glitch was just a glitch. And that in a controlled environment, there would be audible benefits to the enhanced bit rate version of Dolby Digital used on Blu-ray. And that, over the course of an entire movie – we saw just a few minutes – the higher resolution video would have altered the experience. It’s even possible that while romantic comedies such as 50 First Dates do not benefit from Blu-ray, an epic film, animation, or sci-fi really would. I have been on the record saying that most consumers will not be excited by a new disc format – you need several real enhancements to sell a new format, and the only thing Blu-ray offers is higher video resolution for videophiles. Nonetheless, I always assumed that videophiles – and I am one – would be excited by Blu-ray.

But I got none of that from the launch. Samsung’s clearly artificial excitement bled away any possibility of the real thing. This was the official launch of a product I’ve been following and looking forward to for several years – there should have been no way for me to have felt like heckling during the presentation. I have been to product launches where Steve Jobs made me excited about a sneaker/iPod combo for hard core runners, and I have not run anywhere since I was in fifth grade. I’ve been to product launches for televisions – Samsung televisions, in fact – that made me want to pull out my credit card. I have been to product launches for high definition audio formats that I knew were dead on arrival, but at least they made you believe, for a little while, that they might succeed.

The actual Blu-ray experience may be a lot better than Samsung’s launch of the first Blu-ray player. I certainly hope it is.

-avi

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Sony Kills Blu-Ray Advantage with PS3 Pricing

When assessing the relative strength of HD-DVD vs. Blu-Ray for high definition disc format war handicapping, I have always been quick to point out that DVD is the likely successor to DVD, as it is "good enough" for most consumers and addresses a larger installed base of non-HDTVs in addition to HDTV sets with decent anamorphic ("enhanced for widescreen TV") performance. But the other thing I have noted time and time again is that Sony’s Playstation 3 (PS3) was a potential trojan horse, bringing Blu-Ray playback to the masses. At E3 today, Sony announced the pricing and availability for the PS3, and it’s… well, it’s late and it’s exhorbitant. In the U.S., the PS3 will start shipping November 17 for at least $500. $600 buys the version with HDMI, which you’ll need to get all that Blu-Ray goodness over to your HDTV. Will Sony sell more $500 and $600 PS3’s than Toshiba sells of its $500 HD-DVD deck? Probably, but this is hardly a price point that will resonate beyond hard core gamers, and the Blu-Ray capabilities are not a "freebie" when you have to pay $600 for it.

The PS3 pricing will come down over time, and so will pricing on standalone HD-DVD and Blu-Ray decks. And the PS3 may yet be the tipping point that puts Blu-Ray over the edge. But even if that does end up being the case, this trojan horse is going to take an awfully long time to mosey over the finish line. In the meantime, it’s looking like both formats will have a long, tough fight ahead of them, and may never amount to much more than the laserdisc of this era, to be replaced by on-demand downloads, holographic media, better codecs for red-laser media(DVD-something) or …something else.

-avi

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Sonos System Review

What_boxhero1 I’ll admit it up front – one of the key reasons I run Home Theater View is to get early looks at products like the Sonos system. I have been following Sonos since well before it launched. The concept is simple: Sonos takes the music you’re already storing and managing on your PC and streams it to multiple locations around your house. The controller looks like an iPod, and, like an iPod, nearly anyone can use it. Each Sonos unit becomes part of a separate wireless mesh network – no WiFi needed, and setup consists of pushing a couple of buttons and letting Sonos do all the work. Sonos can play different music in each room, synchronize music to multiple rooms, or synchronize music to all rooms ("party" mode). Sonos can also accept music from any room and stream that back to any or all of the other units.

Sonos launched with a 2 room $1199 bundle: Sonos supplied a player/amplifier (ZP100) for each room and a controller (CR100), but expected consumers to BYOS (Bring Your Own Speakers). Zp80_heroSonos quickly heard that the BYOS strategy was DOA for a large segement of their target market, and rolled out Sonos-branded speakers for $179, or as part of a $1499 package for two amps, two pair of speakers, and a controller. The most recent update to the system is the ZP80 (pictured at right), which asks consumers to BYOA (Bring Your Own Amplifiers), which makes sense for economically integrating home theater systems and the like, which already have their own amps.

Zp100_hero_1 My test setup included a ZP80 along with a pair of ZP100’s (pictured at left), a C100, and a pair Sonos Speakers. I have also hooked up a pair of Carver HT5.1 bookshelf speakers to one ZP100 and an Altec Lansing self-powered satellite-subwoofer PC speaker system to the ZP80.

Pricing: It Depends On Your Point Of View

What’s unique about the Sonos’ pricing is that it is either extremely expensive or a significant bargain, depending on your point of view. The Sonos ZonePlayers are $499 each for the ZP100 (the one with a built-in amplifier) and $349 for a ZP80 (the one without the amplifier). ZoneControllers cost $399 each, speakers are $179, charging docks for the ZoneController are $49, and a spare charger cables is another $19. The least expensive bundle is $999, which will be fine for many users, but expects users to both BYOS and BYOA.

This pricing makes technical early adopters scratch their heads and whine that compared to most streaming audio players, the Sonos is wildly overpriced. The Omnifi Simplefi I’ve had in the house for a couple of years, along with products from Pinnacle, Roku, Squeezebox, Linksys, and Apple, all cost between $129 and $299. Other options are mating an iPod with an Apple, Klipsch, or Bose audio dock: presto! music wherever you are. Finally, a cheapskate friend pointed out that boomboxes cost $39 at Target and can also put music in your room. If you’d be happy with a boombox – or even an iPod and an Apple HiFi – then the Sonos is clearly too expensive.

At the other extreme, a custom installed system can cost tens of thousands of dollars for a multi-zone setup that would cost $3,000 or $4,000 with a Sonos. In this respect, the Sonos is an incredible bargain.

The problem with the iPod and boombox is that they are single zone solutions – when you leave that room, you leave your music (and the boombox will only be able to play a fraction of your music collection, digitized or not). True, you could put a speaker dock in every room of your house and move the iPod with you, and if you live alone, this is a perfectly valid solution, but even then you need to move the iPod every time you leave the room, and it’s hardly sufficient for a party.

The problem with most streaming media players is that they are either single zone (Apple, Linksys), cannot selectively synchronize music among multiple zones (all but the Squeezebox), have no display for selecting music to play (Apple, Linksys), have only a basic user interface (all), require a reasonable level of comfort with technology for setup (all except the Apple), and cannot accept music from remote sources and stream that around (all).

Where the Sonos Shines

In practice, the biggest drawback to most streaming music solutions is that they either need to be hooked up to a display, which limits where you can put them in the house, or they have a one line display and a rudimentary remote control, which makes moving through large music collections annoying. My wife was delighted when she discovered that with the Sonos What_hero2she could quickly and easily create disposable mini-playlists by selecting songs and albums and putting them into the queue for just the two rooms she was working in that day. The large screen, scroll wheel, straightforward user interface, and multi-zone capabilities on the Sonos makes that scenario possible, and she discovered it without cracking the owner’s manual. (Our five year old also likes choosing his music and routing it to zones throughout the house, but, then, he’s five. Today’s five year olds can master anything.)

Another neat trick the Sonos does is digitize and stream any source you feed one ZonePlayer to any or all of the other zones in your home. In practice, this means you can plug in a friends iPod, programmed with his party mix, and blast the music all over the house. The ZonePlayer accepts analog signals, so a favorite record or tape can be streamed around as well (though a preamplifier may be needed for phonographs to present a loud enough signal to the system). I even plugged in Nokia’s latest music phone and a Kurzweil digital piano and used those as sources. The volume needed to be adjusted based on the source, but, other than that it works like magic.

Custom installed multi-zone audio systems can do all these things, too. There are several systems on the market that offer rich user interfaces, tech-free setup because someone else sets it up, and even remote source streaming. The problem here is one of price: to do what a Sonos does, you might have to pay tens of thousands of dollars for a sophisticated touch-screen based multi-zone system. A single Crestron controller costs more than a basic Sonos system.

Performance

The Sonos’ sound quality was excellent across the board. The Sonos system could resolve enough detail that the weak link in the chain was typically the codec used to compress the music, not the Sonos wireless system, amps, or speakers. Having said that, it won’t convince hardcore audiophiles to give up turntables, tube amps, and a pair of Vandersteen speakers and settle in for a dedicated listening session. But for the types of uses a Sonos system enables, the Sonos provides all the audio performance that’s needed.

Sp100_lg_1_2The speakers (pictured at right – click to enlarge) are actually quite a bargain. Bass is tight, highs are well resolved, and the midrange is pleasant. In a direct comparison, the Carvers were easily audibly superior with better bass and better presence in the treble, but the Carvers are a bipole design and were part of a system back in the day that retailed for a lot more than $179. I can easily recommend the Sonos speakers at their price point.

Installation and Setup

One key drawback is that a hard wired (Ethernet) connection is required from your PC to the first ZonePlayer unit. After that, Sonos has its own built in mesh network (technically not WiFi) that sets itself up automatically. Like all mesh networks, the more nodes (ZonePlayers and ZoneControllers) on the network, the stronger the network will be. The "first node: wired" restriction is not a problem for users who have Ethernet networks in their homes, but how many people does that cover? Worse, unless you’re willing to string that first wire out of the computer room, the first ZonePlayer is redundant, as most PCs have speakers attached to them already, and the Sonos Desktop Controller PC software will happily drive them.

Aside from that limitation, the setup process itself is simple even for non-technical users. You do need a PC, but you don’t need a home network. To get each unit to discover the network, you simply press the "mute" and "volume up" buttons found on the front of each unit. There are several companies working to make this type of plug and play wireless networking a reality for WiFi, but for now, Sonos’ proprietary solution justifies itself well here. After the initial software installation on your PC, the system will literally updates itself and all the ZonePlayers and ZoneControllers with no user intervention required.

Each ZoneController can control all the zones in the system, but users should keep in mind that as they add zones, they’ll need to add expensive ZoneControllers as well. There’s nothing more frustrating than a powerful multi-zone system that’s playing the wrong music in the zone you’re in and the ZoneController is several rooms away. This may offend Puritans everywhere, but let’s face it, once the remote control was invented, did you ever get up to change the channel again? Now think about going to the other side of your house to change the channel. This is why you need more than one ZoneController.

Over several months I did experience a handful of times where the ZoneController inexplicably locked up. Judging from the message boards, this does not seem to be a widespread problem, but it did give me the opportunity to test out Sonos’ tech support. Using the web "call me" feature, the response was instantaneous and the support rep was knowledgeable. The culprit was diagnosed as wireless interference, but resetting the ZoneController also seemed to trigger a software upgrade (which happened automatically in the background) and there have been no problems since then.

Conclusion

Sonos is narrowly targeted: it doesn’t do video. At all. In this respect, more capable systems may be a better investment. Interestingly, the best video storage system I have seen, the Kaleidescape, doesn’t do audio. So there’s clearly something to be gained in simplicity by restricting functionality to one type of media and doing it right. Still, consumers looking for a complete audio, video, and home automation solution will have to look elsewhere.

Even within audio, Sonos is constrained by DRM. REAL Rhapsody subscribers will be thrilled to discover they can access their entire music subscription library through the Sonos. But tracks purchased from iTunes or other Windows Plays For (Almost) Sure DRM stores won’t play at all.

The Sonos may not translate well outside the U.S. It is easiest to justify for larger homes, like the McMansions that dot our suburbs where its multi-zone capabilities will be put to good use. It does not make as much sense for urban apartments or any type of home in space-constrained Japan. The system’s flexibility only goes so far: Sonos needs water resistant units for the kitchen and bathroom, and an in-wall version for custom installation would be welcome as well. The system as a whole is a bargain but the accessories are badly overpriced, and at least one dock ought to be included with every controller from the outset. Finally, Sonos needs an all-wireless version, where the first unit is WiFi, and Sonos’ mesh network takes over from there.

Sonos has done a good job of creating a system that should sell itself to upscale mainstream users, but as long as distributed PC-based audio is in the early adopter phase of market development, Sonos needs to do a better job in its marketing materials explaining how it differs from the Squeezeboxes and Rokus of the world.

As I finish writing this review, my wife is listening to – and singing along loudly with – The Bangles’ "Eternal Flame" in the kitchen and family room, while I have The Strokes on in the office. She says we don’t have to buy the review sample, but I’m not so sure…

-avi

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Half a Format War Arrives: HD-DVD is Here

HD-DVD was formally launched last week with a single, $499 Toshiba deck. HomeTheaterView has not had a chance to get in a review unit yet, but Evan Powell over at Projector Central bought a unit and gushes buckets about it.

Part of his review is a primer on the difference between 1080i and 1080p at the source vs. how its delivered to the display; this type of arcane differentiation is what pushes normal people to choose formats based on even dubious specs. For now, there’s nothing concrete to compare HD-DVD to in the market. But there’s so little content for HD-DVD that a few month lead over Blu-Ray probably won’t make much difference in the long run.

-avi

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Does High End Audio Matter?

Design Technica just published Mark Fleischmann’s passionate take on Why High-End Audio Matters. I’m not quite as dogmatic as he is — I’m listening to "background music" off of a Portable Media Center as I write this, and I’m much more likely to be immersed in home theater than two channel audio — but his basic points are well taken:

  • Component audio sales are down while iPod sales are way up.
  • Most consumers today don’t know what high quality audio sounds like.
  • The audio industry is isolationist, hastening its own demise.
  • High end audio is not necessarily high priced (Mark specifically points to Outlaw Audio and Paradigm).
  • We are hearing more music than ever in our lives, but actively listening to less and less.
  • High end audio is an exciting, immersive experience.

-avi

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Just How Good Are Multimedia Speakers?

I had to temporarily disassemble my primary multimedia PC system last week (it sits in front of a window that was being replaced) and decided it was finally time to provide some thoughts on multimedia surround sound systems. This is long overdue. How long overdue? One of the systems I intended to review, Klipsch’s ProMedia 5.1, was discontinued a few years ago and replaced with the ProMedia Ultra 5.1. The other, a Logitech Z-5500 system the company was kind enough to send over last year, is no longer a new model either. Logitech added the Z-5450 to the line, which offers wireless surround speakers, though, unlike ProMedia, at least the Z-5500 is at least still on the market!

Logitech_z5500_1Both THX systems are impressive, and can pressurize my small room to over 110 decibels without distortion – true THX reference level, and way too loud for normal listening without causing permanent hearing damage. As a PC peripheral, they’re definitely pricey add-ons. Hard core gamers buying $4,000 PCs should be able to set aside a tenth of that for audio, but with a $400 budget PC it may be harder to justify spending nearly the same amount on the speakers as on the whole computer. Still, when considered as home theater speakers, the systems are quite reasonably priced – you simply won’t find HTIB speakers under $400 that compete with them.

However, there is a huge caveat: multimedia systems are designed for use with a PC. With XP Media Center systems and large LCD monitor/TVs proliferating, perhaps that’s not as unusual a proposition as it was a few years ago, but there are other considerations as well. Multimedia systems are designed for near-field listening: like studio monitors, speaker designers know where you’ll be sitting — right up in front of the speakers, not ten feet away on your couch. Therefore, while the power and THX certification of these systems ensures often spectacular audio performance in a small room with one or two listeners, they simply aren’t designed to be cheap replacements for a living room system. But for secondary systems, dorm rooms, gaming, and small rooms, the performance and value a 5.1 multimedia system can provide is impressive.

Promedia51_300_1 My initial experience with Logitech’s first generation 5.1 speaker systems was not a positive one: the subwoofer was boomy, and the main speakers added a modest amount of unwelcome colorization to the sound. Klipsch has a long history (decades of experience, actually) with the MicroTractix horn drivers used for upper frequencies in the ProMedia system, and the resulting sound was clearly superior to Logotype’s first effort. However, with the Z-5500, Logitech upgraded the main drivers to "polished aluminum phase-plug" units that "combine two drivers into one–the clarity of a tweeter with the richness and fullness of a separate mid-range." Despite my usual skepticism about product marketing drivel (in a past life, I was a product marketing manager myself), in this case, the marketing copy basically has it right. The new driver array is a marked improvement. The subwoofer didn’t improve nearly as much; it can play louder than before, but is still too boomy for my taste, overemphasizing sounds in the upper bass region (I’d guess in the 70 – 90 Hz range). In comparison, the Klipsch’s sub is well controlled down to about 35 – 40 Hz, after which it basically disappears, which is a fair trade-off for a small system. I suspect that consumers – particularly gamers – may actually prefer the Z-5500’s boomier sound, but I’m a home theater snob and wish for better accuracy. The Klipsch sub also provides more flexibile placement options than the Logitech, which comes with a prominent warning not to place the rather large unit directly next to a PC – the exact spot I suspect most users intend to use.

One area where the Logitech solidly trounces the Klipsch and edges closer to HTIB territory is the control unit. The Digital SoundTouch Control Center is quite a bit more than just a volume control. As you’d expect, it can accept multi-channel audio from a PC, but it can also do multichannel decoding itself, supports DTS 96/24, and connects to as many as 6 sources simultaneously. For some users, the flexibility and versatility will be a deciding factor; you could hook up a DVD player directly to the Z-5500 and avoid firing up the PC altogether.

Either of these systems provides a fabulous home theater experience for a PC-based system in a den, home office, or dorm room. To my ears, the Klipsch provides better sound thanks to a tighter subwoofer, but gamers who want things to go "boom" along with consumers looking for additional input and decoding flexibility may want to consider the Logitech first.

-avi

Correction: the Logitech Z-5450 has wireless rear surround speakers, not the "Z5540," as originally posted. 

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(Overly) Complex Solution to a Complex Problem

Yesterday’s column on Atlantic Technology’s corner sub got me thinking about a beautiful glossy press package I got recently from Sound Advance, makers of completely invisible planar speakers. The idea is that the speaker is mounted in the wall, but the wall surface becomes the speaker – no unsightly grills (see picture). There are definite performance disadvantages to using the transmission line effect (i.e., your entire wall becomes a speaker), along with a more complicated and expensive installation process. But the end result is sound without an obvious source.

Soundadvice_pic Is this really necessary? Nearly every in-wall speaker I’ve ever come across allows you the grills to be painted, making them nearly invisible and not so unsightly after all. I understand the uses this technology may have for some commercial spaces – especially theme park rides, where having 100% invisible speakers is a plus and broader dispersion of sound may be a benefit, too. But in the home? It seems like far more trouble than its worth.

Sonance apparently disagrees with me, because the custom install-oriented vendor bought Sound Advance today.

-avi

Editor’s note: the original version of this entry contained a typo, erroneously suggesting that Sonos purchased Sound Advance, instead of Sonance. In my defense, Sonos and Sonance do have somewhat similar names, and I have a Sonos system in for review at the moment, so that company is top of mind. Both companies sell distributed home audio systems, but they are otherwise completely unrelated.

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Simple Solution to a Complex Problem

10csb_front_300 I love it when someone creates a product that invokes WDITOT (Why Didn’t I Think Of That). Atlantic Technology is not the first to create a triangular subwoofer, and they’re not the first to create an unobtrusive subwoofer, and they’re not the first to create a subwoofer that is equalized for a specific spot in the room. But the new $899 10 CSB may be the first to combine all three, by marketing the sub as a solution that is designed to be stuck off in a corner.

Corners provide two advantages: they are out of the way, and they’re louder. As Atlantic Technology points out in their press release, corners amplify speakers (rooms often have more of an impact on the sound you hear than the speaker quality, and almost always have more of an impact on the sound you hear than the electronics you use. No salesperson will ever tell you this, though, unless they’re trying to sell you acoustic room treatments). Corner placement can often cause more problems than it solves, but since Atlantic Technology knew that the 10 CSB will always be placed in a corner, it can account for that in the design. (They don’t seem to have included any active room equalization, so my guess is that they simply assumed a certain amount of boominess and tuned the driver and crossover to tone things down somewhat).

The key, though, is that a corner is rarely used space – you won’t trip over a corner sub, and you might not even notice it’s there – the 10 CSB can be painted to match the walls. Performance plus lifestyle should equal sales.

-avi

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2005 In Review / CES 2006 Review, Pt. 6: Distribution

Part V back in January was supposed to be the final installment of my post-CES chronicles, but we’ll add a Part VI to look at how all these products are getting to market. Each of these posts includes a quick look back on 2005 trends and a quick discussion of products introduced at CES 2006. This one is less about CES and more an essay about the rising power of distributors in home theater…

In 2005:

Go back ten or twenty years, and there were two main distribution channels to bring home audio and television products to market: big box retailers, and specialty audio retailers (some of whom were branching into home theater with the advent of large screen televisions, laserdisc players, and surround sound). Today there are two more ways to reach consumers: the Internet, and custom installers, also called the CEDIA channel.

To service custom installers, major distributors are gaining power. Common in the computing industry, a distributor is simply a middleman – a large wholesaler with a warehouse who takes on inventory and then resells it to retailers (or, in this case, to custom installers). Nobody likes a middleman because they add costs, but when you have a lot of small retailers placing small orders, manufacturers often cannot deal with them; enter the distributor. In the world of computing – particularly small business-oriented products, VARs (Value Added Resellers) provide a lot of the IT services used by law firms, florists, etc. When they need a network firewall or piece of software, it is far more efficient for everybody for the VAR to call a major distributor like Ingram Micro, which specializes in putting together small orders, rather than try to open an account with Microsoft or Cisco.

At CES…

CES isn’t the primary show for custom installation, that would be the big CEDIA trade show in Indianapolis in September. But it was interesting to see how the CES Show Daily (a thick daily trade show paper produced just for CES) was chock full of distributor ads touting A/V equipment. Distributors are riding the custom installation wave, a market that is becoming seriously crowded.

  • For starters, a lot of the independant A/V stores are having a really tough time and are essentially becoming custom installers themselves. Consumers have been putting more money towards big screen TVs, which are low margin in the best of times. To compete with the big box stores, smaller retailers often sell TVs at a loss, and hope to make up the margins on speakers, which are far more profitable. But audio sales are down – the Wall St. Journal reported earlier this month that audio sales dropped 12% last year as consumers bought more plasmas and iPods and fewer speakers and receivers. This is not true across the board; I interviewed an employee at a local high end A/V mini-chain who told me he’s having a banner year. His secret: he refuses to sell plasmas without an accompanying set of slim speakers from Definitive Technologies or KEF. But when audio can’t pay the bills for cut-rate video pricing, then the other option for independant retailers is to make money on services, specifically custom home installation.

  • Electricians are moving from one low voltage specialty – custom lighting installation – to other (ostensibly similar) low voltage jobs: computer networking, whole house automation, and home theater. True, some knowledge of acoustics would certainly be useful (read: ought to be required) before an electrician is qualified to set up a home theater. But there is a definite convergence between home automation, networking, and A/V underway already, and nearly every custom A/V job requires an electrician at some point, so this trend is likely to accelerate.

  • Finally, traditional custom home theater installation benefits from the decor-friendly plasma push. Many consumers are not capable of installing a plasma on their own: it’s made of glass and must be uncrated properly, it’s heavy and brackets must be mounted on studs, and it requires A/V sources to be in the right spot if a wall mount is going to look professional. Most consumers are not capable of installing in-wall speakers, which require cutting into drywall and pulling wire through walls.

The main reason why distribution makes sense for CEDIA members (and their retail and trades-based company) is structural. Custom installers typically need small orders from several different manufacturers drop shipped directly to the work site on an irregular basis. This is something a distributor is designed to handle, and nearly impossible to replicate by setting up one-on-one relationships with manufacturers. Distributors are now advertising that not only do they own inventory, but they hold it at mulitple warehouses around the country to provide just in time delivery on products so that installation schedules don’t slip. Distributors higher up in the food chain ("Value Added Distributors," or VADs) also take over some of the mix-and-match/training functions that can help an installer hone in on just the right doodad for the job.

-avi

2005 In Review / CES 2006 Review, Pt. 6: Distribution Read More