Use Smartphones, Tablets to Help Sell Next-Gen Audio, HTSA Dealers Told

SAN DIEGO -- After they launched home theater and branched out into security, home automation, lighting control and intercom systems, it’s time for specialty AV dealers to come full circle and take ownership of the specialty audio retail market again, panelists said Wednesday at the Home Technology Specialists of America spring meeting. HTSA Managing Director Bob Hana and a handful of audio vendors said they see the computer audio retail market opportunity as a “tremendous” one that’s going largely untapped.

Dealers should learn about computer audio so they can educate customers about a rapidly changing audio world that’s both confusing and ripe for the taking for dealers, said Steve Silberman, vice president of development at AudioQuest. “Hundreds of millions of people are using computers for audio,” he said, “and we're not engaged with those people.” Warning that “the ship is sailing,” Silberman said HTSA dealers don’t have to create the market because it’s already there: “We have to recognize that the market exists and attach ourselves to it.”

Citing Apple figures, Silberman said 225 million people use iTunes, which he said could be a gross understatement because the company counts its users as those customers with an account registered to a credit card who have made a purchase in the last 60 days. That creates a “huge embedded population of customers,” he said. Apple has sold 15 billion tracks through iTunes, which makes it a format “that has “completely replaced the CD,” Silberman said.

More than a compressed audio format, iTunes continues to advance in audio quality, which puts it in specialty dealers’ comfort zone, Silberman said. Threatened specialty dealers have long criticized iTunes for poor audio quality, following its initial launch with maximum bit rates of 128 kbps, but Silberman said iTunes has “phenomenal performance potential.” Apple is gearing up to bring “significant high-performance resolution” to the consumer, he said, saying Apple “quietly changed the architecture” of its hardware through software updates -- including all the versions of iPod, iPhone and iPad -- enabling them to do 24-bit audio resolution. “iTunes is never going to stop, but will continually move forward,” he said.

The pace of continual change in technology is a challenge for retailers, said David Wexler, owner of the Little Guys in Mokena, Ill. Six to 12 months of changes in the digital audio world “is like 10 years in human life,” he said. Wexler is the first dealer to implement Lenbrook’s digital music experience center showroom concept. “People don’t know what they want because they don’t know what they can do,” he said. It’s up to specialty audio dealers with demonstration expertise to show them, he said. Wexler suggested playing music on an AirBook and controlling it with an iPad to show customers how they can best use the technology they own. All systems in the store should be controllable by salespeople’s smartphones, he said. At his store he has added Energy computer speakers to a laptop to show how PC sound can be improved with better speakers. Showing how consumers’ existing technology -- laptops, iPhones and iPads -- can sound better provides “instant credibility,” he said. “You need to be up on it and understand it,” he said. “It’s a huge window into a profit opportunity for us."

That may require re-learning for a specialty retail base that has a reputation for criticizing digital audio formats or products they don’t feel are up to snuff, panelists told the meeting. Panelists urged dealers to shift attitudes and focus on what consumers want, which could be convenience over high-performance audio. “You never want to make customers feel bad for not being up to the standards of the salespeople,” said David Solomon, vice president of sales and marketing for Peachtree Audio. Highly compressed music can offer an opportunity to show customers how to improve on the music stored or streamed on their phones, Solomon said. Pandora is a useful tool for that, he said, because its brand recognition has grown and the company has a large user base that can easily perceive a difference in stepped-up sound. “It’s not our job to judge, but to show how to take advantage of what consumers have,” he said.

Solomon urged dealers to market to computer owners, most of whom store and/or stream music on a Mac or PC. Dealers should approach customers in the digital age “not like we've done in the past as high-end audio guys,” he said. “All these customers need are an education and an expert” in the various digital music formats, Solomon said, since computers are now the “preferred method of storage for music.” He encouraged dealers to show consumers how they can make the most out of the music stored or streamed on their computers including “accessing every radio station in the world that’s on the Internet.” Salespeople should be prepared to use their phones or tablets to show consumers how they can use those devices to control volume, sources and song selection from different rooms using a multi-room Sonos system, AirPlay or DLNA-enabled product, Solomon said.

Some 11,000 DLNA-enabled products are in the market just waiting for someone to show consumers how to make the most of their compatibility, Silberman noted. “You're all selling DLNA products,” he said. “If you have one communications standard for all these manufacturers, you can have a Sony PS3 and a Linn D-A converter and Samsung TV and they all communicate together.” He said dealers could create a virtual private network for their customers with multiple homes that want to access media from the main server when their occupants aren’t at home using DLNA or UPnP. “Customers are happy to pay you to do that,” he said.

Computer audio offers dealers opportunities with existing customers who want to upgrade to have the convenience of streaming, but it’s critical for the future of HTSA and its dealers to establish a connection with the digital generation that has no association with the specialty audio world, panelists said. “We need those young people coming in” as dealers’ traditional customer base ages, Hana of HTSA told us. “There’s so much music in the world, and the challenge is to get them to quit listening on their little earbuds and let them listen to what can truly be high performance even though they have it on a computer.” Reaching a generation that doesn’t relate to high-end audio will require new strategies, he said. “We're challenging dealers to have college seminars,” Hana said. “We have to find ways to attract folks to their locations because audio is a learned experience."

Reaching younger consumers is a challenge for specialty AV retailers. Kathleen Thomas, AudioQuest vice president of domestic sales, encouraged dealers to reach out to Apple store employees and develop relationships so that Apple salespeople funnel business their way for more sophisticated systems and applications using the products. She suggested holding events for Apple employees and local college students promising free food and advertising in the technology and concert sections of local online newspapers. She advised dealers to advertise on Pandora, a $5,000 investment that will reach consumers who opt for the free, ad-supported Pandora plan. She encouraged them to rethink key words for search engine optimization, adding iTunes and music to their list in addition to home automation and home theater. She suggested iTunes tune-up clinics where the message is “bring in your computer to make it sound better."

HTSA Notebook

Sharp is exploring a universal pricing policy for the Sharp and Elite brands, Tom Evans, associate vice president for Sharp Elite TVs and Sharp projectors, told us at HTSA. “We're looking at it very closely.” Evans said the decision will come in June, as the company monitors the success of UPP programs put into effect by Samsung and Sony this spring. Regarding how the company would enforce such a program and the rules around which the company could enforce a UPP program without bumping up against restraint-of-trade issues, Evans said, “we haven’t laid out the elements. We're still evaluating and building” a UPP program. Apple and Bose have been able to navigate those waters successfully, he said. Meanwhile, Sharp Elite will begin production next month of its 90-inch flat-panel TV, with shipping slated for June, Evans told us. While dealers expect the price of the 90-inch model to come in under $10,000, Evans wouldn’t comment on price. He did say the company is “very seriously” looking at UPP on that flagship model. Evans said SharpVision’s introduction last month of a $4,499 single-chip DLP projector is part of a “renewed commitment” to projectors to satisfy consumers’ thirst for larger and larger TVs. The Sharp XV-Z30000 joined the $2,999 XV-Z17000, a carryover from 2011, to make up the 2012 projector line. Sharp is looking to broaden its projector line in 2013, Evans said, to take advantage of growth in the big-screen market.