Bluesound Taking Measured Approach to Wireless Multi-Room Audio

SCOTTSDALE, Ariz. -- Specialty audio company Lenbrook America is well into phase two of its “calculated rollout” of the Bluesound wireless multi-room audio system, but expectations are measured, particularly compared with the success of Sonos, CEO Dean Miller told us at the HTSA spring conference.

On competing with Sonos, Miller said, “We have tremendous admiration, respect and awe for what they've done,” noting the recent disclosure that annual revenue last year was $535 million. “They created the market, so we have no false pretensions of fighting Goliath,” he said.

Bluesound is positioning itself as a “different architecture” with a different distribution model from Sonos, going through the specialty AV channel versus the mass market, Miller said. “We're not a mass-market player at all,” he said. On what dealers are doing to position Bluesound as a higher-end Sonos alternative, Miller said the company hasn’t “turned on a lot of the marketing resources yet because we're still in the launch stage."

Lenbrook launched Bluesound, which was three years in development, in the “protected ecosystem” of Scandinavia last March, where its distributor, Audionord, owns 90 hi-fi retail stores in Scandinavia and the Netherlands, Miller said. Audionord, which owned the NAD brand before selling it to Lenbrook, was a “blood brother” that nurtured the brand and gathered customer feedback on how customers used the product. A lot of what Bluesound learned involved the graphical user interface (GUI), Miller said. “We learned that the GUI is the product,” he said. In response to user feedback, Bluesound added a search-by-genre feature because customers expressed a desire for it.

The importance of the GUI over audio performance was a surprise to a company that has made its name on audio components, Miller said. “It’s not so much the hardware but the GUI, the app” that makes a difference to the consumer with a multi-room audio product, Miller said. But “that’s the cool thing about software,” he said. “You can always update it.”

Lenbrook launched in North America in August after incorporating what it learned from the Scandinavian test bed, selling it exclusively through retail because of the need for the product to be sold by an educated sales staff in a store, Miller said. Less than half of Lenbrook’s dealers are retail, versus custom, Miller said. Some 50 dealers participated last fall in what Bluesound calls “wave one” of its go-to-market strategy. The company sent a two-person team to each store, setting up a router to ensure there was a “robust network” to showcase the products along with a product display that showcased the Bluesound ecosystem. The teams also provided training, Miller said. Following the holiday period and CES, Bluesound resumed the dealer expansion effort with 15-20 “wave two” dealers. Wave two will complete in May when roughly 100 dealers will have the product, Miller said. The company is planning a feedback loop through which customers and dealers can share comments and will have dedicated phone lines for support, Miller said. Product software will be updated in real time based on dealer and user feedback, he said.

Music services remain an issue for Bluesound, along with other upstart wireless audio brands trying to take on Sonos and its 20-plus music services. Bluesound has Slacker along with Deezer, which is not yet available in the U.S., and other services local to the European market. Miller said agreements with larger, well-known streaming music services for the U.S. market are “in the works,” but he couldn’t name them due to confidentiality agreements.

Companies without an established user base are of little interest to the larger streaming music services that want “millions of users tomorrow that they can turn on,” Miller said. There’s not a common communication protocol for setting up a service with a platform so each pairing of a hardware company with a music service “is basically a one-off,” Miller said. “That takes a lot of time, resources and money,” he said. He said the streaming service business model is “difficult,” and “most of them that I read about aren’t making very much money.” Miller predicted some consolidation in the space. “You can’t have a perpetuated no-profit business model,” he said.

Bluesound is still in the launch phase, and “you only have one chance to get it right,” Miller said. The company is taking care of “fundamentals first” -- education, merchandising and distribution -- before turning on the “marketing power,” he said. That’s expected to kick in by the end of Q2. Part of that effort is creating a “Bluesound Club” of salespeople who will be rewarded for sales, he said. Each store will have a captain that’s responsible for driving the sales team in that store through performance awards, he said.

HTSA Spring Conference Notebook

GoldenEar Technology will have wireless speaker offerings but the company is still weighing the options for how to go about it, GoldenEar President Sandy Gross told us. A first step could be through a powered speaker that accepts a feed from an outboard wireless receiver, Gross said. He cited the Sonos Connect as the type of box that could connect to a powered GoldenEar speaker to deliver wireless multi-room audio. “Our attention and energy is better focused on coming out with speakers than trying to create a wireless product,” Gross said, when we asked if GoldenEar was considering a WiSA (Wireless Speaker & Audio)-enabled speaker or one using a competing technology. Gross believes there will be a market for upscale wireless speakers but said he doesn’t think now is the right time to bring one to market. “I don’t think the price points have gone there yet,” he said, referring to speakers in the $1,400-per-pair and higher range where GoldenEar speakers sell. One of his challenges is choosing which wireless technology to use because “you can get married to a wireless technology that changes very quickly and find yourself out in the cold,” he said. He envisioned two ways to go about a wireless offering: through a powered speaker with a port that will accept the input from a wireless box, which would offer the most flexibility, or “taking a stab at making a choice” among wireless platforms, he said. “For us, the former makes more sense,” he said. That would require making fully powered speakers rather than GoldenEar’s Triton speakers that have built-in powered subwoofers. Another challenge to wireless speaker technology is dealing with electrical noise produced by RF transmitters, he said. One manufacturer reportedly has come out with “rather high-end” wireless speakers and has discovered that certain environments produce RF noise that interfered with sound quality, he said. “That’s why I would prefer to create powered speakers that would accept a wireless device because it doesn’t marry us to a particular wireless technology and its issues,” he said. But there’s no question that the time is coming for wireless high-end speakers, Gross said. He sees GoldenEar customers being able to send media from a phone, computer or network to have “the performance of a full-bore system from a pair of nice speakers that plug into the wall.” His vision “is coming but it’s not there yet. You can come out with a product or technology too early and end up failing because the market isn’t there for it yet,” Gross said. The time for higher-end wireless speakers is two to three years away, he said.