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Maturing Dock Sales
[December 17, 2011]

Maturing Dock Sales

(TWICE Via Acquire Media NewsEdge) TWICE:How did sales fare in units and dollars in 2011 compared to 2010, and what is the forecast for 2011? Patricia Schoenberg, Spectra: Generally we think there is still growth in docking speakers if only due to the big quantities being sold of Apple iPhones and iPads in particular. 2011 sales may not exceed 2010 sales due to the economy, plus a trend for retailers to reduce space, and number of models, for a perceived mature category. Some retailers have also taken away space to have more available for “new technologies.” Raleigh Wilson, Altec Lansing: Lower price points are saturating the market right now due to the poor eco– nomic environment. In general, we feel that 2011 is the year that the docking category has fully matured. His– torically, iOS devices have driven this market segment, and now over half of the market [for mobile devices] is Android and other smartphone platforms. Now, the driv– ers toward new purchases are user design preferences, improved sound quality, and more functionality.

Roy Carpenter, Philips: Docking retail sales have declined 7 percent through September YTD for both units and dollars, according to NPD, mainly due to soft– ness in the clock radio and boombox/radio segments. Segments such as multimedia speaker sales remained steady (+2 percent). Full–year 2011 performance should improve as cyclical trends should trigger positive growth in the fourth quarter versus the year–ago period. Other growth drivers include: • an increase in average prices for docking–related products as AirPlay technology becomes more widely adopted/available;• the expansion of the category to include Android– compatible docks; Philips has just introduced four such docks to the category; and• finally, iPod market maturity that should be offset by the continued growth in iPhone and iPad sales.Key Points © The docking–speaker market is mature, but sales will accelerate as owners of smartphones other than the iPhone opt for Bluetooth–streaming speakers to free up music from their devices, several suppliers contend.

»Tabletop speakers that dock via wireless Bluetooth or Apple AirPlay will gain traction among consum– ers who want to keep their smartphones and tablets close at hand while listening to music through a table– top speaker, some suppliers said.

© An expected Android upgrade allowing audio sig– nal to pass through the mobile device's micro–USB connector could result in tabletop speakers that dock, play and charge Android devices without using stereo Bluetooth.

Pia Chon, iLuv: We achieved consistent growth in year–to–year sales of audio docks in both units and dol– lars in 2011, and there are multiple contributing factors. The continued popularity of the iPhone, the phenom– enal success of the iPad, and the whole tablet category in general have been driving forces behind demand.

Tablets have created the ever–growing need for a new category of docks that function as audio/video/produc– tivity hubs … [and] the launch of iPhone 4S also pro– vided another boost for audio docks and accessories.

AirPlay's Future Impact TWICE:How important will Apple's AirPlay be– come in the docking–speaker market? Schoenberg: Actual deliveries of products with AirPlay have only recently started. Perhaps not help– ing is how long they were announced to come be– fore they actually did. It hasn't become more widely available in docking speakers in large part because of cost. We all know that so far the Apple autho– rized module is available from a single source, with a first cost that is anywhere from $20 to $30–plus depending on quantities bought up front. There are other added component costs along with technical challenges. I don't think I have yet seen a resounding product review at $299 to $499 retail.

Wilson: AirPlay will eventually play an impor– tant role, as do many Apple–backed technologies. But for right now, consumers’ awareness is still building, and a wide diversity of products are si– multaneously becoming available. We expect that as awareness grows, iOS audio accessories will begin to shift to AirPlay, and simple hard–docking speakers will shrink on all but entry–level price points, as consumers look for a charging and lis– tening solution.

Carpenter: There is certainly a high potential for success since the premium segment of the dock– ing market does very well, and these speakers pro– vide a premium solution without wires.

While the technology was announced in 2010, prod– ucts are just now reaching the marketplace. The chip– set supporting the technology is currently produced by only one supplier, which has limited production.

Chon: Apple's AirPlay is a viable option in the docking–speaker market, but Bluetooth has been more widely embraced and already has a substan– tial market share … we will also deliver Bluetooth– enabled docks to be unveiled at CES 2012.

Bluetooth's PotentialTWICE:What is the market potential for tabletop speakers equipped with stereo Bluetooth now that most smartphones incorporate the technology? Schoenberg: This may be one of most important changes to monitor in 2012. However, Bluetooth draw– backs are limited range of about 30 feet, the inability to stream video, and some limitation of sound quality.

Wilson: Our view is that we must provide consum– ers with an array of connectivity options, including docking, single point–to–point wireless (like Bluetooth), single stream multi–room wireless audio, and full multi– stream multi–zone network flexibility. It must also be re– alized that the docking consumer is now not only an iOS user. Once an Android or other Bluetooth–enabled– device user finds the possibilities with this technology, we expect to see even more adoption.

As tablets and smartphones continue to thrive, we believe that consumers will gravitate toward docks and accessories that are compatible with several devices, as opposed to device–specific items.

Participants Raleigh Wilson, Altec Lansing sales and mar– keting executive VP Roy Carpenter, Philips Consumer Lifestyle marketing director Patricia Schoenberg, Spectra Merchandising Int. president NOT PICTURED: Pia Chon, iLuv Creative Technology global marketing director Tabletop Bluetooth speakers will be an important component of this category going forward. Consum– ers are less willing to hard dock an iPhone/iPad than an iPod, but they still need great sound. Their phone is usually in their pockets, while iPads tend to live on cof– fee tables and consumers’ laps.

Carpenter: Bluetooth wireless speakers have seen dramatic growth in the past year (+392 percent), but the segment remains small at 10 percent of the overall dock market. We anticipate this segment will continue to grow as consumers are looking for more freedom.

An expected Android upgrade allowing the audio signal to pass through the mobile device MicroUSB charging connector could limit the need for Bluetooth connectivity as newer Android devices could dock, play and charge just as Apple products do.

2011 International Press Telecommunications Council

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