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The rise in speaker solutions

01 Feb 08

These days you’re more likely to find someone listening to music from their PC or laptop than a good old fashioned CD player. Wireless streaming of music has made this a commonality, and consumers now need to be made aware of the quality speaker solutions that are available to them. While laptops come with built in speakers, to really enjoy the experience, a user needs peripherals to enhance the features.
The merging of AV and IT means that the more media people are exposed to, the more they want available to them in that area. Just look at the convergence between PCs and home theatre – people are starting to realise the benefits of using powerful home audio systems. It may have been slow to catch on, compared to that of the MP3 player for example, but the demand for speaker solutions is on the rise.
When it comes to working more with retailers or resellers, the general consensus among vendors and distributors is that the aim is to find a balance between the two. At the end of the day, there is a lot of potential out there for resellers, as speakers are another sale to add on to gain margin out of a PC or laptop sale.
“Every consumer who likes listening to music is a potential customer,” said Bryan Simpson, Business Development Manager for Logitech. A manufacturer of speakers for PCs, laptops and iPods, Logitech has been in the game for 25 years. Simpson believes that when it comes to speaker solutions you can’t get away with selling something that isn’t high quality. “Product quality with speakers is very noticeable, especially compared to mouse and computer products, and with good quality comes customer loyalty.”
Loyalty is an important factor for Logitech. Simpson stressed that every brand has a type of fault, whether it be a user or manufacturing fault. “There is a lot of red tape end users and resellers have to go through when faced with quality issues, so we have the policy of if you have a problem, you can return it, as long as it’s still under warranty; and we replace it at no cost, no questions asked.” Simpson hopes that this way people want to be associated with the brand again.
Value for money must be considered as a crucial element in driving the sale of speakers. Simpson stated that you have to be able to bring products to the market that have a value for money proposition; otherwise, just creating the interest becomes difficult.
There has recently been a strong drop in the price of high quality speaker products, according to Paul Dowd, Marketing Assistant for Digital Blue. This development means better quality speakers are available to a wider audience. “You have to remember speaker technology is very old technology,” Dowd stated. “The changes are slow; however, they are happening.”
 A distributor of ranges such as EFR and AAD, Digital Blue offers a wide variety of speaker solutions, from extreme entry level, up to the high end, with speakers around the $20,000 mark. “With prices in high quality speakers dropping, people get better bang for their buck essentially,” said Dowd.”It means they get a much better experience, which is what we want to provide.”
When asked about opportunities partners can focus on when it comes to speakers, Dowd answered that there seems to be a concentrated focus on entry level, leaving the upper end of the spectrum largely untapped. “There is definitely money and margin to be made by up-selling to the higher end, either by selling a better quality 2.0, or a full surround sound system.”
Dove is another distributor that puts a lot of energy into speakers. “Speakers are another accessory that people want, especially because everything is multi-media now,” said Rick Jansen, Operations Manager for Dove. The company distributes the Genius brand, which offers speaker solutions from very low end to moderately high end. In recent months Dove has also taken on the distribution of Cygnett products. In Australia, Cygnett is rated in the top three in terms of MP3 player speakers, and has a comprehensive range, including 5.1 surround sound for gamers.
By working with key retailers, Dove examines their range to identify what the core range would be for each retailer. Ensuring retailers and resellers don’t conflict is an important focus for the company. “We always to have a specific range for retail and a specific range for IT,” stated Jansen. “That way we can keep people on track as far as what we think is a good product to have and make sure there is no cross over.”
Jansen believes with the growth of sites such as YouTube, and the popularity of webcams, people are keen to get a decent sound system alongside, and the way to go is by selling a package. “Probe the customer’s needs to understand what they are using their PC or laptop for, then you can add on other products like speakers to enhance the solution.”  Simpson backed this up when he stated the focus now needs to shift away from solution selling to the idea of an attached sell.
While the average margin for selling speaker solutions is generally between 25 and 35%, Jansen had some advice on how to go about raising margins: “In order to raise margins, partners need to suggest it to the customer, especially if they’re selling multimedia machines, and have a range on hand to show customers. You need to have the ability to show them low, medium and high options, but the problem is most don’t have them on hand.”
According to Jansen, the whole desktop area is still untapped. “Retailers and office product guys do it quite well, and there are a few in IT that do it okay, but it still seems to be a second thought,” he said. By selling a complete package there is an opportunity to make considerably more margin.
With a wide variety of speakers now available, the next phase is to encourage people to take a step up in the market. “Too many people settle for lower end when there is such good stuff out there now.  They should be searching for the next one up,” stated Jansen. “Push the mid or high range, because there’s definitely good money to be made in it.”
Philips is one vendor that has caught on to the fact that speaker solutions are beginning to take off. Philips has never previously offered speaker solutions in New Zealand, and the company plans to release a range early this year. “This is just the beginning of us getting into this space and Philips is keen to get established in PC speaker peripherals,” said Caroline Fountaine, Product Marketing Manager for Philips. “The new speakers range comes as part of a bigger picture in regards to peripheral offerings from us.”

Globally, Philips is really growing in the peripheral offerings space, and now has over 5,000 accessories available. Philips speaker solutions have already been available in Europe for a couple of years, with a very successful uptake. The New Zealand range will see the company offering everything from 2.0 speaker solutions to 5.1. “We are going with the strategy of good, better, and best,” Fountaine stated. “That way, there is something on offer for everyone, but everything will be of a high quality standard.” There will be seven products available in the new range of Philips speakers.
“A lot of our retailers have identified product gaps in the market, such as the 5.1 space,” said Fountaine. “So we are looking at releasing speakers that will fill those gaps. From people that just want something next to their laptop, right up to really grunty speakers for gamers.

With Philips being classed as an ‘A brand’, the vendor’s speaker solutions will be a consumer sell, rather than a business sell. “Consumers and businesses want the same specs and performance, however, design is a much bigger factor for consumers,” Fountaine explained. Philips prides itself on having strict quality control procedures, making sure everything that is produced is of a high standard. “If you release just one product that is not up to scratch, it affects your whole range.” 
Now is a great time of year to push speaker solutions. With huge demand for iPods at Christmas, people will be out there looking for accessories in the New Year. iPod docking is very exciting in speaker technology right now. “A lot of the time people want to have the simplicity of a small package like two speakers and an iPod dock,” Jansen explained. “That way, it doesn’t fill up the whole room but the quality is still there.” In the current speaker market, the quality factor is continuing to rise but the prices are not.
Don’t forget that the New Zealand market in peripherals is buoyant, and the opportunities are defined by the restrictions you put on yourself. Resellers have to be open to new methods of attached sell. So create your own opportunities and speak up!  

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