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Why Many Manufacturers are Expanding Beyond Their Primary Technology Focus - ResidentialSystems.com

Why Many Manufacturers are Expanding Beyond Their Primary Technology Focus

While the soft economy has resulted in fewer dollars being spent on research and development in many high-tech businesses, there is little evidence that the manufacturers servicing the custom installation industry are holding back. These companies, driven by an ever-increasing level of competition in combination with the promising growth potential of what still remains a relatively young market, are releasing new products at breakneck speed.
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While the soft economy has resulted in fewer dollars being spent on research and development in many high-tech businesses, there is little evidence that the manufacturers servicing the custom installation industry are holding back. These companies, driven by an ever-increasing level of competition in combination with the promising growth potential of what still remains a relatively young market, are releasing new products at breakneck speed.

"We remain competitive by introducing new products on a very aggressive and regular schedule," said David Hanchette, vice president of marketing at OnQ Technologies (www.onqtech.com). "That is the primary way that we stay on top of making sure that we are giving custom installers what they need to stay ahead of the marketplace."

Although the number of product introductions may seem overwhelming to some, the technologies they address are few by comparison. Digital media delivery-and the convenience it offers-is one such example. Integrated multi-room and even whole-house control technologies, is another. Ethernet and IP-based systems also are evolving into a distinctive presence. The focus on these technologies is largely driven by the fact that broadband delivery of content is fast becoming the norm.

"With the penetration of broadband into the general market, sources such as Internet radio and streaming media of different types will become more and more prevalent, no doubt," said Andy Lewis, director of product development and technology at Russound. "Pay-per-play scenarios for music and movies is going to become more common with broadband. These are also great sources for multi-room media controllers."

In an effort to gain more market share, many manufacturers are coming out with entirely new product categories. For these companies, this brand-strengthening initiative is a natural progression in the growth of their businesses.

Indicative of this evolution, at CEDIA EXPO this year Crestron Electronics boasted an audio room, an admitted departure from its traditional exhibit. On display were the company's new surround sound processors for home theater applications, amplifiers and audio distribution processors that integrate with the manufacturer's control systems. Lighting and HVAC, two solutions that Crestron (www.crestron.com)) didn't always provide to the residential market, have been on the company's docket for the past couple of years. According to Jason Frenchman, Crestron's director of corporate communications, the company is also developing its ability to integrate intercom technologies with its audio distribution solution. "It's a whole-house approach," Frenchman said. "It starts with the central control, which is what we are known for, and the user interface, which is the touch panel," he said. "Now we have all of these different sub-system solutions that can integrate into that entire environment, so you really can have a Crestron Home."

Russound has included speakers in its product line for a while, but, as is the case with many companies, they are fabricated by an OEM and simply bear the company's brand. At the upcoming winter CES, Russound plans to introduce a brand-new speaker line that is being developed in-house, with the help of industrial designer Allen Boothroyd. "To just come out with another 'me-too' speaker in that category, which is so crowded now, didn't make sense," Lewis said. "We wanted to come up with some innovative hooks and have an advantage and unique benefits that weren't there before." To achieve this, Russound (www.russound.com) is concentrating on designing speakers that are easier to install, possess high-quality sound reproduction and use new, patented technology.

With R-NET-based (Russound Network) audio/video control products such as Russound's CAV6.6, Lewis sees the potential to eventually integrate compatible "smart sources."

"They would leverage the display of the keypad to give the user valuable system feedback such as station ID on a tuner, or media choices available on a media server," Lewis said. "It's amazing how many keypad systems are out there that don't let you know the room's volume level or things like what exact radio station you are tuned to, or what artist is being played right now. It's that rudimentary." ELAN Home Systems (www.mediasystems.com). "Granted, all companies need to grow, and it's very understandable and very natural. But it seems like they would rather grow deep along their area of expertise rather than growing very shallow across a bunch of different product lines. For the most part, they are not very good at things as soon as they move away from their core technology. If I were a manufacturer, I would concentrate on being the very, very best in whatever I was good." Some custom installers may also be reluctant to upset the relationships they share with existing suppliers. Pikcilingis illustrated this point with a few hypothetical questions. "Why would we take this amplifier and sell this surround sound processor with it? We already have a perfectly good surround sound processor that is renowned worldwide. Why would I want to bring some other processor into play? I'm very happy with the relationship that I have here, and I was very happy buying these from you. Now suddenly you want to be all things to me. It just doesn't work like that."

Bob Gullo, president and CEO of Electronics Design Group Inc., a high-end custom installation firm in Piscataway, New Jersey (www.edgusa.com) is even more blunt with his criticism. "We don't beta test any manufacturer's products, regardless of who they are," he said. "It is too much heartache for us, it's heartache for our clients and it's not profitable for us to figure out all of the bugs while the manufacturer gets free beta-testing at my expense. There are only a few manufacturers that are very good at being diverse. I think that manufacturers need to focus on their core competencies and if they are interested in branching out into areas that are not necessarily part of their expertise, they should consider mergers or strategic acquisitions. There are some companies that just shouldn't be manufacturing products that don't fit within their current scope." At the same time, Ray Lepper noted, there is something to be said for maintaining a limited number of suppliers. "What we are looking for is a balance between suppliers that are a good fit for our businesses, and the smallest number of total suppliers," said Lepper, who is president of Home Media Richmond in Midlothian, Virginia (www.homedia.com) and vice president of CEDIA. "In our company, we are always trying to reduce the number of suppliers that we have. In spite of that, we are always adding new suppliers. Generally, if one comes in, the other has got to go. Otherwise, it's unmanageable." Still, custom installers want to work with manufacturers that make excellent products. "If you can't win at a product category, you probably shouldn't play," Lepper said. "I would suggest that manufacturers will do more for themselves and for their retailers if they focus on being the best in their category, instead of being in all of the categories."


Carolyn Heinze (carolyn@carolynheinze.com) works from her office in Vancouver, Canada.

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