Philips Sound Solutions Buy Seen Keying D&M’s Automotive OEM Expansion

D&M already had a stake in the auto OEM market via its Boston Acoustics brand, which had long supplied audio products for Daimler Chrysler vehicles and recently signed a deal with GM. The PSS purchase will now allow D&M to enter BMW, Volkswagen, Toyota (Europe), Seat and Jaguar vehicles. PSS also has CE customers including Dell, Nokia and Philips itself.

PSS products now include DSP amplifiers, lightweight and high-power cone speakers, flat speakers, assemblies used in flat displays and TVs, as well as wireless surround speaker systems. The addition of PSS also provides D&M with patented technologies and expertise that will provide opportunities to introduce differentiated products, the company said. D&M will rename PSS as D&M Premium Sound Solutions, allowing the PSS name to continue. The acquisition is expected to close this quarter for an undisclosed amount of cash.

D&M is also eyeing the introduction of mobile electronics products from brands other than Boston Acoustics as part of its planned automotive expansion, it said Wed. There is “a lot of potential for that in the future,” N. America Sales & Mktg. Pres. Bob Weissburg told Consumer Electronics Daily. There is “a lot of brand equity” from D&M’s other brands that can be leveraged in the mobile space, which was a “key driver” of its decision to buy PSS, he said. But he said it was too soon to provide specifics on its plans for the other brands. The company stressed only that it will be selective about what products it selects featuring those other brands.

Denon, meanwhile, is “very encouraged and very optimistic about our business prospects for 2007 and beyond,” Sales & Mktg. Pres. Stephen Baker told reporters. The CE market is now clearly “being driven by the explosion in flat panel/high definition television sales,” he said. As a result, he said, “we're anticipating that we'll experience increasing sales as more audio product gets attached to video products” at retail. Opportunities in the sector are rising thanks to increased demand for superior performance products, as well as advanced connectivity and applications, he said. “Denon is thriving in this environment,” he said, telling reporters “our market share continues to grow.” Denon now has a #2 market share in receivers, amps and tuners, jumping from 17.7% last year to 19.1% in the past 12 months, he claimed.

The AV receiver “has become the central device” for a digital home network, said Baker. Because of this, the company is adding a cross-section of advanced connectivity and networking features to its receivers in 2007. In addition to HDMI 1.3, Denon Dir.-Product Development & Systems Integration Jeff Talmadge said the company plans to offer “Made for iPod” compatibility across all its receivers now, as well as HD Radio and the latest Dolby and DTS surround sound formats (Dolby True HD, Dolby Digital Plus and DTS-HD) in some models. The new receivers will also support 36-bit Deep Color with 1080p passthrough and most will support 8-channel surround, high-resolution uncompressed PCM audio, he added. All receivers will also be XM-ready.

The HDMI 1.3 announcement didn’t come as a major surprise because Denon has long been a champion of HDMI for its AV receivers and DVD players. The company already embraced 1.1 and decided to skip over 1.2 completely as it eagerly awaited the arrival of 1.3, Talmadge said during the company’s July line show in Cleveland (CED July 27 p1). HDMI 1.3 increases single-link bandwidth to 340 MHz (10.4 Gbps) from 165 MHz (4.95 Gbps) and ends interface-related restrictions on color selection by adopting Deep Color and XVYCC color space.

D&M as a whole, however, remained on the fence about support for Blu-ray or HD DVD. “We haven’t made any announcements yet; we just haven’t committed yet,” D&M COO- Pres. Vic Pacor told us. “Everybody’s interests are being served except the consumers” now, he said, adding “who would have thought we didn’t learn a lesson” as an industry about “the negative effects of format wars” with such battles as SACD vs. DVD-Audio? The most visible Blu-ray/HD-DVD battle is now being fought in the videogame arena with PS3, which features Blu-ray, and Xbox 360, which is compatible with HD- DVD, Pacor noted. But it’s “kind of a conceptual penetration, not a practical penetration” at this time, he said, adding he is curious how many movies are being rented in the new formats as a result of PS3 and Xbox 360. You “have to have a lot of integrity when you're dealing with” the kinds of consumers D&M products appeal to and the “prestigious brands” it offers, he said, telling us “you have to be very careful with the decisions you make” to make sure you “don’t break that trust” with the consumer. Pacor said he doesn’t believe the CE industry can “shoehorn” a format into consumers’ hands through the videogame market. “We'll have a solution,” he said but didn’t provide a clue as to what that might be or when it will be announced.

D&M is, however, taking a more aggressive stance in the HD Radio arena now. The Boston Acoustics (BA) Recepter HD tabletop radio is now being sold at many more retailers than it was only a few short months ago, BA Senior Sales & Mktg. Vp Phil Cohn told us. The product had been selling at about 700 stores but that number is “about double that now,” he said, telling us it launched at Circuit City on about 100 sales floors, and is also gaining a national presence online via Crutchfield and OneCall, along with the latter’s Huppins retail store. Fry’s was also added in the past 30 days and Abt Electronics in the past 45 days, he said. Sales were “very positive,” he said but provided no specifics.

The increased number of HD Radio promotions this holiday already is giving the category a larger lift in sellthrough and awareness, he added. The company is also “looking at how we can expand our reach” in the category, specifically via mid-range priced products, he said, adding the company has no plans to delve into the low-priced waters. Its Recepter now sells for $249 after launching at $499. Asked if Boston Acoustics plans to introduce wireless speakers, Cohn told us only that, along with “other technologies are being evaluated” by the company.