Back in January I wrote that Apple’s AirPlay would drive a renaissance for audio. Networked audio solutions have been building slowly to a crescendo I believe plays out over the next 24 months. Of course companies like Sonos and Logitech with their Squeezebox suite of devices left important early footprints while defining the market for networked audio solutions. Several years ago I spoke with the guys at BridgeCo (who’s JukeBlox Connectivity platform now enables Apple AirPlay) and could see the potential of network audio solutions.
Today several pieces have come together to make 2011 the year I expect to see networked audio move into the mainstream. First, television sales are declining which will free dollars that can be spent on other tech categories (like audio). This development started in 2010 and will continue for at-least the next 4 years. At the same time consumers are maintaining their historically high levels of spending on technology relative to other durable goods. After spending a decade plus updating and upgrading video in their homes, consumers are starting to look at audio – something I’ve expected to see for the past several years, but is now just materializing. More, the strong growth in portable products like tablets and smartphones is creating the network effects that will ultimately power this ecosystem.
You also can’t ignore the Apple Effect on this category. Roughly 50% of American households own an MP3 player. Given Apple’s marketshare in that category its easy to surmise that many of those households own iPods and are likely managing their music through iTunes – which has sold over 10 billion songs. All told, Apple has sold over 300 million iPods and 40 million iPhones worldwide. A large installed base of products and strong utilization rates adds tremendous support. In the US, we sell about 20 million MP3 docks a year – almost all of which are for iOS devices. I would expect AirPlay-enabled devices to reach this level – the timing on which will depend on consumers’ understanding of the technology. Clearly they want audio in these multiple locations – understanding the ability to manage a multi-room audio experience is the crucial component. The degree of interest in extending that audio experience beyond the currently served rooms will ramp the annual figure above or below that 20M annual figure.
A myrid of AirPlay-enabled products launched at CES from companies including Denon, iHome, Klipsch, Marantz and B&W. These CES launches were perhaps some of the biggest Apple-related launches/announcements of the year (you had to know iPad2 would launch Spring 2011 and would surely include two cameras, and the white iPhone had to eventually show-up on the horizon). Many of those products have already begun shipping or will shortly. Just this week there were several additional AirPlay-related releases. JBL released its first AirPlay speaker and Denon announced a new series of AV Recievers that are AirPlay-enabled.
One of the most pronounced announcements to come out this week was from Sonos. With the announced software upgrade (and an AirPort Express), individuals can now stream directly from any iOS device to every room in the home. Sonos has always been impressively quick to adjust their strategy as market fundamentals change. Through AirPlay, Apple essentially moved into whole-home audio. By quickly integrating AirPlay Sonos both recognizes the clear risk as well as makes a strategic coopetitive-like move. Users can now integrate AirPlay-enabled devices into their Sonos system. Additional nodes create network effects and enhance the value. Users can of course use iOS devices to control where music is streaming. This integration also means any iOS device can stream music over the Sonos network – so friends can stream their music over your Sonos system.
I once had the chance to observer how today’s teenagers interact with each other and their devices. I noted they would often play songs for each other over their personal mobile devices. The ability to stream music over an audio system from a personal device is exactly how many will use this functionality. When individuals gather together, each of their mobile devices can become a host unit.
Technology devices are ever reliant on networks. Which networks to enable on your devices is an increasingly important question for OEMs.
