Polk Enters the Apple Stores

On February 5, This Week in Consumer Electronics announced that Polk Audio had announced plans to sell its I-Sonic ES2 iPod docking tabletop hi-fi ($499) and miDock Studio portable iPod speaker through the Apple website and freestanding store network. This came less than a week after Polk announced that Best Buy would carry its TSi loudspeakers, PSW powered subwoofers, select RM series drive-units and, of course, the SurroundBar 360 DVD Theater (all of which are currently available from the rival Circuit City chain).

What does this mean? Regarding the deal with Apple, it means that the Polk products are, among other considerations, "made for iPod" (MFI), which, according to Apple's executive vice president Phil Schiller, "seeks to formalize how accessory makers work with Apple—while also preventing consumers from getting stuck with knockoff products that don’t perform as advertised." Other analysts have suggested that the MFI tag is a "tax" for third-party manufactuers—one that could cost as much as 10% of the component's price. Neither Apple nor any MFI third-party manufacturers has confirmed that estimate.

However, both the Best Buy and Apple announcements do reflect the search for new outlets for specialty-audio manufacturers. In conversation after conversation at the 2008 Consumer Electroncs Show in January, manufacturers expressed concerns about market shrinkage. One 30-year veteran of the high-end scene told me that his problem wasn't finding customers as much as it was finding retail outlets that could reach those customers.

Polk's senior vice-president of sales and marketing, Dan Hodgson, concurs. "As consumers' entertainment consumption patterns have evolved, we've had to follow them to where they've gone. The CD gave way to the iPod, and that changed the way consumers listened to music—and video entertainment—so manufacturers need to offer products that facilitate that. Polk's goal is to provide a better listening experience wherever people are listening, so our I-Sonic ES2 will be one of, if not the, best-sounding iPod speaker systems available.

"This is part of the continuing evolution of Polk, reaching beyond our roots in component loudspeakers into other types of products. It really started about five years ago with our XRT-12 XM tuner, which was offered at a number of online retailers."

Polk also was one of the first specialty audio companies to add the Crutchfield catalog to its dealer ranks, a move since undertaken by Marantz Reference Series, AudioQuest, PS Audio, and Thiel Audio.

Ken Dawkins, Thiel's North American sales manager, explained the Crutchfield collaboration: "It came about quite organically. Their goal was to grow the quality home portion of their business and ours was to have the opportunity to put high-performance audio in front of far more people than we could have, given our advertising budget. We've added customers and we haven't lost any of our dealers, so we consider that a success.

"Certainly, all high-end manufacturers are looking for more exposure in markets where we might not have dealers or might not have appropriate dealers. The audio world has changed so much, that a small, but healthy, company needs to go beyond traditional independent audio salons in order to survive. We have about 125 dealers in North America and we have begun to look outside of that paradigm in order to grow."

Several manufacturers I contacted pointed out that many retailers had flat years in 2007, but some of their sales came from product categories that didn't exist in specialty audio a decade ago—categories like security, curtains, and even whole-house vacuum systems. Accordingly, specialty audio manufacturers have felt the pinch—and many of them are searching for new outlets or new product categories.

Dawkins said, "We announced a new product category at CES, ThielNet, so we'll start from scratch on marketing that. We're going broad with ThielNet—that could be an endcap at Macy's or Kroger, it could be a full-page coupon in Playboy or a relationship with Amazon, in addition to our traditional dealer network."

If specialty-audio manufacturers can get the message out that there is such a thing as "better," then their enlightened self-interest might just save the whole industry. Fingers crossed, everybody.

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