Switching on the digital home

Capitalising on the popularity of digital audio players, Optima's CE division will bring new products to the market in June, according to Ung. Hitting the $99 price point had helped Optima sell more than 10,000 units in the December 2004 quarter, Ung says.

Optima's new range of audio products will include flash memory-based players and hard disk-based players with up to 40G storage.

As consumers buy MP3 players and grow their collections of digital music, content management could open up another opportunity for resellers, says Ung. 'It could be external, for music or videos,' he says. 'DMA technology will be really attractive.'

Krieke is another who sees the MP3 player boom developing the digital home market more broadly. 'The iPod of course has been an enormous success for Apple, but it has also stimulated market growth and interest in these types of devices.

'What we will see will be less music-centric portable devices, although these will remain strong, but there will be the emergence of more and more devices which store images, video clips and text which is downloadable from the home PC,' Krieke says.

Changing channels

In 2004, the IT industry, spearheaded by manufacturers such as Intel and Microsoft, promoted the digital home to consumers while also making advances towards traditional 'smart house' custom installers such as the CEDIA (Custom Electronics Design and Installation Association) membership base.

However, the convergence of the IT and AV channels is something that has only seen incremental success.

Tech Pacific, perhaps the leading driver of the digital home concept at the distribution level, may get its message to more resellers through its merger with Ingram Micro.

The new Ingram had largely preserved the existing management structure and commitment to the digital home market, according to Netgear's Ian McLean, who says the merger had not greatly affected its reseller base, as it was already a touching many Ingram customers through its relationship with rival distributor Synnex.

Samsung was one manufacturer that took the convergence bull by the horns last year, combining its IT and AV business under one business unit, headed up by sales general manager Krieke.

He says the vendor has had 'a selected few' of its IT distributors take on its AV product range, bringing new resellers and AV specialist stores into the fold.

'At the same time some of our AV retailers have started to take on board some of our IT products, for example multimedia notebooks, as a means of consolidating their vendor line-up and provide a one-brand solution to their customers.

'New resellers are coming on board, particularly based on our notebook line-up. As our product categories increase in the coming 12 months, we expect our reseller base to potentially double on what we had at the start of this year,' Krieke says.

One of the few IT companies to attend the CEDIA Expo last year, Netgear has had some success entering the audio retail market with the signing of JB HiFi. 'We're attending the CEDIA Expo again this year,' says McLean. 'With a lot of the programs and strategies you have to think longer term.'

Another vendor who had seen some success through the CEDIA Expo was Danish company KiSS, distributed in Australia by Melbourne-based QualiFi. 'The CEDIA Expo worked out really well for us. We targeted Harvey Norman Electrical stores for KiSS, and we're now in 40 or 50 of their stores,' says QualiFi's Joe Salamanca, general manager, KiSS, Force & PJ.