Consumer Sales Dip at Universal Electronics, Which Cites ‘Tough’ Challenges

"In my 15 years here, I haven’t seen a period where’s there’s been as much time and money being devoted to next-generation applications with our customers,” Arling said. On the broadcast subscription side, “they're all very interested and can see they can bring a lot of value to consumers by bringing new services” to set-top boxes, he said. Those customers are “doing all the right things to develop next-generation platforms,” including working with Universal on next-generation control technology that will help power it, he said.

Each new iteration of remote control technology “is closer to the day when the remote sets itself up with no effort from the user,” Arling said. Toward that end, Universal has released the latest versions of its QuickSet remote control application and Fusion platform that include new functionality and more automatic setup features, Arling said. Universal’s QuickSet 1.5 application uses the two-way communication capability of HDMI to automatically program a remote by reading brand and model information from a TV, he noted. The company is currently in development with several companies to roll out the technology this year, he said.

Next-generation QuickSet development is “already under way” and will include control of IR-powered devices through a home network along with integration of smart devices with “absolutely zero configuration,” Arling said. The QuickSet roadmap has the goal of making remote control setup “not just easy but automatic,” he said.

Universal’s Fusion remote control platform, announced at CES, is targeted to the growing IP-based set-top box market, Arling said. Citing In-Stat data, he said shipments of IP-based set-top boxes in North America are forecast to grow 48 percent this year. The Fusion platform, which includes a QWERTY keyboard, is the “ideal solution” for digital set-top boxes that need advanced navigation and text-entry functionality for more sophisticated search functions, Web browsers or social applications, he said.

The Fusion platform incorporates QuickSet 1.5 for automated setup along with Universal’s remote control application programming interface technology for “seamless integration and scalability” with advanced navigation and control features on target platforms, Arling said. As IP-connected devices enter the home entertainment market, there are many potential applications for the features, “some not yet envisioned,” he said. Universal’s API “allows our customers to confidently enter this world knowing that as they change the functions and features of their control devices, they can implement [the changes] quickly and easily with far less investment than in the past,” he said.

Wi-Fi Direct will be a big part of future Universal products, Arling said, since it brings benefits “not available before in the home entertainment space.” Because Wi-Fi Direct uses less power than traditional Wi-Fi, it’s “ideal” for battery-powered devices such as remote controls, he said. Wi-Fi Direct is less expensive to implement, making it more accessible to a wider range of products, he said. As a software add-on, Wi-Fi Direct adds no extra cost to platform manufacturers over basic Wi-Fi, and it expands Wi-Fi “usability by offering backward compatibility with existing Wi-Fi certified products in the market,” he said.

Universal plans to ride the rapidly growing adoption wave of Wi-Fi Direct, which will be fueled by support in Android 4.0 and Windows 8 devices, he said. In-Stat pegs the number of Wi-Fi Direct-enabled products shipped in 2011 at 172 million, and by 2014 it predicts that every PC, CE device and mobile phone that ships with Wi-Fi silicon will be Wi-Fi Direct-enabled, Arling noted. Through Wi-Fi Direct, Universal’s connected remotes will be able to link wirelessly to tablets and “add them to the control ecosystem, providing a simpler, more user-friendly TV viewing experience,” he said.

While the traditional remote control will continue to be a “mainstay” in Universal’s home entertainment product list “for the foreseeable future,” the company will expand remote control technology to include “multiple new product platforms” including smart devices with apps that “improve the home entertainment control experience,” Arling said. Quoting Nielsen figures, Arling said 70 percent of tablet users use their tablets for games, social networking and downloading apps while watching TV, and 30 percent of total tablet hours are spent in front of the TV. The company plans to provide both a “lean forward” and “lean back” experience for consumers “with a connected remote” that is employed “when the tablet is put down or removed from the room,” he said. A connected remote will give consumers “the best of both worlds,” he said.

Universal has “a number of patents with many plans” around them,” Arling said. Last summer, Universal sued Logitech for infringement of 17 remote control technology patents. Arling wouldn’t comment on the lawsuit, which is still pending. The company doesn’t sell its products based on its intellectual property but on the ability to “deliver product and technology at one good system level price for the customer,” he said. In some cases, “we have to use our IP and I think we're proving with recent actions that in cases where we think people aren’t respecting our IP, we will enforce it,” he said.

For Q4, Universal sales were up 15 percent to $117.6 million over Q4 2010. The business category contributed 88.2 percent of total net sales, while consumer represented 11.8 percent, a dip from 13.1 percent year over year, the company said. For Q1 2012, the company expects net sales to range between $104 million and $110 million, compared with $105.7 million in Q1 2011. Executives are sanguine about growth in all regions during 2012, especially in Latin America and Asia, led by the broadcast business. Universal is entering the retail market in Brazil and is studying plans to open a third factory in China, executives said.