Harman Increasingly Heeding Demand For Goods That ‘Cut the Cables’

The Charge, due in stores this quarter, comes in multiple colors, including blue, green and black. On the difficulty of managing multiple SKUs to keep up with the current trend for fashion colors, Dragon said, “It’s not as bad as it used to be. We used to have to carry more when Apple was doing the Nano in seven colors.” Apple would make a slight change to its black, “and then we'd have to come up with a new black,” he said. Now, Harman’s portable product line has “some semblance to Apple stuff, but we're having a little more fun free-wheeling,” Dragon said. “We didn’t want to limit ourselves to Apple so we offer different colors -- some bright and fun and then plainer gray and white,” he said. Harman will deliver more products in the series closer to the Berlin IFA show in late summer, he said.

When we asked how Apple’s switch to the Lightning connector with the latest iPhone and tablets affected Harman’s dock business, Dragon said Harman was able to incorporate the change early on due to the company’s product cycle. Harman was one of the only companies delivering iPhone dock products for the holidays with Lightning connectors rather than the Apple-compatible 30-pin sound dock products that were highly discounted at retail.

Harman will still offer some docking products going forward, Dragon said, because there’s still consumer demand for the feature. Harman research has shown that the primary reason consumers want Apple-compatible music systems with docks is for charging, not for control of the product. Docking products have their share of challenges, though, in addition to changes in pin design, Dragon added. The Harman customer service department fielded a lot of calls from angry customers that missed wake-up calls because their iPods didn’t wake up when docked because they were in sleep mode, so the phones didn’t wake up the customers at the designated time. As with any company’s product, “You have to use our app,” he said. “The app has to be engineered to work with your product,” he said.

Harman, like most other audio companies, has limited its wireless audio designs to single-room solutions that can be handled by short-range wireless protocols including Bluetooth and AirPlay. That has left wireless do-it-yourself multi-room audio systems as a category mostly owned by Sonos to date. NuVo Technologies, for one, announced at CES that it had recently begun selling its do-it-yourself multi-room products via hobbyist websites.

On Harman’s direction with wireless multi-room systems, Dragon said, “Nowhere.” Harman AV receivers have dual-zone capability -- “decades-old technology” for distributing music to a secondary zone using wire, he noted. To stay current, the company has added Pandora on receivers, along with AirPlay and Bluetooth to meet the needs of in-room wireless streaming from smartphones and tablets. Some Harman receivers support Roku’s MHL-based (Mobile High-Definition Link) Streaming Stick technology for connected TVs, but the company hasn’t embraced multi-room wireless technology so far. When we noted that audio companies largely have given away that segment to Sonos, Dragon said, “Sonos is doing a great job, it looks great and it sounds good enough."

Chip-based solutions that create speaker-to-speaker multi-room audio systems are on the way, including the Skifta Audio Module, a Qualcomm dual-band SoC with Wi-Fi and a processor that runs a Skifta engine for access to content and adds audio algorithms for streaming multi-zone audio (CED Dec 10 p1). Such products can stream music from room to room, eliminating the AV receiver from the picture. On whether powered speakers incorporating a chip-based multi-room audio solution might be on Harman’s drawing board, Dragon said, “We've been in and out of the powered speaker business many times.” Consumers have resisted technology requiring speakers to be plugged into the wall, he said. At the same time, he said, the speaker-based multi-room concept “could be a really great path with logic embedded in the speaker, with the speaker plugging into the wall, talking to electronics wirelessly. Who knows?”

Among Harman Kardon CES product releases were the BDS 577 integrated 3D Blu-ray player and receiver with Bluetooth and AirPlay wireless streaming, controllable by Apple and Android apps. The Harman Kardon AVR 3700 AV receiver ($999) packs a 7.2-channel amplifier, Ethernet connectivity, along with AirPlay and Wi-Fi. The step-down AVR 2700 loses the Wi-Fi connectivity, the company said. Both are due in stores this quarter.

For now, Harman’s consumer audio focus is on portable devices, soundbars and headphones, along with higher-end home theater products, Dragon said. “That’s the way we're attacking business these days. It’s all about cutting the tethers and home theater,” he said. Dragon wouldn’t quantify Harman’s spend, but he said the company is allocating “significant” amounts to research and advertising, “looking at each use case to see what consumers are asking for.” Aside from just online surveys, Harman is holding focus groups, “spending time with people, and getting it from the horse’s mouth.”

That’s a change from days when “retailers were driving what we were delivering,” Dragon said. Now retailer input is just one of the input resources Harman uses to determine product direction. “Getting to the street gets us insights we didn’t get before,” he said. Harman is also spending heavily on advertising to educate customers about the products they need, he said. As an international corporation with a market cap of $3.14 billion, Harman has the resources to invest in ways other audio companies can only dream about. “We're the only audio company that’s investing the kind of money we're investing,” he said. He wouldn’t give Harman’s ad budget but noted that the company is paying musicians and bands including Paul McCartney, Maroon 5, Jennifer Lopez and Tim McGraw to serve as spokespeople for Harman brands.

Harman doesn’t see its marketing investment as a choice, but a necessity. As a former CE salesman, Dragon said, “We used to spend a lot of time with the customer, but we don’t have the floor anymore. It’s become a self-serve industry,” he said. “If you don’t tell the story in merchandising, advertising and online, you can’t expect the customer to know what’s available to them.”