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Headphones are passe; Ear pods are the new thing in the audio device market

Erick Massey/ 12 Apr 19 | 06:06 PM

A lot of brands are vying for the top spot in the audio devices category as the industry booms and people shift from the clutter of wires to Bluetooth devices. And just before they can finish shifting, in come true wireless devices in the form of ear pods.

Audio equipment maker JBL is closely observing the trend and has plans up its sleeve for the future.

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Sumit Chauhan, Vice President, Lifestyle Audio Division at Harman India, believes the shift will take its own sweet time. 

"There is a clear shift from wire to wireless and from wireless such as Bluetooth earphones and headphones to true wireless like ear pods. I think the total shift will happen gradually because they are a bit expensive than regular Bluetooth earphones. By the end of the year, we'd have five or six devices just in the pure wireless category but that does not mean the whole market will move there at one go. The first shift will happen is from wireless to Bluetooth and the second shift will be to true wireless," he added.

Chauhan also says the Bluetooth space is not limited to wireless in- and on-ear audio devices as the share is also being taken up by voice-enabled speakers such as Google Home, Alexa and Cortana. He added that since in the connected home space, the bulky home theatre systems are being replaced by sleek sound bars, JBL has a slew of SKUs that will be launched.

On being asked about Indian market where price remains the key and there is a hoard of freebies, Chauhan, who was speaking on the sideline of an event to announce JBL's partnership with IPL franchise Delhi Capitals, says, "It's all about the quality."

"We segment the market with entry, medium and premium, the entry level is Rs 1,500 and lower. From Rs 1,500-5,000 is what we consider medium and anything above that is premium."

JBL and Harman Kardon tend to focus on the upper two segments. The first might be substantial for the volume but if you really look at the revenue, margin and value, it's not really that great. The quality in smart audio devices that cost less than Rs 1,500 is poor and people usually buy cheaper devices for use and throw.

Portability and design have become a priority for people, but bigger companies are facing a challenge here as new players are launching products on similar lines.

Chauhan says they pump in around 6-8% of their overall revenue back into R&D and design, but the entry-level and in fact, some older companies do not invest in R&D because the margins will shrink.

"We and probably one or two other brands are still putting a lot of amount. Also, the assembly and manufacturing is the major cost, brands that offer cheaper products procure design from original design manufacturers (ODM) and they don't have to pay for tooling. Ten products will have a similar design but the tuning will differ and that's where the quality part comes in, so there's a clear difference," he says.

On the impact of e-commerce websites on business and importance of offline presence, Chauhan says, "We are the only brand where the split between online and offline is almost 50-50 in terms of revenue, and it was deliberate, as it is easy to go online and launch a product, if the business fails 'then it can be wrapped because you can fail quick and small." The real association with the customer is when they can touch the product, feel it and experience it, this comes from the offline presence and from day one, our intent was to have a substantial presence on the offline side as well, he says.

"Most of the brands are either skewed towards offline stores, which is also not good because they are missing on the expansion on the online space, but if they are only focused on the e-commerce then the risk is very high because any new brand can rattle you," Chauhan says. "The stability in the business actually comes from the offline side, the growth probably comes from the ecommerce side."

Talking about the new e-commerce policy that created a split in the industry as it was favoured and opposed equally, Chauhan believes "market grabs and freebies tend to spoil the market in many ways."

"The recent happenings are not challenges because they are pushing the industry in the right direction," he says. "A lot of cashbacks and discounts are being offered due to which Amazon, Flipkart and others are losing money. So, in a way, it is for pushing them to be profitable, and overall, it is good for the industry."

About future plans, Chauhan says the company is working on a specific series of headphones for the gaming community, hearing aid is another avenue it might look at in the future and artificial intelligence is also being explored to make personalised devices.

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