Memories, moments and stories may change.

Transcription

Memories, moments and
stories may change.
www.marketnews.ca
Vol. 37 No. 12
PM40015963
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But our passion for connecting will always live on.
®2012 Samsung Electronics Canada, Inc. All Rights Reserved. Samsung is a registered trademark of Samsung Electronics Co., Ltd. Pursue your passions is a trademark of Samsung Electronics Co., Ltd. Used with permission.
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samsung.com
At Samsung, we’re dedicated to creating technology that helps Canadians pursue their passions.
Samsung’s devices let you share and stream wirelessly, so you can experience content more easily
than ever before. Showcase your favourite photos. Stream your favourite shows. Share your passions.
Because a passion worth having, is a passion worth sharing.
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CONTENTS
Volume 37, Number 12, December 2012
Editor’s Note
Get Smart .......................................................................................................................................................................................... 6
8
Canada’s Consumer Technology
Business Journal
PUBLISHER
Bob Grierson
ASSOCIATE PUBLISHER
EDITORIAL DIRECTOR
John Thomson
[email protected], Ext: 225
V.P. SALES
Mary Thomson Grierson
EDITOR
Christine Persaud
20
32
EDITOR-AT-LARGE
Gordon Brockhouse
ASSISTANT EDITOR
Adam Grant
40
CONTRIBUTING EDITORS
David Birch-Jones, Peter Burian,
Brent Butterworth, Vawn Himmelsbach,
Wally Hucker, Ted Kritsonis, Frank Lenk,
Marc Saltzman, Sarah Jane Silva
CREATIVE DIRECTOR
Erik Devantier
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Copyright 2012. Marketnews is published monthly by
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GST Registration R140396912. ISSN: 0714-7422.
The views expressed by advertisers are not necessarily
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44
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The Year in Review
By year-end, smartphone penetration in Canada will surpass 60%. Despite introductions like the
iPhone 5 and iPad mini, some observers think Apple has lost some of its mojo; but Samsung has
gained traction in both smartphones and tablets. Microsoft and RIM are battling for third place in
mobile operating systems.
By Ted Kritsonis.............................................................................................................................................................................20
What difference did new wireless entrants make in Canada’s telecom market? .......................30
Digital Imaging
The State of the Imaging Market
Thanks to the biannual Photokina tradeshow, 2012 was a banner year for new digital cameras. We
saw full-frame DSLRs at attractive price points, innovative new Compact System Cameras (CSCs), and
connected cameras with built-in networking. Smartphones have cannibalized sales of entry-level
fixed-lens cameras, but categories like super-zooms and CSCs are thriving.
By Peter Burian..............................................................................................................................................................................32
Custom Corner
Innovations in Home Automation
Home automation vendors are integrating smartphones and tablets into their systems. Not only does
this reduce costs compared to dedicated touch panels, it allows for more individual control. Integrators
need to view smart devices as an opportunity rather than a threat.
By David Birch-Jones .................................................................................................................................................................40
Social enterprise software enables employees to communicate and collaborate in the workplace in the
same way they do in their personal lives. The technology is also being used to interact with customers,
so that retailers can portray themselves as engaging and concerned.
By Vawn Himmelsbach ............................................................................................................................................................44
Commercial Installation
Digital Signage Content that Grabs Viewers’ Attention
60
When it comes to digital signage, content is king. To figure out what works, integrators and users need
to consider the audience and location. Who’s viewing the sign? For how long? How often do they
return to the same location? New systems can determine viewers’ age and gender, and deliver customized content.
By Marc Saltzman........................................................................................................................................................................60
Appliances
Caffeine Hit: What’s New in Coffee Makers
64
Canadian consumers are trying to economize by brewing coffee at home rather than going to cafés;
but don’t want to compromise on quality. Single-serve pod machines are the hottest segment right
now, accounting for 23% of unit sales.
By Sarah Jane Silva......................................................................................................................................................................64
Shop Talk
HMV Canada launches streaming music service; Major retailers take Quebec government to court;
NESA sold to Liquidity Services; The Brick settles Quebec class-action suit.
By Wally Hucker ............................................................................................................................................................................68
68
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Going Mobile
Social Enterprise: The Retail Social Revolution
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The State of the Industry: Life After the Flat-Panel Party
For the first time ever, Canadian unit sales of flat-panel TVs will decline in 2012. Manufacturers are sustaining revenues through an emphasis on larger screens and smart features. Some audio categories,
such as headphones and soundbars, are booming, helping to pick up the slack.
By Gordon Brockhouse ............................................................................................................................................................... 8
Retail Tips
OFFICE MANAGER
Jeanette Bottoni
Bomar Publishing Inc.
Audio Video
76
Marketnews
BlackBerry starts fresh with BB10...........................................................................................................................................76
Ted’s Take: Microsoft Surface Pro price will have to come down.............................................................................76
Computing in 2012: the year that was.................................................................................................................................78
Personnel Appointments ..........................................................................................................................................................78
Samsung Canada announces Smart Galaxy Wi-Fi & 3G camera .............................................................................80
Magellan creates GPS/back-up camera combo kit .......................................................................................................80
Archos combines gaming and Android tablet ................................................................................................................80
TomTom updates Android app...............................................................................................................................................80
Nintendo announces Wii Mini; available exclusively in Canada ..............................................................................80
Buyer’s Bio
Pat Reilly, Vice President of Divisional Merchandising for Staples Canada, has worked on both sides of
the fence: buying and selling. He says knowing what makes manufacturers tick helps in negotiations.
...........................................................................................................................................................................................................82
82
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©2012 Sharp Electronics Corporation. Sharp, AQUOS, and all related trademarks are trademarks or registered trademarks of Sharp Corporation and/or its affiliated companies.
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Wednesday January 9, 2013
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At Marketnews, we have a holiday tradition dating back several years: publishing year-end
updates on the most important sectors of the CE industry. In this issue, we have feature
articles covering the audio-video, digital imaging and wireless industries, plus a shorter
piece in our back pages on the computer industry.
It’s no secret that the most vibrant CE categories right now are smartphones and tablets.
As Ted Kritsonis outlines in his Going Mobile Year in Review feature, there were many big
events in 2012: Apple’s long-expected 7” iPad, Samsung’s 5” Galaxy Note smartphone
(called a “phablet” by many, because of its large screen), and the continuing rollout of ultrafast LTE networks in Canada.
RIM’s difficulties made regular financial news; but the announcement that the oftdelayed BB10 operating system will launch on January 30, 2013 gave the company’s share
price a nice bounce. You can read Christine Persaud’s initial take on BB10 in our Marketnews pages.
During 2012, the wireless industry passed a milestone. Early in the year, Canadian smartphone penetration surpassed 50%; and it’s expected to exceed 60% by year-end.
The boom in smartphones and tablets is having repercussions far beyond the wireless
industry. As Peter Burian points out in “The State of the Imaging Market,” smartphone
adoption has destroyed the market for entry-level point-and-shoot cameras. There’s lots
of life in other segments though, including super-zooms, Compact System Cameras and
DSLRs.
Instead of fighting the smartphone boom, camera vendors are taking advantage of it by
adding models with built-in Wi-Fi networking. This allows for easy transfer of images to a
smart device for uploading to social-networking sites, and also for control of the camera
by smartphone apps. During 2012, Nikon introduced a Wi-Fi digicam that runs Android
2.3; and Samsung introduced an Android 4.1 camera with Wi-Fi and 3G connectivity.
As Frank Lenk notes in his computer industry update, the big news on the PC front for
2012 was the launch of Windows 8. With the interface formerly known as Metro, Microsoft
is trying to provide a unified experience across smartphones, tablets and PCs, an approach
that many have questioned. What’s particularly remarkable about Windows 8 is the incredibly diverse range of products it’s inspired, such as hybrids that work as notebook PCs
and tablets.
Smart devices are reaching into all corners of the audio-video industry. TV vendors are
enhancing their smart TV platforms to allow for easy connectivity to tablets and PCs,
so that users can beam videos and photos to the big screen. AirPlay connectivity and
remote-control apps have become must-have features on AV receivers beyond the entry
level.
Tablets and smartphones are causing several categories to surge. These include premium headphones and wireless speakers. As Phil Bryant, Vice President of Sales for D&M
Canada Inc., told Marketnews,“Smartphones mean more music. As long as manufacturers
and retailers ‘follow the source,’ we’ll satisfy our customers.”
Most consumers now have large libraries of music on their computers. The computer
may be a waystation for music on its journey to a portable device. But it can also be a highquality music source in its own right. This is creating a new market for computer audio. As
Sheldon Ginn, Vice President of Sales and Marketing for Kevro International, told Marketnews, handing customers a tablet and inviting them to scroll through a library of music on
a store server can create a compelling tactile experience.“It’s an opportunity to engage
the customer, and it’s not a hard sell.”
It takes a fair bit of work to build robust store networks and configure systems for demonstrating wireless music and smart TV. As anyone who’s sat through a carefully rehearsed
networking product presentation that’s gone awry knows, the demo gods can be pretty
fickle at times. Things don’t always work as expected, which can create embarrassing moments. But it’s worth the trouble. Smart is where we’ve got to go.
One last note: with this issue, we welcome back Editor Christine Persaud, who’s been
away for the last 12 months launching her baby boy into the world. It’s been a privilege
and a rush to keep her seat warm. Welcome back Christine!
And to all our readers, best wishes for the Holiday Season, and a prosperous and healthy
New Year. See you at CES – and Canada Night!
MARKETNEWS MOBILE APPS can be downloaded at www.marketnews.ca
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AUDIO VIDEO
The State of the Industry:
Life After the Flat-Panel Party
by Gordon Brockhouse
At this time of year, many of us go on some kind of binge:
a gift-buying binge, a partying binge, a dining-out binge.
And most of us have learned what happens after those
excesses. For the past half-decade or so, a good chunk of
the CE business has been enjoying a flat-panel surge. Now
reality is catching up with the industry.
“A lot of our partners have a hangover from the flat-panel
party,” comments Martin Szpiro, President of Montreal-based
Jam Industries Ltd., parent company of Erikson Consumer.
“They have to rebuild their focus around other segments.”
As we’ll see when we burrow beneath the stats, it’s premature to say the flat-panel boom is over. But demand is
falling, and revenues are falling even faster. Consequently,
dealers are having to scramble to maintain revenue (let
alone grow).
The Consumer Electronics Marketers of Canada (CEMC)
projects total flat-panel shipments in 2012 will be 3.3
million units, down 6.1% from 3.514 million in 2011. At
presstime, CEMC had not completed its 2013 forecast.
Glass Half-Full
“This is the first year we’ve seen a decline in demand for
flat-panel TV,” notes Mark Haar, Director of Consumer
Electronics at NPD Canada. “This creates a significant challenge for retailers with large investments in space for TV.”
According to NPD, Canadian unit sales of flat-panel TV
for the first 10 months of 2012 were down 5% compared
to the same period a year earlier; and dollar sales were
down 14%. Average selling prices are still falling, although
the declines aren’t as rapid as previous years. “Last year
ASPs declined 20 to 25% on specific screen size segments,” Haar states. “This year, it’s in the mid-teens.”
That’s the glass-half-empty position. You can also take
a glass-half-full view. On the flat-panel market as a whole
(rather than comparing screen-size segments), ASPs were
down 9% during the first 10 months of 2012, versus 18%
in the same period a year earlier. Explains Haar: “That
shows an impact of people moving up in screen size and
feature content.”
NPD’s numbers reflect the trend. Sales of flat panels 55”
and larger are up 27% in unit terms and 21% in dollars.
“The share of 55 inches and higher is now 10 per cent of
all units sold,” Haar adds, “but 30 per cent of revenue.”
Consumers are moving up in feature content as well,
which again is helping to sustain ASPs. Sales of smart TVs
(which NPD defines as TVs with a built-in Web browser)
40” and larger were up 100% in unit terms and 71% in
dollar terms in the first 10 months of 2012. “Currently,
19 per cent of TVs 40 inches and larger have a browser
installed, so there is obviously an opportunity for growth,”
Haar observes. Smart TVs account for 32% of revenue in
TVs 40” and larger, he notes.
Haar believes that sales of smart TVs are being driven
Overview
• For the first time ever, flat-panel shipments will fall this year; and ASPs continue to decline. Major TV
vendors are maintaining revenue though an emphasis on smart TV and larger screens.
• Several audio categories are enjoying explosive growth, including soundbars, headphones and
wireless speakers.
• Two-channel listening and computer audio are evolving into potentially lucrative niches for
enthusiast dealers.
• In both the audio and video markets, innovation and growth are being fueled by connectivity with
smartphones and tablets.
8 MARKETNEWS
MNDEC12.indd 8
by consumer demand, rather than the fact that the feature
is present on a television that consumers want for other
reasons. Sales of 3D models are also up, but Haar suspects this is because the feature is offered on the TV, not
because consumers want to use it. Unit shipments of 3D
models 40” and larger are up 49% this year. Their share
of the market is 19%, versus 11% in 2011.
Delay of Game
For this article, I talked to senior executives at four major
flat-panel vendors: LG Electronics Canada Inc., Panasonic
Canada Inc., Samsung Electronics Canada Inc. and Sharp
Electronics of Canada Ltd. (Sony of Canada Ltd. declined to
participate.) All respondents acknowledged that competition
and price erosion make the TV marketplace very challenging. But they also claimed success in bucking the trend
through an emphasis on larger, more highly featured TVs.
However, some eagerly anticipated flat-panel technologies failed to make their debut in 2012. At the 2012 Consumer Electronics Show, LG and Samsung both displayed
gorgeous, super-thin 55” OLED televisions. Both companies said they planned to introduce OLED in Canada
around mid-year. That didn’t happen; but it will in 2013,
they promise.
“I was just in Korea, and saw it in production,” states
Colin Bettam, Vice President Marketing at LG Canada. “We
will have an extended rollout at CES, and aggressive plans
for 2013. It will ship early in the year. Aesthetically, it’s
unbelievable.”
What about pricing? Asked during CES 2012 about the
price tag for LG’s 55” OLED TV, LG Canada’s Frank Lee told
Marketnews, “There is not going to be sticker shock.” Bettam sings a different tune, without revealing specifics. “Firstin technology is never for the faint-of-heart,” he observes.
The other new display technology at CES 2012 was
4K, shown by LG, Sharp and Toshiba. Intended for large
screen sizes, where HD pixel structure can be seen at close
viewing distances, 4K television has since been renamed
“Ultra-High-Definition TV” (UHDTV).
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AUDIO VIDEO
Unlike OLED, UHDTV did make it to market in 2012. At
CEDIA, JVC, LG, Runco and Sony all showed 84” UHDTVs.
All employ passive 3D technology. While LG doesn’t officially acknowledge this, all appear to be using an LG panel.
Sony is selling its XBR-84X900 in Canada and the U.S. for
$25,000. LG is selling its 84LM9600 south of the border
for US$20,000; but did not introduce it in Canada in 2012.
I was blown away by the picture quality of this TV when I
saw it during an LG media briefing at CEDIA, and by the
picture on the Sony model at the company’s CEDIA exhibit.
An LG UHDTV LED television will arrive in Canada in early
2013, Bettam says. He says pricing of the 55” OLED will
be “on par” with the 84” UHDTV. If we take the U.S. launch
price of the 84LM8600 as a starting point, and allow for
some of the depreciation that’s typical of second-generation
models, it’s easy to see Bettam’s point that these televisions
aren’t “for the faint-of-heart.” As Bettam notes, these are
“early adopter” pieces, “the front edge of the wedge.”
James Politeski, President of Samsung Canada, says his
company will bring OLED and UHDTV to market in 2013.
“What you also will see is beautiful products,” he adds.
“Our design is second to none. Year after year, we launch
beautiful products, and 2013 will be no exception.”
Bucking the Trend
Panasonic has traditionally offered only plasma TVs in larger screen sizes. But in 2012, the company launched 55”
LED TVs, including the TC-L55WT50 shown here.
What about 2012? Both Bettam and Politeski say Canadian ASPs on their companies’ televisions actually increased
this year. Panasonic and Sharp also were able to hold the
line on pricing.
“There has been quite a bit of price erosion this year,
about 8.8 per cent to date,” says Michael Moskowitz,
Executive Vice President at Panasonic Canada. “We expect
it to end up at 10 per cent. We’ve bucked that trend. Our
ASPs are not dropping as quickly as the industry’s. Overall,
our ASPs are down two per cent. We focus on higher-end
product and we’re skewed to larger screen sizes.”
Panasonic has traditionally focused on plasma in larger
screen sizes. But in 2012, it began offering LED at larger
sizes, up to 55”. “We have a balanced portfolio between
LED and plasma,” Moskowitz says. “We wanted to give consumers choice, and we will continue to do that. Our channel
partners have really been able to differentiate the two.”
Panasonic remains committed to the independent channel, Moskowitz adds. “Overall, the independent channel
is strong. Our dealers are strong, and have the ability to
differentiate our products in the marketplace. We will
continue to invest in that area.”
Like other Japanese multinationals, Panasonic Corpora-
tion posted a significant loss for 2012. But Moskowitz says
the global company is in good shape. The losses stemmed
from write-downs of assets over the past couple of years,
as Panasonic realigned under-performing business units.
The company posts an operating profit, Moskowitz notes
(however, operating profit declined in 2012). It’s a highly
diversified company with revenues in the $100 billion
range (again down for 2012). Besides consumer goods
(primarily television), it’s involved in B2B segments like
cinema projectors, PBX systems, security products and
ruggedized notebook PCs.
Moskowitz calls television “one of the most difficult businesses Panasonic is in. It’s tough to balance profitability
and volume expectations. I’m not happy with where the
industry has gone. Frankly, I think this industry is giving
away dollars. Vendors are chasing volume.”
Even so, Moskowitz is pleased with the company’s
position in the Canadian marketplace. “We had realistic
goals for profit, revenue and units, and we’ve exceeded
our goals for this year,” he states. “Our 10 per cent share is
fine with us.
“Business is tough out there,” Moskowitz continues. “But
is it a fun business? Absolutely. The value is amazing. The
product keeps getting better: picture quality, integration
with social media, smartphone integration, on-demand
content. There aren’t many businesses where ASPs are in
the $800 to $1,000 range, and you’re still selling three
million units a year.”
Moskowitz says smart TV is resonating with consumers.
“Based on our research, 50 per cent of customers are incented to buy based on smart,” he notes. “Whether or not they
use it after they purchase, we don’t know. As we integrate
with smartphones and develop content, interest will grow.”
He believes consumers want smart technology built into
their TVs, as opposed to adding a media adapter or other
external component. “There’s something to be said about
having an integrated device rather than a bolt-on product,”
Moskowitz says.
In 2013, Panasonic will continue to refine its smart TV
platform, adding content providers and improving integration with smart devices and social media. “The combination of design and picture quality will also improve,”
Moskowitz promises. “Panasonic has not taken our foot
off the development pedal at all. We need to maintain our
position in the marketplace as a premium provider.”
Michael Moskowitz, Executive Vice President, Panasonic
Canada Inc.: “Business is tough out there. But is it a fun
business? Absolutely. The product keeps getting better:
picture quality, integration with social media, smartphone integration, on-demand content.”
Abraham Cherian, Associate Vice President, Sharp
Electronics of Canada Ltd.: “All our large screens are cut
at our 10th-generation plant in Sakai. The screen size is
limitless, because the mother glass is massive. It’s just a
matter of the price hitting mass appeal.”
James Politeski, President, Samsung Electronics Canada
Inc.: “Our mission for 2012 was to focus on premium
product, get behind retailers and drive excellent in-store
experiences. We’ve had substantial ASP growth, in the
hundreds of dollars.”
The Big Picture
Sharp Corporation was also in the news 2012 for financial
woes; indeed, the company’s very existence was in ques-
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tion at times. “The financial situation at Sharp Corp. will
have no effect on Canadian retailers,” says Abraham Cherian, Associate Vice President at Sharp Canada. “In Canada
and the U.S., Sharp is doing very well.”
Cherian acknowledges that 2012 was a difficult year for
the TV business in Canada. “Market dollars were down
double digits. September, October and early November
were all difficult, but Black Friday pulled us out of the
doldrums. It was a surprise for all of us.”
Like his counterparts at other TV vendors, Cherian cites
price erosion as the industry’s most serous problem. He says
he saw a Canadian retailer advertising a 32” LCD HDTV at
$178 as part of a Black Friday promotion. And he’s seen 50”
panels advertised in Canada at $699. “Overall, price erosion
in the 32-inch segment is around 35 per cent,” Cherian
says. “In the 40-inch segment, it’s 15 to 20 per cent.”
Sharp Canada participates in those markets; its smallest
model is a 32” CCFL-backlit LCD. But Sharp’s primary focus
in North America is larger screen sizes, which enabled it
to keep ASPs up during 2012. “We identify ourselves as a
premium large-screen brand,” Cherian states. “Over 80 per
cent of the TVs we sold in 2012 were 60 inches and up.
We have higher ASPs, because we’re selling a disproportionate number of large TVs.”
For example, Sharp has two 80” models, priced at
$4,500 and $5,500, which is basically unchanged from
a year ago, when Sharp launched that size. “Sixty-inch is
about 10 per cent lower for us than last year,” Cherian
adds, “and 70-inch is about the same as last year.”
Price erosion on 60” product in Canada has been more
moderate than in the U.S. South of the border, Vizio has
promoted a 60” television with a Sharp-manufactured
panel for $699. During 2012, Taiwan-based Hon Hai
Precision Industry invested in Sharp’s 10th-generation
LCD factory in Sakai, Japan, and has offered other brands,
including Vizio, access to Sharp panels. But as Cherian
notes, Vizio does not sell in Canada. Sharp Canada has a
CCFL-backlit 60-incher for under $1,000, but there are no
$699 or $799 Vizio sets being sold here.
Cherian says big screens are the best motivator to bring
consumers into the TV market. “LCD is a mature technology, so you have to offer the consumer a good reason to
replace an older TV. A couple of years ago, LED enticed
people for energy savings. 3D wasn’t a motivator, but
smart TV is. People can’t go to a video store anymore, so
they need a way to get on-demand movies.”
Sharp’s smart TV platform isn’t as rich as its competitors’, Cherian acknowledges. “There are different levels of
smart,” he elaborates, “some with the basics, some with
Phil Bryant, Vice President Sales, D&M Canada Inc.: “Better smartphones capable of more and improved music
indicate a continued need for audio support products.
The love of music has always been a binding human
experience.”
12 MARKETNEWS
MNDEC12.indd 12
Samsung made a push into the audio market in 2012 with some gorgeous docking speakers. Its DA-E750 employs a
pair of tubes in the preamp stage, and supports wireless streaming via Bluetooth and Apple’s AirPlay protocol.
a full processor. We have found that what people want
are video services like YouTube and Netflix.” Consumers
can use a laptop, tablet or smartphone for Web browsing,
social media and running apps, Cherian says. But in early
2013, Sharp will introduce a new line of TVs with smartphone and tablet connectivity via DLNA; Sharp is branding
this capability as “BeamzIt.”
Rather than focusing on smart capabilities, Cherian believes consumers are better served by buying a high-performance big-screen TV and using a media box or Blu-ray
player for smart functions. “Ultimately, you can beef up
the TV, but it’s hard to keep up,” he says. “We’re not the
leader in smart. We’re going to market with the biggest TV
for the dollar. Use a media box, and buy the biggest, most
beautiful TV.”
Competitors are now offering very large flat panels,
though none as big as Sharp’s 90-incher. Cherian says
Sharp’s Sakai facility gives it an advantage that it will be
able to sustain. “It has to come down to cost versus size.
Their 84-inch is the same as our 90-inch. Their 75-inch is
the same as our 80-inch. All our large screens are cut at the
Sakai plant. The screen size is limitless, because the mother
glass is massive. It’s just a matter of the price hitting mass
appeal. We have the opportunity to make larger TVs.”
At CES, Sharp will demonstrate a thin-film technology
called IGZO (indium gallium zinc oxide). “The beauty of
Sheldon Ginn, Vice President Sales and Marketing, Kevro
International: “Computer audio is a good opportunity
for dealers. Put that tablet in customers’ hands, and
ask what they want to hear. It’s a huge opportunity to
energize the customer.
IGZO is its high efficiency and high resolution,” Cherian
says. “We have a 4K 32-inch IGZO panel for broadcast,
medical and design applications. Other options include
screens for tablets and smartphones.” Rumour has it that
Apple will use a Sharp IGZO screen in its next iPhone.
The challenges in the TV market will continue in 2013,
Cherian predicts. “There will be a push from certain brands for
marketshare, especially in smaller screens. In that segment,
there’s very little value that vendors can offer the market.”
Up and Away
The two big Korean vendors both report healthy TV sales
in both unit and dollar terms, although they acknowledge
distress in the marketplace. “Overall, TV isn’t as strong as
everybody would like,” comments LG’s Bettam. “Household penetration is fairly high. People are less open to
making a change unless you can show the technology.”
But he adds, “This has been a great year for LG. We’ve
made significant growth to establish ourselves as the
number-two brand, and we’ve moved into a new building.
We’re definitely up over last year in both dollars and units.
Our ASPs continue to climb.”
Bettam cites two factors: LG’s smart TV platform and
its Cinema 3D technology. “Our focus in 2012 was on
showcasing our technologies,” he says. “We’ve made great
Pat McKeever, President, Lenbrook Industries Ltd.: “It’s a
very difficult time to be in CE. But our independent dealer
partners have survived through the decades that were
supposed to mark the demise of independents.”
12/14/12 12:52 PM
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MNDEC12.indd 13
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AUDIO VIDEO
advance with our smart TV platform, and it’s been well
received by dealers and consumers.”
The key feature is LG’s Magic Remote, which allows freeform navigation of app screens, rather than tabbing through
options with cursor keys. “As soon as people get the Magic
Remote in their hands, their reaction is truly surprise and
delight,” Bettam says. “We have well over 1,000 placements
where people can try it. The remote is tethered to a display
with pre-programmed content. It’s really a differentiator.”
But the technology needs to be shown and explained,
Bettam comments. “Smart TV is more of a discovery piece.
A lot of people know about Netflix without realizing the
depth of our smart TV offering. That is our job when they
come into the store. We’re investing heavily in training and
in-store placement.”
Bettam believes the smartphone boom helps fuel the
buzz around smart TV. “The verbiage is prevalent in
phones,” he points out. LG is exploiting this by outfitting
retail sales representatives (RSAs) across Canada with
LG Optimus II smartphones, so they can show how the
phones interact with the TV.
Even though 3D hasn’t taken the TV market by storm,
Bettam is a believer. “The 3D business continues to grow,”
he says. “There’s lots of interest in 3D cinema. We have a
partnership with Cineplex, and it’s their take that 3D has
been well received with the right titles.”
In 2012, LG introduced a unique spin on 3D called “Dual
Play,” which is intended for two-player videogames. Players put the TV in 3D mode, selecting the formatting option
used by the game (side-by-side, top-and-bottom), then
don LG’s Dual Play glasses. One pair of glasses shows the
left-eye view to both eyes, the other shows the right-eye
view. The result is that players see a full-screen instead of
half-screen image, for their character only. “It eliminates
screen peaking,” Bettam elaborates. “It’s a great in-store
piece. RSAs are all gamers, and they enjoy talking this up.”
Bettam says he’s “bullish on 2013” and on the close to
2012. “We get a lot of data, but the best source of intelligence is walking the floor and taking to consumers and
retail associates. My take is that people are feeling more
confident than they were a year ago. People are looking at
purchasing home entertainment as a nesting opportunity.”
for his company. “Our mission for 2012 was to focus on
premium product, get behind retailers and drive excellent
in-store experiences. We’ve had substantial ASP growth,
in the hundreds of dollars. The consumer is buying bigger,
more highly featured, more expensive TVs.”
He attributes this to three factors: the products Samsung
is presenting on retail floors, training in the channel, and
online training initiatives. “We’re focusing on the in-store
experience,” Politeski states.
Samsung opened its first dedicated retail store in Canada
during 2012, located in Vancouver. “We are working on
expansion for 2013,” Politeski says. “We wanted to make
sure we got it perfect, and we’ve got it as close to perfect
as possible.
“We’ve had a banner year in smart TVs,” he continues.
“Smart is resonating very well with consumers. On-demand content continues to be the driving reason for app
usage. It’s great to see YouTube videos on a big screen.
We are committed to smart TV, but also to connectivity
with other devices. We want to show how seamless it is to
share content.”
Last spring, Samsung added AllShare Play to its smart TV
platform. This allows sharing of content over the Internet,
as well as on the local network. For example, a parent
could show children’s pictures that are sitting on a remote
PC on a new Samsung TV in the grandparents’ home. The
PC would have to be running Samsung’s AllShare Play
software for this to work.
The other focus is sharing content among Samsung
devices over a home network. Samsung demonstrated this
capability at several events during 2012, including the Canadian launch of its premium 9000-series LED televisions
at a posh home on Toronto’s Bridle Path. Politeski says he
has a 9000 television in his basement, and uses it to connect to a Samsung smartphone, tablet and Wi-Fi equipped
camera. “In 2013, we’ll tell the convergence story, the
connected story,” Politeski says. “We’re the only TV vendor
with strong phone, tablet, PC and camera portfolios.”
New bring-your-own-device policies in large organizations have helped Samsung’s position in the enterprise
space, Politeski notes. “Our strength in retail helps drive
strength in enterprise. We will use that momentum to drive
our enterprise business.”
During 2012, Samsung also took a serious run at the audio market. Politeki says the company had “a good year in
home theatre, and even in our Blu-ray business.” Samsung
also launched a line of beautifully finished speaker docks,
capped by the DA-E750, which employs a pair of vacuum
tubes in the preamp stage, and has Bluetooth and AirPlay
connectivity. “Sell-through is going very well,” Politeski
says. “In 2013, you can expect to see a major push in
audio. We’ll have beautifully designed wireless audio with
great performance.”
The Audio Market
It’s not surprising that major vendors like Samsung are
making a run at the audio business. While legacy categories like audio-video receivers are stagnant, there are
many growing categories, including speaker docks.
Well Connected
In Marketnews’ wrap-up feature in December 2011,
Samsung Canada’s new president expressed shock at the
ongoing decline in ASPs, and declared, “I want that to
stop.” A year later, Politeski is claiming success, at least
James Tanner, Vice President, Bryston Ltd.: “There has
been a resurgence of people wanting a high-quality stereo system that’s independent of their surround system.”
LG’s smart TVs for 2012 feature a Magic Remote, which allows free-form navigation of smart TV screens. “As soon
as people get the Magic Remote in their hands, their reaction is truly surprise and delight,” says Colin Bettam, Vice
President Marketing at LG Electronics Canada Inc.
At 90”, Sharp’s LC-90LE745U LED-backlit television is the largest LCD TV available in Canada. Sharp positions itself as
a premium large-screen brand; 80% of the TVs Sharp sold in Canada during 2012 were 60” and larger.
14 MARKETNEWS
MNDEC12.indd 14
12/13/12 3:12 PM
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12/13/12 3:12 PM
AUDIO VIDEO
According to CEMC projections, 180,000 AV receivers
will be shipped to dealers in 2012, down 5.3% from 2011.
The organization is forecasting a further decline of 5.3%
in 2013, to 170,000 units. Blu-ray players were essentially
flat, at 980,000 units, and are expected to grow 3.6% in
2013, to 1.015 million units.
Home-theatre systems (HTiB) are expected to fall 27.9%
in 2012, to 310,000 units, and a further 12.9% in 2013.
But this is offset by the sudden emergence of soundbars.
From practically nothing (CEMC says a small number
could have been included in HTiB systems in 2011), this
category exploded to 160,000 units in 2012, and will
grow 31.3% in 2013, to 210,000 units.
According to NPD Canada, sell-through of AV receivers in
the first 10 months of 2012 was 12% lower in unit terms
and 15% lower in dollars than the corresponding period of
2011. Home loudspeakers were down 17% in unit terms
and 23% in dollars.
Blu-ray player sales showed unit growth of 6%, compared to 26% in the same period a year earlier; but dollar
sales were 16% lower. “The bright spot is on the wireless
side [models with built-in Wi-Fi],” Haar reports, “which are
up 68% in units and 30% in dollars. Overall, ASPs are
down about 20% versus last year.”
But there are some sunrise categories as well. HTiB
systems, including soundbars, are showing about 1% unit
growth. But soundbars are up a whopping 132%. “This is
almost totally offset by a decline in home-theatre systems,” Haar notes.
Docking and streaming speakers are up 21% in units,
and 14% in dollars. But the streaming sub-category is
exploding. According to NPD, wireless streaming speakers
were up 77% in unit sales, and 132% in dollar volume in
the first 10 months of 2012, compared to the same period
a year earlier. “Streaming is only 13% of the total,” Haar
elaborates. “The vast majority are wired.” Docking speakers were up 15% in units and 4% in dollars, indicating
continued growth, but falling ASPs. Vendors expect the
market to shift dramatically to wireless speakers in 2013.
The other darling category is headphones, which were
up 7% in unit sales and 12% in dollar sales in the 10
months ending October 31, 2012. “Almost all the growth is
coming from microphone-equipped models, which are up
66% in 2012,” Haar comments. “ASPs are still rising.”
The Big Three
Given NPD’s and CEMC’s sales figures for audio, it’s not
surprising that audio vendors seem genuinely energized.
Besides exploding categories like headphones and soundbars, there’s also a revival in two-channel listening and the
emergence of computer audio.
“On the consumer side, there are three buzzwords right
now,” says Szpiro of Jam Industries, “wireless, headphones
and soundbars. That’s the focus of everybody I talk to.
We’re selling a ton of all three.” But these categories aren’t
gimmes, Szpiro cautions. “Dealers have a hard time merchandising them,” he states.
The most straightforward of these three categories is
soundbars. “They’re the new home-theatre-in-a box,”
Szpiro says.
“Headphones have to look good, like jewelry,” he
continues. “People want to try them on. They want to hear
them. Retailers need to get more aggressive in how they
merchandise headphones.”
Wireless audio is a broad category, Szpiro points out,
encompassing everything from one-piece Bluetooth speakers to whole-home distributed sound systems from NuVo
or Sonos. “Wireless is a challenge. I don’t think anyone is
doing a great job of displaying and demonstrating it. This
is a solution that people want, if only we can figure out
how to show it. It’s not a solution in search of a problem.”
Szpiro recounts his own experience as an example. “I
have a NuVo system at home. When I show it to people,
16 MARKETNEWS
MNDEC12.indd 16
The Sculptura TV2 from Sinclair Audio combines a soundbar containing four mid-bass drivers and dual dome tweeters with a wireless 8” subwoofer. In 2012, soundbars emerged as a strong category, displacing sales of HTiB systems.
With Bluetooth capability, the Sculptura TV2 hits another hot button for 2012: wireless audio.
they’re shocked; and these people are not technologically
unsophisticated. This is still early-adopter stuff to some
degree.” Sales of wireless audio have downstream benefits
to dealers and suppliers, Szpiro adds. “It leads to speaker
sales, and speakers have to be amplified.”
Dealers are looking for new products to make up for
falling flat-panel revenues, Szpiro notes. “There’s lots of
moving around for products to fill that space. A lot has
shifted to audio and other categories.”
Erikson Consumer is involved in enthusiast audio, with
brands like Arcam, Mark Levinson and Revel. “This is
healthy stuff,” Szpiro says, “but it won’t replace TV sales.”
The company also distributes car audio, and area that
Szpiro says “is doing OK. The hobbyist part is still healthy.”
Szpiro believes the biggest opportunities are in headphones, soundbars and wireless audio, areas where Erikson Consumer is heavily involved. “2013 will be a great
year for our brands,” he states. “Pretty well all of them
have a vast array of new products with new features touch
all these themes.”
Follow the Source
A huge portion of the audio business is being driven by
the explosion in smartphones and tablets, notes Phil Bryant, Vice President of Sales at D&M Canada Inc. “Smartphones mean more music,” he says. “As long as manufacturers and retailers ‘follow the source,’ we’ll satisfy our
customers. Smartphone apps expose home theatre as a
means to control and stream audio.”
This is a bandwagon that the two big D&M brands
(Denon and Marantz) hopped on early. They were the first
receivers to add AirPlay support. This is now a standard
feature on pretty well all AV receivers beyond entry level.
Similarly, the major AV receiver brands all offer free apps
for controlling their products from a smart device. iOS
came first, but most brands, including Denon and Marantz,
added Google apps during 2012.
No doubt, connectivity is sustaining AV receiver sales; but
despite this, they’re declining. “With the recent decline in
panel sales and ASPs, we are noticing a similar decline in
AV receivers,” Bryant notes. “The greatest challenge in maintaining sales is the decline of audio-to-video attachment.”
But there are compensating bright spots. “Headphones
are an important growth category,” Bryant observes, noting that Denon has just introduced a revamped lineup
spanning four different listening styles. “If you’re not taking
advantage of headphones’ sales potential, you are missing
a lot of revenue now and for the foreseeable future,” he
states. “Headphones are ‘the new stereo speakers’ that get
regularly replaced and often upgraded. Almost all members of the family need at least one pair, and often more.”
At CEDIA, Denon added two speaker docks with support
for wireless streaming, and now has three compact audio
systems, two with network streaming. The company is now
looking at refreshing its two-channel component products.
“Better smartphones capable of more and improved music indicate a continued need for audio support products,”
Bryant comments. “The love of music has always been
a binding human experience, and people of all ages will
continue to buy related audio products.”
Listeners are getting more demanding, he adds. “I feel
that better audio products for digital music libraries and
smartphones have exposed poor compressed audio to
many people. The relatively low price for memory means
more space for uncompressed audio, with superior sound.”
Tactile Experience
With traditional products like home-theatre speakers
now declining, dealers need to adopt new products, says
Sheldon Ginn, Vice President Sales and Marketing at
Kevro International, North American distributor for Monitor
Audio. “Our theatre product is still doing well,” Ginn states,
“but the category in general is down.”
Ginn sees computer audio, both the nearfield and
armchair varieties, as “a good opportunity for dealers.
More and more dealers need to embrace this.” Kevro used
to distribute Musical Fidelity, and Ginn says high-end CD
players have become “a hard sell.” But premium DACs and
streamers are exploding.
Ginn recounts an experience at a Monitor Audio dealer
who had a library of music on a server. The dealer handed
Ginn an iPad and told him to choose what he wanted to
hear. A second or two later, Abraxas by Santana began
playing. “It sounded better than the original recording,”
Ginn says, noting that there’s a lesson here for all audio
retailers. “Put that tablet in customers’ hands, and ask
what they want to hear. Give them that tactile experience:
scrolling, picking what you want to hear. It’s an opportunity to energize the customer, and it’s not a hard sell.”
At CEDIA 2012, Monitor Audio launched a two-channel
wireless audio system designed for nearfield listening.
The WS100 just began shipping in Canada, at $429 retail.
“It’s a growing market, but one we’re approaching with
caution,” Ginn says. “Future Shop has shelves of computer
speakers starting at $50, but I think there’s a market for
better-quality sound.”
Monitor Audio also offers speaker docks, and at CES
2013 will add a wireless model. “The wireless trend is not
going away,” Ginn says. “We’re coming out with wireless
products. There will be no more physical docks.”
Kevro’s sales were “up modestly” in 2012, Ginn says.
“In this economy, anytime you’re up or even when you’re
selling things that are wants, not needs, you’re doing OK.”
Most growth came from the custom division, thanks to
a new range of trimless in-ceiling and in-wall speakers.
“Monitor gives dealers an opportunity to present good,
better and best products in a premium brand. Most people
have the wherewithal to spend, but you have to present
the product.
“Custom will continue to grow in 2013,” Ginn continues,
“but you’ve got to work for it. You can’t be complacent.
You’ve got to go after the business. You need a dedicated
space to demonstrate. You need to be passionate, but also
patient; and you need to pick your brands wisely.”
12/13/12 3:12 PM
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MNDEC12.indd 17
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AUDIO VIDEO
Cut the Cord
Pat McKeever, President of Lenbrook Industries Ltd., says
many dealers are looking at audio to replace falling profits on
TV sales. “Dealers all had large space devoted to TV. Most of
them have strong expertise in audio, and have pushed harder
in that segment, mostly for the margins it commands.”
He sees many of the same trends as other vendors, including headphones, wireless audio and computer audio.
Lenbrook launched PSB-branded headphones earlier this
year. “Headphones are up 15 per cent over last year, and
the premium category is growing the most,” McKeever
states. “It’s being driven by tablets. This is all new business for us.”
Last year, Lenbrook launched a premium iPod dock
under its NAD brand; and at CEDIA 2012, it announced an
AirPlay version. “There is a transition from docking to wireless speakers,” McKeever says. “You can count on all our
product offerings following that trend. The whole wireless
category is going to grow like crazy.”
Wireless is also becoming important in the home-theatre
category. “Home theatre is quieting down,” McKeever
observes, “but on the premium side, it’s gone up. Wireless
subs and surrounds are bright spots. Soundbars at a high
quality level are a fantastic business.”
A category related to soundbars is sound bases: speaker
boxes that sit on top of cabinets and dressers, and underneath TVs. Lenbrook distributes the ZVox line of sound
bases in Canada. “Attachments like that have gone up
dramatically,” McKeever states. That category will be measured by tracking agencies next year, he adds.
Another sweet spot for Lenbrook, and many dealers, is
two-channel audio. McKeever says Lenbrook is “enjoying double-digit growth” in this space. “It’s beyond our
business planning,” he adds. “Two-channel is one of those
categories that gives relief for dealers from other huge
challenges.
“Computer audio is the next logical step,” McKeever
continues. “It’s just a matter of education.” He cites success
that Lenbrook is having with specialized products, like the
NAD M51 DAC preamp, which has USB, HDMI and SPDIF
inputs. “We can’t keep it in stock.”
The High End
New digital products are driving growth in the enthusiast
segment of the audio market, says James Tanner, Vice
President of Bryston Ltd. “2012 was a terrific year for us,”
he states. “We were up 20 per cent over last year. We just
had the right products at the right time.”
As an example, Tanner cites the SP3 surround processor.
“That product has had great reviews, and it tends to drag
amplifiers with it.”
Two-channel is also booming. “There has been a resurgence of people wanting a high-quality stereo system
that’s independent of their surround system,” Tanner says.
AirPlay support and smartphone apps have become must-have features, not just on premium models like Denon’s
new flagship AV receiver, the AVR-4520CI, which was launched at CEDIA 2012, but on everything above entry-level.
“We’ve been able to capitalize on new digital technologies with products that are above and beyond, but aren’t
lunatic fringe.”
These products include the BDA digital-to-analog
converter and BDP-1 digital player, which is a Linux box
designed for playback of digital files. Bryston is considering developing an optical drive that works with the BDP-1,
so that listeners can play discs through the BDP-1 or rip
them to the drive. Also in the pipeline is a new DAC, the
BDA-2, with an asynchronous USB interface that supports
files to 192kHz/24 bits.
“Sit-down listening never went away,” Tanner opines,
“but it got waylaid by home theatre. We’re seeing a resurgence of serious listening from digital sources. This is the
first time when we can download a direct master.”
During 2012, Bryston launched its first speakers, all of
them floor-standers, in active and passive versions. Also
launched in 2012 was the BHA-1 headphone amplifier,
which can also be used as a three-input preamp. “This
started with us realizing that there’s a huge underground
of serious headphone listening,” Tanner says. “We had no
clue this was so big a market.”
Looking Ahead
No one would dispute that there are serious challenges
facing the CE industry in Canada. But there are lots of
reasons for cautious optimism.
For one thing, Canada has weathered the economic
downturn much better than most countries. Notes Moskowitz: “Overall, the Canadian economy is in good shape
with a strong industrial base and relatively low unemployment. Our GDP is fairly healthy, and consumer behaviour
is fairly strong. We’re on a steady track. Still, we’re not
insulated from the rest of the world. If China hiccups,
Europe worsens or the U.S. goes into decline, we will have
significant difficulty.”
For another, the CE industry is nothing if not innovative, providing many opportunities to adapt to challenging
conditions. “It’s a very difficult time to be in CE,” McKeever
comments. “But our independent dealer partners have
survived through the decades that were supposed to mark
the demise of independents.”
Szpiro is optimistic about the coming year, despite lingering challenges. “Showrooming is not as big a problem
as it is in the States,” he warns, “but it may become a problem. The percentage of sales being done online is twice
as high in the U.S., but I have no doubt that it’s growing in
Canada. You need to have the product in stock.
“People are cautious,” he concludes. “If you have an exciting product, you’re going to do well. An average product
will perform below average. Business is harder. You’ve got
to be more on the ball and faster to market, and more
flexible so you can deliver it how the customer wants it
delivered.”
Adds Bryant of D&M: “Most retailers we deal with find
business more challenging than it has ever been. Many
dealers are re-focused on profitability and have scaled
their businesses accordingly. The dealers that have made
changes in these changing times are more optimistic than
others but I would describe their overall mood as cautious.
“Dealers who embrace, support and showcase the latest
technologies with a strong customer-service ethic will succeed. Sure, you should stay true to your core; but if you
don’t embrace change, you won’t survive in virtually any
business.” mn
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MNDEC12.indd 18
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• TrueHD/DTS-HD decoding to support the
latest Blu-ray technology
• 4 DSP Gaming Modes: Rock, Sports, Action,
and Role Playing
• On-Screen Display via HDMI
I
I
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Contacts Territory 51 Canada Inc. [email protected] 416 486-1292
MNDEC12.indd 19
To See Onkyo: Public viewing under the
Gibson big tent in front of the Las Vegas
convention center. Private viewings by
appointment.: The Onkyo CANADA Meeting Room is located in the Bassano Room
2703 in THE VENTIAN Convention Center.
www.onkyo.ca
12/13/12 3:12 PM
Year in Review
GOING MOBILE
By Ted Kritsonis
This may be the year some in the wireless industry look
back on as having created a permanent shift in the smartphone market in Canada.
Smartphone penetration in the Great White North
crossed the 50% mark early in the year and has surged
since; it’s on track to reach 60 to 65% at the end of the
year. There are many factors contributing to the surge, not
least of which are expanded hardware options; plus better
pricing and services from carriers.
LTE (Long Term Evolution) may have been first unveiled
in 2011, but it became a fixture on smartphone spec
sheets in 2012. Dual-core processors led to quad-core
processors; screen sizes inched ever closer to tablets; and
tablets slowly became a bigger part of the conversation.
And for the first time, the tablet conversation wasn’t all
about the iPad.
It wouldn’t be far-fetched to suggest that this was not a
banner year for Apple, despite record-breaking sales. The
company sold 26.9 million iPhones and 14 million iPads
in its fiscal Q4 alone. That quarter ended on September
29, 2012, so it included only a week of iPhone 5 sales;
and it didn’t include the iPad mini and 4th-generation
iPad, which were unveiled in October. And yet, in spite of
billions in profits, there was a sense among analysts and
the press that Apple lost some of its mojo over the course
of the year.
Whether or not the company lost anything tangible, time
will tell. But it became apparent there were upstarts nip-
ping at Apple’s heels throughout the year. Samsung had
emerged as a credible phone and tablet manufacturer in
2011, making consumers and media alike take notice in
2012 with high-profile keynotes, extravagant launch parties, and a sense of confidence about what the company
was bringing to market.
Brand Building
This was most evident with the Galaxy S III and Galaxy
Note II. Samsung attained the kind of staying power
others had longed for, no longer needing coddling from
carriers to get the message across. “Galaxy” became a
firmly entrenched brand that consumers could identify
with without further clarification.
At the Canadian Wireless Trade Show (CWTS) in Toronto in
September, comScore presented stats that showed Samsung
and Android were big winners as early as June. Samsung’s
share of the smartphone market was 25%, tops in Canada,
and Android had surpassed iOS as the most widely-adopted
mobile operating system with 34% of the market. Those
numbers may have fluctuated since with the latest product
launches, but it does put a stamp on Samsung’s continuing
success as a premier mobile brand.
All of this wasn’t merely a trend in the wireless industry over the course of the year, but rather a seismic shift
that reduced the carriers’ role in marketing hardware to
customers, and put the onus back on manufacturers. After
all, if Apple was so successful at building a lasting and
recognizable brand, why couldn’t Samsung, HTC, LG and
Overview
• New hardware options and better pricing helped spur a surge in smartphone sales
• Apple may have lost some of its “mojo” this year; while Samsung has gained attention in the smartphone
and tablet categories
• The onus is now back on manufacturers versus carriers, with phone exclusives becoming a thing of the past
• Upset over Apple’s new Lightning connector and failed Maps application led to further support for Android
• Microsoft and RIM will battle for third place with innovations like Surface and Windows 8 for the former,
and BlackBerry 10 for the latter
• We’ve reached close to 60% smartphone adoption, and by the end of 2012, more than half the
population will have access to LTE
20 MARKETNEWS
MNDEC12.indd 20
Motorola do the same?
“Apple stimulates and promotes mass adoption of hightier devices,” says Brent Johnston, Vice President of Mobility
Solutions at Telus. “But as the market has become much
more broad-based, we’ve seen the need for OEMs to build
a strong brand and reputational image well beyond that of
what a carrier used to provide. Before, OEMs would look to
the carriers to build awareness and promote devices. Now
that devices are reaching mass appeal, they carry the bulk
in building the brand. I don’t think we can say that about
LG, Motorola or Nokia, but Samsung is definitely doing it.”
The year was a topsy-turvy one, Johnston adds, because
players were all in the process of identifying the brands they
were aiming to market. Nokia’s partnership with Microsoft
led to Lumia handsets running Windows Phone 7, culminating in even newer devices once Windows Phone 8 launched
in November. For much of the year, LG was a non-factor in
the “superphone” arms race, having been unable to launch
a standout flagship device until the Fall. Google’s acquisition
of Motorola Mobility was finalized in the spring; but so far,
this has not led to preferential treatment from the nowparent company, as some pundits had feared.
Among other smartphone manufacturers, including HTC,
Sony and Research in Motion (RIM), a sense of purpose
appeared to set in. For RIM, more delays in launching the
much-anticipated BlackBerry 10 created some guarded optimism after snippets and pieces of the new operating system
were finally shown. Sony, in its first year without Ericsson
as a partner, set off to do its own thing, only to stick to the
same formula until the Xperia T “Bond Phone” launch in November, and addressed a few major sticking points, ranging
from carrier exclusivity to automatic screen brightness. And
HTC declared that it would battle competitors by focusing
on both Android and Windows Phone 8, equally.
Arm’s Length
The branding issue is familiar to Motorola. The company
created one of the pioneering smartphone brands with its
RAZR. That sub-brand was milked for years, until Motorola
realized it was being left behind as more feature-laden
phones came to market, triggering a shakeup at the top.
Google may own the company; but it doesn’t get
12/13/12 3:13 PM
MNDEC12.indd 21
12/13/12 3:13 PM
GOING MOBILE
involved in its day-to-day operations, according to Darren
Seefried, who until recently was National Account Director
at Motorola Mobility Canada.
“(Google) wants us to be treated the same way other
Android manufacturers are dealt with, so we have to bid
on Nexus projects just like they do,” says Seefried. “Even
Andy Rubin, who heads up Android, keeps it in a separate
silo, but still works tightly with Google. For us, it’s like we
live in the same condo and have the same parents, but we
don’t talk.”
Despite having Google as a parent, and re-launching
RAZR last year, Motorola continues to struggle with branding. Not surprisingly, it’s the only phone manufacturer that
is 100% focused on Android. But it’s had challenges with
device deployment and software upgrades. Launched in
late 2011, the first RAZR smartphone came to market running Android 2.3 Gingerbread. Some competing handsets
came to market in the following months, running Android
4.0 Ice Cream Sandwich out of the gate. But RAZR didn’t
receive an upgrade until well into the summer.
Being at arm’s length, Motorola isn’t privy to Android’s
evolution before other OEMs, Seefried notes. So preparing
for the upgrades is no different than other manufacturers.
Still, he believes the process should improve in 2013, to
ensure consumers don’t feel left out.
“We’re going to have a more streamlined approach as
Android continues to mature so we can be more nimble
and quicker,” Seefried elaborates. “With that futureproofing, we can support upcoming versions of Android.
We’re taking a different approach that is represented in the
Atrix HD LTE and RAZR HD. This meant removing things
that weren’t widely adopted and hindered us from quickly
adopting newer versions of Android.”
Playing Catch-up
This became just as much a problem for LG Electronics,
which saw fellow Korean rival Samsung catapult itself into
elite status in the mobile space. LG’s reported 9.5% share
of the Canadian handset market is largely comprised of
low and mid-tier handsets, including quick messaging
feature phones that were popular two or three years ago.
“We were late globally to smartphones and have been
playing catch-up ever since,” admits Derek Krismanich,
Channel Marketing Manager for Mobile Communications
at LG Electronics Canada Inc. “We’ve done well on our
entry-level and mid-level smartphones, but our flagships
Derek Krismanich, Channel Marketing Manager for
Mobile Communications, LG Electronics Canada Inc.: “We
definitely noticed less demand for exclusivity from the
carriers this year.”
and hero phones haven’t seen the same success. We also
haven’t had as much success with brand awareness as our
competitors.”
To combat the perception of becoming a has-been, LG
took an aggressive approach in the waning months of
2012, releasing three smartphones that were considerably
better than anything it had launched before. To mark the
change in focus, LG’s mobile communications team has its
own dedicated marketing campaign, including TV advertising, for the first time in several years, Krismanich says. The
company also announced that it was suspending tablet
development to better focus on the smartphone arena.
Heading up the trio is the flagship Optimus G, a powerful
phone with a 4.7” 720p HD display and quad-core processor. It has a slightly bigger battery than some competitors’
phones, and a number of other features that put it well in
line with the best in the industry.
The most intriguing of the three is the Nexus 4, an
LG-manufactured and Google-inspired smartphone that is
sold directly to consumers, unlocked, through the Google
Play store. At CDN$309 for an 8GB model, the Nexus 4
significantly undercuts other phones on the market. And
being unlocked and generally agnostic in terms of wireless
brands makes it even more attractive. Consequently, the
8GB and 16GB models sold out in less than an hour after
they first went on sale in North America on November 13.
The last member of the trip is the Optimus 4X HD, a
handset meant for smaller carriers like Wind and Videotron. Though not quite as powerful as the Optimus G,
it has the same screen size and impressive specs for a
feature-laden smartphone.
“We scored a nice hat trick within the past couple of
months with these,” says Krismanich. “They should go
a long way toward making it clear that LG is a premium
smartphone manufacturer, and winning the mindshare of
consumers.”
Samsung’s Galaxy Note, which debuted in early 2012,
straddled the line between a phone and tablet, people
began calling it a “phablet.” It was surprisingly successful, leading to the launch of the Galaxy Note II, shown
here. Like the original, the Note II comes with a stylus
and some pen-enabled apps.
The focus on competition was very much at the centre of
the success Samsung enjoyed over the course of 2012. It
started with the launch of a smartphone that blurred lines
and confused some in the market: the Galaxy Note.
Is it a phone or a tablet? With a 5.3” display and a stylus
called the S Pen, the Note looks like an oversized handset
or “mini” tablet. The term “phablet” (half phone, half tablet)
became a nickname for the device. A Super Bowl com-
mercial highlighting the S Pen’s capabilities drew scorn
from the media, mainly because the stylus was viewed as
an archaic tool in a finger-wielding world. Almost all major
Canadian carriers opted to offer the device, albeit with
measured expectations.
Recalls Ken Price, Director of Mobile Communications
at Samsung Electronics Canada Inc.: “We heard the same
things from the carriers: ‘We’ll come along for the ride,
but we’re not sure how it’s going to do.’ The Note may not
be for everyone because of its size, but communication is
becoming more data-centric served by a larger screen. It’s
still a phone, but when you calculate the number of calls
as a ratio of all interactions, consumers would probably
admit that calls are dropping.”
Before launching the device, Samsung’s assessment
(as has been the assessment of many) was that voice is
Brent Johnston, Vice President of Mobility Solutions,
Telus: “Carriers relied far too heavily on device exclusivity as a means of differentiation, and underinvested on
the true service carrier elements: pricing, simplicity, clarity, customer service and network reliability.”
Ken Price, Director of Mobile Communications, Samsung
Electronics Canada Inc.: “The 10-inch [tablet] gives you
more real estate, but it can be a more passive experience,
while a seven-inch gives you a free hand to interact with
the device in a more active way.”
Blurred Lines
22 MARKETNEWS
MNDEC12.indd 22
12/13/12 3:13 PM
Head Office
210 Saunders Road
Barrie, Ontario L4N 9A2
www.affinitycanada.com
MNDEC12.indd 23
sales@affinitycanada.com
Phone - 705.792.5313
Toll Free - 888.669.8158
Fax - 866.897.5774
12/13/12 3:13 PM
GOING MOBILE
no longer the central experience of a smartphone, Price
notes. This allowed Samsung to take liberties with form
factor and portability. It also challenged the notion that
smartphones couldn’t get over the hump of going from
consumption to creative devices.
“The physical dimensions of the product were the most
widely mentioned,” Price says. “But we also felt we were
bridging a gap between communications and productivitybased devices, potentially blurring the line between a
smartphone and personal computing device. People
responded to the ability to create content that we built in
around the apps serving those other experiences, including those better served by S Pen.”
Within a month of launching the Note in February,
Samsung had sold five million units worldwide. By August,
it had sold 10 million. The Note II launched at the end of
October and was projected to hit 20 million by the end
of the year. After the flagship Galaxy S III, the Note lineup
was the most successful for Samsung’s mobile division.
Indeed, the success of the first Note also led to a 10” Note
tablet with S Pen.
This success came in spite of Samsung’s highly-publicized legal battle with Apple over alleged patent infringements. Apple ultimately scored a victory in the case, but
the outcome, and various rulings in other countries, never
impacted Samsung’s Canadian operations or its relationships with carriers and retailers, says Price.
“It became a courtroom drama that was an interesting
story with international consequences,” Price comments.
“But the average consumer just wanted a good product.
Each country had a different spin on it, it was confusing to
understand and it never played out here, so it didn’t affect
the ability for Canadians to buy our products. The court
you need to win in the most is that of public opinion. You
either innovate or you get crushed, and consumers will
judge that more than courtrooms will.”
It helped that Samsung now had the Galaxy franchise to
associate with the company’s Android devices, something
Price says is vital in today’s market. It also underscored
the growing shift from carriers to manufacturers. While the
popular Galaxy S II came in a few few carrier-exclusive
variants, Samsung showed no interest in doing that with
any of its products in 2012. It also did its own marketing,
and worked considerably more with regional carriers and
new entrants, Wind and Mobilicity, on getting them flag-
Krista Napier, Senior Analyst and Tracker Team Lead for
Mobility, IDC Canada, says the share of smartphones in
the total number of phones shipping into the market in
Canada every quarter is larger than any other region in
the world that IDC tracks.
24 MARKETNEWS
MNDEC12.indd 24
Though LTE was first unveiled in 2011 (shown here is Rogers Executive Vice President and Chief Marketing Officer
John Boynton at that carrier’s launch event), it became a fixture on smartphone spec sheets in 2012.
ship devices. Neither of those carriers, it’s worth noting,
carry the Apple iPhone.
“The differences among Android products are harder
to find,” says Telus’ Johnston, “but Samsung stood out
because it built this mass appeal and brand awareness for
the Galaxy franchise. We always believed exclusivity was
part of a natural evolution, but it really should’ve changed
a while ago because it is very much intertwined with the
brand issue at the OEM level.”
Non-Exclusive
This is part of a shift in the purchasing process, Johnston
notes. Previously, consumers would choose carrier first,
and then pick a device. Apple was the first vendor to reverse that sequence. Now, Samsung has a similar amount
of brand power to continue on this path.
As device exclusivity continued to erode throughout the
year, it became clear that carriers had to refocus efforts on
reaching out to customers, Johnston adds.
“Carriers relied far too heavily on device exclusivity as
a means of differentiation, and underinvested on the true
service carrier elements: pricing, simplicity, clarity, customer service and network reliability,” Johnston says. “We
realized 20 or 30 months ago that is how the game was
going to play out, and pushed OEMs for less exclusivity
and a more level playing field on the device side, because
we felt we had a service advantage over our competitors.”
Though there is no official data to quantify the reduction
in exclusive devices, a growing number of handsets are
available from more than one carrier.
Still, there are others that continue to go the exclusive
route despite signs pointing to a shift in this method.
Sony Mobile partnered with Rogers for its Xperia S and
Xperia ion phones, but then changed its position with the
Xperia T “Bond Phone” in November by making it available to a number of carriers. Motorola continued to go
exclusive, with Bell getting the Atrix HD LTE and Rogers
getting the RAZR HD. Nokia’s Lumia 900 was a Rogersexclusive when it launched in April, and the two partnered
again for the Lumia 920, which is one of the top Windows
Phone 8 smartphones.
But these were exceptions to the rule. Mirroring Apple
and Samsung, HTC, RIM and LG have shied away from
device exclusivity, opting to support at least two carriers
In early 2012, Nokia announced that it would adopt Windows Phone as its smartphone OS. The Lumia 920, offered
through Rogers, is one of the top Windows 8 smartphones.
12/13/12 3:13 PM
Always moving.
Always charged.
Portable Power Banks - Charge your device anywhere.
MNDEC12.indd 25
12/13/12 3:13 PM
GOING MOBILE
Tablets
LG became a serious player in the smartphone arms race
during 2012. Its Optimus G features a 4.7” HD display
and quad-core processor. LG is promoting is strengthened phone lineup in a dedicated marketing campaign.
for respective devices.
“We definitely noticed less demand for exclusivity from
the carriers this year,” says LG’s Krismanich. “Carriers
would rather focus on their networks and services as a
message, letting manufacturers promote their own products and create demand to drive customers to their stores.”
Better Plans
For the “Big 3” carriers, that meant changes to pricing,
hidden fees and services. This year marked the first time
Telus and Bell would unlock the iPhone for their customers, albeit for fees of $35 and $75, respectively. Data plans
became more flexible, with shared plans for smartphones
and tablets becoming regular fixtures in the list of options.
That list was then streamlined by all three in the space of
a week after Rogers announced that it was consolidating
as many as 15 different plans into five options. The new
“Talk, Text and Internet” plans were all-in plans that cover
airtime, texting and data in specified buckets ranging from
$45 to $95 per month. Telus and Bell didn’t pare their
offerings down so dramatically, but did make pricing for
some plans more competitive.
“It’s becoming more understood that clarity and a simplified rate plan structure has tremendous end-to-end benefits
for consumers and carriers,” says Johnston. “At the highest
level, you’ve got voice over LTE on the horizon whenever it
comes to market, so carriers recognize that voice services
will just be another app that runs over a data pipe.”
Telus was arguably the most aggressive of the incumbent carriers at cutting or eliminating fees. Johnston says
as many as 50 fees were pared down to just 10. One of
the more high-profile cuts was the $35 activation fee for
new customers. However, new customers still have to pay
$10 for the SIM card. Telus also got rid of the $25 equipment exchange fee for renewing customers. He adds that
Telus is the only carrier that offers a full listing of all its
fees on its Website. As of this report, Rogers and Bell had
not matched those moves, though Rogers did strategically
offer a promotional waiving of the activation fee at the
same time as Telus’ initial launch of that change.
Data sharing plans with tablets may not have been the
main catalyst for increased tablet sales in 2012. iPad
competitors stepped up their game over 2011, says Krista
Napier, Senior Analyst and Tracker Team Lead for Mobility
at IDC Canada.
Somewhat surprisingly, it was the 7” form factor that
proved popular with consumers, led largely by Google’s
Nexus 7. When it launched in the summer, the Asus-manufactured tablet sold for just $209 for the 8GB version. Both
the 8GB and 16GB models sold out quickly, especially at
big box retailers, which had to wait for weeks before replenishing inventory. A 32GB model was
added in the Fall for $259, the 16GB
reduced to$209, and the 8GB discontinued. A 10” version, the Nexus 10,
made its debut in November.
“We saw huge growth in tablet
sales this year, and a lot of refinement with Android especially,
where manufacturers were playing
around with screen sizes, updates,
and form factors to see what
works,” says Napier. “The seveninch tablets grew because of the
number of devices that launched this
year, including the Nexus 7, Galaxy Tab 7.7,
iPad Mini and Kobo Arc. Compare that to last year when
the only branded seven-inch tablets were really the BlackBerry Playbook and Kobo Vox.”
She adds that, according to her research, consumers still
prefer the 10” form factor in 2012, but the 7” did better
whenever price was a key factor. In both cases, sending
e-mail, doing a search, using free apps, and playing games
are still the primary uses for most Canadians who bought
tablets this year.
“Consumers haven’t figured out what they’re going to be
using the devices for yet, so as they discover more, there’s
a possibility they would prefer a more portable form factor
to take it with them,” Napier says. “There is some disconnect with customers in terms of education, understanding their options, and the valuations they apply to these
things. When we ask why they don’t add a data plan, the
Thanks to prices that start at $209, the Asus-built Nexus
7 tablet sold out in the first weekend following its summer launch. The company added a 32GB version in
November.
cost of the plans usually tops the list.”
Though Samsung didn’t manufacture any of the popular
Nexus tablets, Price says, without going into specifics, that
the 7.7-inch Galaxy Tab performed well, suggesting that
pricing can capture a consumer who might have otherwise
been hesitant.
“Going from $500 to $200 might have been enough to
compel consumers to try them out,” he says. “There are
always trade-offs between portability and usability. The
10-inch gives you more real estate, but it can be a more
passive experience, while a seven-inch gives you a free
hand to interact with the device in a more active way.”
Apple
Whether the popularity of 7” tablets (particularly Amazon’s
Kindle Fire in the U.S.) was what prompted Apple to unveil
the iPad Mini is not clear; the company never discusses
competitive product. But the more diminutive iPad sold in
the millions in its opening weekend. Exactly how many
is unknown to anyone outside of Apple, because the
company lumped all iPad sales together in its public announcements; it didn’t break out iPad mini sales. At $329
for a 16GB Wi-Fi-only model, the Mini is more expensive
than competing 7” tablets. Yet customers still lined up on
launch day.
Speculation over Apple losing its touch was compounded further when iOS 6 launched days before the iPhone 5.
Apple replaced the core Google Maps app that had been
part of iOS since the first iPhone in 2007 with its own
mapping application.
Apple also discontinued the recognizable 30-pin connector in favour of a much smaller one called Lightning.
Though largely rumoured leading up to launch, Lightning
threw the aftermarket into a bit of chaos, as the iPhone 5,
4th-generation iPad and iPad Mini were all outfitted with
the new connector, making it impossible to use certain
accessories without an adapter. Apple’s own Lightning-to30-pin connector was delayed in coming to market, which
didn’t help the transition.
The iPhone continued to be a top smartphone in Canada
in 2012, but it now had to share the spotlight with a few
other devices, especially Samsung’s Galaxy flagships.
The Apple Maps debacle added even more credibility to
Apple’s announcement of a seven-inch
tablet in late October surprised no one.
The company sold millions of units in the
Mini’s opening weekend.
26 MARKETNEWS
MNDEC12.indd 26
12/13/12 3:13 PM
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GOING MOBILE
Google Maps, which is more feature-rich on Android. Two
high-level executives at Apple were fired in the weeks that
followed, presumably because of the flawed app.
Microsoft
Android isn’t the only competing mobile OS gunning for
Apple. Microsoft shocked many in the summer when
it announced the company would build its own tablet,
calling it Surface. The tablet runs a lightweight version of
Windows 8 called Windows RT, and can be bundled with
a separately sold clip-on thin keyboard. A more powerful
iteration called Surface Pro is set to be released in 2013
and run Windows 8 Professional.
Microsoft’s traditional PC manufacturing partners
followed suit with designs that took the same hybrid
approach. Tablets could clip on or off a keyboard and be
used either as laptop-style computers or as standalone
tablets. Many came to market in the weeks following the
launch of Windows 8 on October 26.
“That could have an impact on making tablets more
creative devices, but at their very core, tablet OS’s are
more lightweight than a laptop or even a netbook,” says
Napier. “Tablets are capable of a lot, but they’re still add-on
devices, so they’re not cannibalizing traditional computing
devices yet.”
The tablet hybrids were only part of the Microsoft story
of the past year. The attempted mobile renaissance with
Windows Phone 7 attracted some extra market share at
the expense of RIM’s BlackBerry in 2011 and into 2012,
but it remained mired in the single-digits, overall. Still, IDC
has projected that Windows Phone will grow from 5.3% to
19% share by 2016, propelled in large part by Windows
Phone 8.
Microsoft took a leap forward from Windows Phone 7 by
releasing a contained, yet flexible OS in Windows Phone
8 that allowed manufacturing partners to build phones
comparable to the best in the industry.
CEO Steve Ballmer was on hand at HTC’s Windows
Phone 8 unveiling in New York where he called HTC’s
8X and 8S handsets “the signature Windows Phone 8
devices.” The announcement came as a surprise, considering the Microsoft-Nokia partnership, but also seemed to be
part of the company’s strategy going into 2013.
“We made a device for everyone, but one for each of
us, not for everyone altogether. That’s the difference in
our design philosophy and how we’ve gone to market,”
says John Kennedy, Vice President, Operator Channel at
Sony capitalized on the release of Skyfall and the 50th
anniversary of the James Bond movie franchise by
launching the Xperia T smartphone, which is available
through several Canadian carriers.
28 MARKETNEWS
MNDEC12.indd 28
Microsoft Canada. “There’s a base of users who are leaving
BlackBerry and are looking for a media-driven experience
that’s legitimate for business. A lot of people adopted Android early and are now dissatisfied with the fact the store
is a malware-induced flea market.”
Calling Windows Phone 8 a “breakthrough,” Kennedy
adds that features like Kids Corner, Data Sense, browser
compression on Internet Explorer and the social elements
are innovative and “not mimicking any other OS.” The
downside to the improved OS is that there is no migration path. Apps that were purchased and downloaded on
Windows Phone 7 are not compatible with devices running 8 because they can’t tap into the extended hardware
features of the new handsets.
Kennedy didn’t know how many native apps, meaning
apps specifically developed to run on Windows Phone
8, were available at the time of launch, but did say that
developers would only need a “15-25 per cent effort” to
port over a Windows Phone 7 app to the latest OS.
“We are the only OS that doesn’t orphan our users,” he
says. “With Windows Phone 7.8, we’ve given them a path,
but we still feel there are so many more advantages to 8
that users will be eager to adopt it.”
His comments came a month before Microsoft announced it had to delay rolling out the 7.8 update to existing Windows Phone 7 users until early 2013. Those who
bought new phones got it pre-installed, further frustrating
users who voiced their displeasure on the Web.
Research in Motion
Around the same time, RIM finally announced a launch
date of January 30, 2013 for its twice-delayed and muchanticipated BlackBerry 10 operating system, plus the two
smartphones that will be the first to run on it. Napier
expects that the battle for third place in the industry will
largely be between RIM and Microsoft, while Apple and
Google jostle for first.
“There is definitely room for all four, and the carriers
would love that because it reduces their risk by having
viable options,” she says. “The BlackBerry brand is still
particularly strong here in Canada, and growing in other
regions, so it’s still too soon to write them off. They’ll never
go back to the type of market share they enjoyed before,
but I don’t think anyone expects them to anyway.”
She also sees BlackBerry and Windows competing
strongly on the business side, now that businesses and enterprises are embracing mobile devices with multiple OS’s.
Both Windows PCs and BlackBerries have been pervasive
in the business world, which is why she reckons they are
well positioned to address those market niches.
Even so, this year was consumer-driven, and the industry
will continue to be in 2013, she adds.
“One of the biggest trends this year was the switchover
from feature phones to smartphones, which Canadians
are scooping up in higher margins,” she says. “The share
of smartphones in the total number of phones shipping
into the market in Canada every quarter is larger than
any other region in the world that IDC tracks.
The three-year contract, which didn’t meet its ulti-
In 2012, Motorola revived the RAZR sub-brand. Defying a trend toward non-exclusivity, the RAZR HD is sold
exclusively by Rogers.
mate demise in 2012, is a big reason why smartphone adoption grew so substantially, she notes. A popular device, like
the iPhone 4 8GB, could be had for $0 on a three-year term.
The Galaxy Note was also $0 at one point, and several other
premium smartphones were $99.99 or less on contract.
“We’re now north of 60 per cent adoption, and the
smartphone has gone from a niche product for an early
adopter or business tool, to just a central concierge
and social tool of sorts for so many people,” says Telus’
Johnston. “We saw a lot of smartphone growth even in
2011, but a lot was coming from the mid-to-low tier of the
market, whereas we now see the bulk of demand moving
to the iconic devices.”
LTE expansion is also expected after the government
holds the 700 MHz spectrum auction in mid-2013, further
increasing demand for mobile bandwidth. By the end of
2012, over half the population will have access to LTE,
depending on the carrier.
“Mobile is overtaking PCs for Internet usage and that’s
going to continue to grow and fuel demand for high-end
phones and LTE adoption rates,” says Krismanich. “Browsing and social networking is now being done everywhere,
away from the computer, so that will continue to grow
quickly in 2013 and impact the devices people are
buying.” mn
Microsoft’s Surface RT tablet runs
an OS designed specifically for
ARM processors, so it won’t
run Windows applications.
However, it comes with an RTspecific version of Office. The Surface
Pro tablet, which just began shipping, is based on
Windows 8, so it can run Windows applications.
12/13/12 3:13 PM
MNDEC12.indd 29
12/13/12 3:13 PM
GOING MOBILE
What differences did new wireless entrants make in Canada’s telecom market?
Every year, members of both incumbent and new carriers gather to discuss and debate the state of the wireless market in Canada. Back in 2011, a heated discussion ensued with
participants, which included (l-r): Greg O’Brien, Cartt.ca (Moderator), Ed Antecol (WIND Mobile), Mirko Bibic (Bell), Ken Englehart (Rogers), John Lawford (PIAC), Chris Pierce (MTS),
and Michael Hennessey (Telus).
As the Canadian Radio-television Telecommunication Commission (CRTC) gathers opinions from the public regarding
a code of conduct for the wireless telecom industry, the
regulator’s insight into the impact of the new entrants,
WIND and Mobilicity, tells an equally interesting story.
According to the CRTC’s 2012 monitoring report issued
in early September, the new entrants, made up mostly of
WIND and Mobilicity, but also including Public Mobile and
other regional players, captured just four per cent of the
27.4 million subscribers recorded in 2011 (revenues were
just two per cent). Granted, they doubled their two per
cent showing in 2010, but it’s a wonder if they managed
to double it again in 2012.
The incumbent carriers, Bell, Rogers and Telus, play
down the role the new entrants have had in driving down
prices and increasing competition. But that’s to be expected. You’re not going to publicly admit that the upstarts
looking to chip away at your market share have been
getting it right in their marketing messaging. Still, there is
going to be an impact when a carrier comes along and offers as much as WIND or Mobilicity do for $40 per month.
The numbers behind these two particular carriers
are interesting because they come at a time of serious growth in the industry. Smartphone adoption was
moving steadily to 50% in Canada by the end of 2011,
but has since passed 60-65% as we get into the waning
days of 2012. Just how much of those new smartphone
MNDEC12.indd 30
users have gone to the new entrants?
There are no numbers yet to say for sure, though WIND
did publicly state that it had reached 403,000 by the end
of 2011. But this year was really the first time WIND and
Mobilicity could offer the kind of hardware the incumbents
could. Indeed, it marked the first time manufacturers like
Samsung, LG, Motorola, Nokia and HTC made powerful
and feature-rich smartphones available to both carriers.
With some good hardware and aggressively-priced plans,
the combination should be enough to snatch some new
customers, right?
Maybe, maybe not. Three-year contracts will probably
be the biggest single issue facing the industry in 2013, as
consumer anger over it is unlikely to abate until regulators
force the incumbents’ hand. For WIND and Mobilicity, the
gaping hole they have to deal with now is lack of LTE. As
smartphone adoption grows, so does LTE adoption. A prospective customer comparing them with the big guys might
see that as a major discrepancy. LTE deployment will be the
biggest issue facing WIND and Mobilicity, because without
that, it’s impossible for them to compete moving forward.
The 700MHz spectrum auction in mid-2013 is supposed to
be the entry point for them to get the spectrum they need
to begin rolling it out. We’ll have to see how that goes.
But to say that the new entrants haven’t had an impact
on the incumbents is being a little disingenuous. System
access and 911 fees are gone. Telus eliminated activation
and equipment exchange fees. Rate plans have increasingly been streamlined as all-in talk, text and data buckets.
Nationwide plans are more readily available.
The incumbents can claim these were all part of their
original plans, but it’s hard to see that when they’ve had
such a terrible track record of offering relief to consumers.
After all, who can justify the extortionate practice of charging per text message?
WIND and Mobilicity had their work cut out for them
from the start because they wanted to compete nationally, not regionally. And the four per cent marketshare
noted by the CRTC includes Public Mobile and Videotron,
both regional players that have no plans to go beyond
their respective coverage areas. What the report doesn’t
seem to point out is how many people switched from the
incumbents to the new entrants. Given the low overall percentage, it may not be quite as high as WIND or Mobilicity
would have us believe.
Until a new report is released next year, it will be hard to
quantify the level of growth they managed in 2012. If the
share increased to eight per cent, or even 10%, that would
be a notable bump up. Except the real question at that
point is whether they can jump on the LTE bandwagon
and keep offering plans at current rates without making a
single dollar of profit. By this time next year, there should
be a definite answer to that.
—Ted Kritsonis
12/13/12 3:13 PM
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12/13/12 4:03 PM
The State of the Imaging Market
DIGITAL IMAGING
By Peter Burian
Manufacturers and retailers of photographic products
are certainly familiar with the historic ups and downs of
this industry. In some years, the economy spurs sales; in
others, it slows them. In 2011, natural disasters in Asia
created a major supply chain interruption that continued
into 2012, because factories were damaged or destroyed.
The shortage of many popular products, especially during
the holiday shopping season, and an initial lack of new
products to jump-start consumer spending, made 2011 a
tough year.
“January to March was very quiet due to the lack of products, especially certain cameras [including the very popular
Nikon D800] and lenses,” recalls Ron Neumann, Buyer for
McBain Camera, a nine-store Alberta chain. “And when you
couldn’t sell cameras, that reflected on accessories too.”
Thankfully, the situation improved by March, with a few
exceptions. The popular 24MP Sony NEX-7 and full-frame
36MP Nikon D800 did not begin shipping in high volume
until around June. But the entire industry got a boost in the
fall, before and during the biannual Photokina tradeshow,
with the introduction of an amazing number of products.
“The announcements created excitement, and that created demand,” says Robert Bagliolid, Owner of BellArte
Camera in Hamilton, ON, and Chairman of Foto Source,
Canada’s largest buying and marketing group for photographic retailers. Except for Canon’s EOS-M and EOS 6D,
most of the latest cameras, lenses and accessories were
shipping by the beginning of November, including the
eagerly anticipated 24MP full-frame D600 from Nikon.
“Things are bubbling now; there’s new product on the
shelves and that’s boosting sales,” Bagliolid enthuses. “And
Nikon has the inventory so they’ve been filling orders for
the D600 and lenses like crazy.”
Neumann agrees that new product drives the market,
but he believes there’s an ongoing need to promote new
models and new technologies. “I think manufacturers
still need to do a lot of national advertising to make their
brand and their specific products known to consumers,” he
states. “A certain percentage of people have read Internet
articles about the full-frame EOS 6D, and they’re waiting
eagerly for it to arrive. But there’s still a need for national
advertising to generate interest among the other consumers who make up a high percentage of the market.”
When discussing the holiday shopping season with my
sources in mid-November, most retailers and distributors
were quite optimistic. However, in terms of the full year,
none expected 2012 overall to be better than 2011, because the new products from Photokina arrived quite late
in the year. Nearly all expressed concern that dark clouds
on the economic horizon in the U.S. and Europe could
affect consumer confidence in Canada in 2013. Before
getting into predictions for next year, let’s take a look at
what’s selling well and how to offset the effects of declining categories.
Overview
• While smartphones have cannibalized sales of low-end fixed-lens cameras, some segments are growing,
including super-zoom models and prestige compact cameras.
• Camera vendors are adding Wi-Fi connectivity to many models, to allow easy transfer of images to
a smartphone or tablet.
• Compact System Cameras are driving growth in the Interchangeable Lens Camera category.
CSC unit sales grew 86% in the first nine months of 2012, and dollar sales grew 114%.
• During Photokina, Nikon and Canon announced full-frame DSLRs at very attractive price points.
These cameras will fuel demand for multi-platform lenses.
32 MARKETNEWS
MNDEC12.indd 32
Integral-Lens Cameras
It’s no secret that fixed-lens cameras are in decline. Mark
Haar, Director of the Consumer Electronics Division at NPD
Canada summarized the situation at the end of Q3 as follows. “Point-and-shoot sales are down 22 per cent versus
the same period last year,” he says. The supply shortage
in Q1 may account for some of this drop, which was only
15% in 2011, but it’s more likely that the category is “challenged by the smartphone boom,” as Haar puts it.
All of my contacts in retail agree that the sub-$200
camera is in trouble. “This category [where volume was
very high in the past] has gone down for us big time,”
Neumann comments. “When the future models come out
in spring, we’ll be very selective as to what we’ll bring in
due to the declines.”
But there’s better news in three specific categories: cameras with wide-range optical zooms (especially the 25x
and longer superzooms), submersible tough models and
premium-grade compacts.
This is all part of the camera-versus-smartphone
syndrome, says Greg Poole, Vice President of the Imaging Division at Fujifilm Canada Inc. “The trend is to buy
something that’s three steps above the iPhone. Consumers
are saying, ‘I’ve got two compact cameras at home and a
phone in my pocket all the time. I’m going big or I’m going home.’”
Alan Fernandes, DSC Marketing Manager with Sony of
Canada Ltd., agrees that the strongest sellers are cameras with a 30x or longer lens, such as Sony’s 18.2 MP
DSC-HX200 with a 28-810mm equivalent Zeiss lens. “The
HX200 offers everything necessary for serious photography,” Fernandes states.
Both McBain Camera and BellArte Camera have been
doing very well with Nikon, especially the Coolpix L610 (a
small camera with 14x zoom) and the L810 (larger with a
28x zoom). But the 12.1MP Panasonic Lumix DMC-FZ200
is particularly popular at BellArte because of its electronic
viewfinder (not available with the more affordable models),
12/13/12 3:13 PM
Its speed and durability will have your
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The Olympus OM-D E-M5 has the speed and toughness to go anywhere and shoot anything.
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12/13/12 3:13 PM
DIGITAL IMAGING
Leica DC 25-600mm equivalent lens and very wide
f/2.8 aperture at all focal lengths. “It’s not inexpensive,”
Bagliolid says, “but customers whose kids play hockey,
indoor soccer or lacrosse get plenty of telephoto; and f/2.8
is very useful when shooting in low light.”
According to my sources, the tough waterproof/shockproof camera category is holding its own, but not growing. “There’s not a lot of innovation in this area so people
are not trading up regularly,” Neumann summarizes. Still,
some models like the full-featured Panasonic Lumix DMCTS4, Nikon Coolpix AW 100 and Canon PowerShot D20,
all with built-in GPS, have not experienced a decline. And
there’s room for growth in the rugged, waterproof POV
(point of view) cameras, like the Ion Air Pro Sport (from
Gentec) and Sony Action Cams that were introduced only
recently in Canada.
There are sales to be made in the more affordable tough
segment too, according to Bagliolid. “A lot of our customers buy the Fuji FinePix XP50 for their 12- to 16-year-old
children. It’s a really rugged camera, so they don’t worry
about sending them away to camp and leaving it outside
in the rain or dropping it in the pool by accident.” Fujifilm’s
Poole says this is the best-selling camera in the FinePix
line, perhaps because of the $200 price and HD video capability. “It is levelling out, however; we’re not experiencing the explosive growth we had in the past three years.”
Olympus is targeting consumers looking for a high-end
submersible camera with its latest model, the 12MP Tough
TG-1 HS (about $400), with 4x lens, FAST autofocus system, GPS, and numerous features; it’s also nearly impervious to damage. The Sony TX20 ($350) competes in a
similar arena, although it omits the GPS receiver.
A bright spot in the fixed-lens segment is the superzoom category, with lenses 30x or longer. Panasonic’s Lumix
DMC-FZ200 features a Leica DC 25-600mm lens with wide f/2.8 maximum aperture at all focal lengths.
The third integral-lens camera category that’s doing well,
booming in fact, is the premium-grade, full-featured
compact with a superb lens. Several new models were
introduced in 2012, all of them targeted at photo enthusiasts and pros who want a compact camera for use when
they’re not carrying a full SLR kit. Several of my sources
mentioned the Sony Cyber-shot DSC-RX100 as a leader
in this category; and it’s the one I picked as Gear of the
Year in HERE’S HOW! magazine’s year-end issue. “We have
had a lot of interest in the RX100 because of its large
one-inch [13.2x8.8mm] sensor,” Neumann comments. “It
has become very popular, partly because it fits into a large
shirt pocket.”
This full-featured Sony camera for serious shooters
is indeed surprisingly compact in spite of the oversized
sensor and three-inch 1.3-million-dot LCD; it’s lightweight
(213g) as well, thanks to the aluminium body. There’s
no viewfinder, since that would increase the size/weight;
but the fine Zeiss T* 28-100mm f/1.8-4.9 lens helps sell
the DSC-RX100 ($700). Fernandes says Sony considers
premium compacts to be the integral-lens segment with
the greatest growth potential. “A lot of consumers out there
are looking for compact size with the ability to make very
high-quality pictures. A great deal of technology went into
miniaturizing this product; that’s unique to Sony so other
brands cannot replicate it.”
While some of the high-end cameras are larger, the
Nikon P7700 with 28-200mm equivalent lens and the
full-frame 24.3MP Sony DSC-RX1 are highly desirable
too. The RX1 attracted a lot of media attention because
of its oversized (35.8x23.8 mm) sensor and 35mm f/2.0
Carl Zeiss T* lens, which combine to produce amazing
image quality. But at $3,000, it is the most expensive in its
category, and the lens is not a zoom.
Canon’s PowerShot G series is selling especially well,
Ron Neumann, Buyer, McBain Camera, Edmonton:
“Manufacturers still need to do a lot of national advertising to make their brand and their specific products
known to consumers.”
Robert Bagliolid, Owner, BellArte Camera, Hamilton, ON:
“The Photokina announcements created excitement, and
that created demand. Things are bubbling now; there’s
new product on the shelves and that’s boosting sales.”
High-End Camera Boom
Vistek’s Vice President Kevin Parker points out. Neumann
seconds that motion. “The Powershot G series has always
been popular; we expect the new G15 to do very well. The
G1X [with a larger 18.7x14mm sensor] is a nice camera
in terms of features. But it is getting large, so it hasn’t attracted as much interest.”
Regardless of the brand and model, the premium
compact category offers a benefit for the photo specialty
channel especially, Neumann adds. “This type of camera
is not bashed around [discounted] as much, so you end up
making a better margin on it.”
Innovation Drives Sales
Since virtually everyone already owns a digital camera,
it’s the excitement about major improvements and new
technology that gets consumers opening their wallets. The
most innovative new products are those with Wi-Fi connectivity. This includes many compact cameras but also
DSLRs: the Canon EOS 6D and, with an add-on adapter
($70), the Nikon D3200 and D600. With any such camera,
Kevin Parker, Vice President, Vistek: “The industry needs
to work on convenience with Wi-Fi; and Nikon is doing
just that. Nikon understands what they need to do to
capture back this market from the smartphones.”
34 MARKETNEWS
MNDEC12.indd 34
12/13/12 3:13 PM
MNDEC12.indd 35
12/13/12 3:13 PM
DIGITAL IMAGING
Vistek’s Parker agrees that user-friendliness is still an
issue. “The industry needs to work on convenience with
Wi-Fi; and Nikon is doing just that. “It’s not as fast as you’d
like but they have taken a step forward [adding Android
OS] while others in the industry have not.” (Nikon’s new
firmware for the S800c has improved Android stability and
Wi-Fi performance.) “Nikon understands what they need to
do to capture back this market from the smartphones.”
What’s Really Hot?
Sales of waterproof/shockproof cameras like Nikon’s
Coolpix AW100 are holding steady in Canada. In addition
to tough construction, the AW100 features built-in GPS,
16MP CMOS sensor, 5x wide-angle zoom lens and HD
video recording.
Prestige compact cameras with high-grade lenses are a
booming category, appealing to photo enthusiasts who
want a camera they can take anywhere. A standout model
is Sony’s Cyber-shot DSC-RX100, which features a large
one-inch sensor and Carl Zeiss T* 28-100mm zoom lens.
it’s possible to transmit photos and video clips to a smart
device and then upload them to Facebook and other sharing sites.
This is a significant development, says Fujifilm’s Poole.
“This was the last thing we needed to bring the camera
into the consumer electronics world. It seems like every
other device was connected in some way. Cameras had to
get there, and quickly.” Although the implementation of
Wi-Fi on the latest cameras is better than it was with earlier models, there’s still room for improvement, in Poole’s
estimation. “Each company has its own functionality; I feel
we need to develop some standards for the industry; Wi-Fi
needs to be even more robust, easier to use and more
reliable. Even so, adding this function has been a healthy
move for the industry.”
The best connected camera announced in 2012 is the
16MP Samsung Galaxy Camera. In addition to Wi-Fi, it
has 3G connectivity, so that users can upload images to
social-media sites or save them to the Cloud without going
through a smartphone or tablet. The Galaxy Camera runs
the latest Android 4.1 (Jelly Bean) operating system, and
features a 4.8” touchscreen and 21x zoom.
“We saw it at Photokina and it was the Wi-Fi camera of
choice for us,” says Vistek’s Parker. “But we heard they’ll
be marketing it through phone stores and not photo
retailers.” Just before our press time, Samsung Canada
announced that the Galaxy Camera would be marketed
through Black’s and Samsung retail stores exclusively
($549 when purchased with a data plan).
Several retailers praised the 16MP Nikon Coolpix S800c,
with 10x lens and 2.5” OLED touchscreen and the Android
2.3 (Gingerbread) OS. This is the first mainstream camera
with an operating system and browser like a smartphone or
tablet. “Especially 18- to 29-year-old customers are paying
extra for this camera, because it’s cool to have an Android
operating system and the ability to post photos to Facebook
from an Internet café,” Bagliolid says. “The technology is a
bit tricky at first, but we show them how to do it.”
Every one of my sources mentioned that the biggest
growth has been in Compact System Cameras (CSCs).
NPD’s Haar says the sell-through numbers support that
assessment. “The Interchangeable Lens Camera (ILC) market continues to be buoyed by the rapidly growing CSC
segment,” he states. According to NPD, in the nine months
ending September 2012, ILC unit sales in Canada grew
2% compared to the same period a year ago. CSC unit
sales were up a whopping 86%, more than offsetting the
5% decline in Digital SLRs. Comments Haar: “CSCs have
almost doubled in importance over the past year, with
their share of the interchangeable-lens market at 15% in
Canada, versus 8% last year.”
There’s another important fact about the CSC category,
Haar adds. “The revenue growth on CSCs is 114 per cent;
that’s outpacing the unit growth of 86 per cent as consumers are now trading up to higher-end cameras.”
Adds David Oyagi, Marketing Manager ILC at Sony of
Canada Ltd: “The overall breadth of product is changing,
with more models at the higher end in several brands. We
had a lot of pent-up demand for the NEX-7 especially.”
This 24MP NEX-7 retails for $1,350 in a kit with an 1855mm standard-zoom lens. “Once supply rebounded in
the spring, a lot of the demand got filled,” Oyagi continues. “This high-end camera also offers a lot of opportunity
for accessory flash and secondary lenses.”
The greater attachment rate is an important benefit to
any of the $900+ Compact System camera kits. That’s
because models like the NEX-7, Lumix GH3, Olympus
OM-D E-M5, Samsung NX-20 and the Fujifilm X series
are attracting true photo enthusiasts. (The Canon EOS
M, $879 with lens and add-on flash, is more of a massmarket camera.) “People who buy the more expensive
kits are more interested in photography and the value of
different lenses, so there’s a higher attachment rate,” says
Poole. “That’s one reason why we went with a top-down
approach with our first CSCs, instead of trying to compete
in the $500 range, initially at least.”
Ron McKerron, General Manager, DayMen Canada:
“Customers are paying as much for high-end CSCs as
for DLSRs. They don’t want to buy a $1,000 system and
walk out with a $39 bag.”
Mark Haar, Director of Consumer Electronics, NPD
Canada: “The revenue growth on CSCs is 114 per cent;
that’s outpacing the unit growth of 86 per cent, as
consumers are trading up to higher-end cameras.”
David Oyagi, ILC Marketing Manager, Sony of Canada
Ltd.: “A lot of customers are looking at CSCs because of
their size, while providing features and photographic
quality they cannot get from a smartphone.”
36 MARKETNEWS
MNDEC12.indd 36
12/13/12 3:13 PM
DIGITAL IMAGING
Are Compact System Cameras stealing sales from DSLRs,
as the 5% decline in that segment might suggest? “Well,
CSC is increasing at a very rapid rate, but not necessarily
stealing from DSLR to the extent most people expected,”
says Vistek’s Parker. “It’s stealing share from point-andshoots, I would think. For us the Sony NEX-7 and Olympus
E-M5 are doing very well, and Nikon 1 is really starting to
pick up. The Nikon J has hit a home run with women and
they are trading up to it from a compact camera.”
While Oyagi is seeing some DSLR owners switching to a
NEX system for the sake of smaller size, he finds that many
point-and-shoot owners are looking to trade up. “At the
dealers’ consumer shows this year, a lot of customers were
looking at CSCs because of their size compared to a DSLR,
while providing the features and photographic quality they
cannot get from a smartphone or point-and-shoot camera.”
Full-Frame
Drives Lens Sales
Since the DSLR and CSC cameras continue to do well, lens
sales have also been brisk, with a 9% growth for the first
nine months of 2012 compared to the same period last
year, according to NPD. While EF-S, DX, DC, etc. lenses for
small-sensor DSLRs remain strong, the growth in full-frame
DSLRs will be particularly beneficial. Most newcomers to
this type of camera need at least one new multi-platform
EF, FX, DG, etc. lens. And that should grow in 2013, because of increased sales in the full-frame DSLR category.
The new Canon EOS 6D, Sony Alpha a99 and Nikon
D600 DSLRs offer a vast range of features and a more
attractive price point than earlier cameras.
“The lens market continues to be very strong for us, and
we have high expectations for the full-frame category,”
says McBain Camera’s Neumann. “A lot of people did not
want to drop $3,000 or more; but $2,100 [Nikon D600
and EOS 6D] will get them into the market.”
“That is the magic number,” Vistek’s Parker agrees. “We
Announced at Photokina, Canon’s EOS 6D full-frame
DSLR just began shipping in Canada. At $2,100 (body
only) the 6D and Nikon’s new D600 will entice many
enthusiasts to consider a full-frame model; and that will
drive demand for new lenses.
Unit sales of Compact System Cameras are up 86% this year compared to 2012, according to NPD. Upscale CSCs like the
Olympus OM-D E-M5 are driving up average selling prices, and creating demand for lenses, flashes and other accessories.
definitely proved that last Christmas when the EOS 5D Mk
II was below $2,000; there was a very large demand for it.
And this year, Nikon lenses are already very, very strong
due to the D600.”
The full-frame Sony a99 is more expensive ($2,800),
perhaps because of its pro-grade video features, but there
has been a lot of pent-up demand for it, according to Oyagi. “We have not been a big player in the full-frame market
recently, since shipments of a900 and a850 stopped. But
we are getting significant interest at the consumer shows
because of fast, continuous autofocus in Movie mode and
the dual AF system. Users of other brands are coming over
because they have heard of the great possibilities of our
translucent mirror technology.”
In addition to OEM brands, Sigma is a strong contender
in the multi-platform lens category, with a full 27 DG
lenses available now, and more to come soon. While
its new 18-250mm f/3.5-6.3 DC Macro OS HSM (for
small-sensor DSLRs of all brands) will be a best-seller in
December, higher-end lenses should get a boost in 2013.
In the past, Sigma may have concentrated on affordable
categories, but the company is moving its image upscale.
That will include a significantly new look to the new DC
and DG products, like the 35mm f/1.4 DG HSM, says David Bursach, Director of Product Marketing of the Imaging
Technology Division at Gentec International.
Sigma is also restructuring its lens lineup into three new
categories, Contemporary (compact, flexible zooms), Art
(prime lenses, wide-angle and macro lenses) and Sports
(multi-platform DG series primes, telephoto zooms and
super zooms). Each line has a clearly defined concept to
guide shooters in the selection of the right lens for their
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photographic interests. “Sigma is not re-labelling existing lenses,” Bursach explains. “This applies only to new
products. In addition to the entirely new look to the lenses,
there’s also a strong focus on quality control. They’re now
using a 46-megapixel Foveon chip for MTF testing of every
lens leaving the building. This technology represents an
enormous improvement over previous methods.”
High-Margin Accessories
Since most accessories provide higher margins than cameras, this has traditionally been an important category for
the photo channel. That’s true today too, although NPD’s
Mark Haar says there’s softness across many accessory
categories. That includes cases/bags at -19% for the first
nine months of 2012 compared to the same period in
2011, batteries at -10%, filters/filter sets at -4%, external
flash at -2%, and tripods at -6%.
The decline in camera bag sales for example, is problematic for retailers, but understandable, says Ron McKerron, General Manager of DayMen Canada. Camera sales
were slow at the beginning of the year due to shortages
in some brands; and when the supply came back there
wasn’t a huge uptick in the business. “What came back
were the higher-end DSLR cameras, but a camera requires
only one bag. In a different [better] economy they might
have bought an additional bag.”
As Compact System Camera sales are increasing,
customers are buying smaller bags and spending less
for them, he adds. “On the other hand I am hearing from
dealers that they would like small bags at a higher price
point. Customers are paying as much for high-end CSCs as
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Affordable full-frame DSLRs like the Nikon D600 and
Canon EOS 6D are fueling the market for multi-platform
lenses. Sigma is adding higher-end lenses like the 35mm
f/1.4 DG HSM.
for DLSRs. They don’t want to buy a $1,000 system and
walk out with a $39 bag. We are working on that.”
High-grade camera straps are also attractive for the same
reason, Gentec’s Bursach adds. “The BlackRapid straps
(retailing for $70 to $100), based on the same concept of
comfort as sling bags, have been a tremendous success.
And there’s a new one on the way, the Metro for $50, a
strap for the CSC and high-end compact camera owner.”
Some manufacturers, including Lowepro (a subsidiary
of DayMen) are working to increase demand with new
strategies. “We have introduced colour, fashion and more
innovation that created demand higher than the attach
rate,” McKerron says. “We find bright colours sell well and
put new breath into the Lowepro brand especially, and
maybe into Acme Made [another DayMen brand]. We’re
also building bags that are dual-purpose, with a removable
padded insert so it can be used for other purposes, not
only to hold camera equipment. We are always focused
on coming out with new product. We will succeed only if
we provide profitable opportunities for dealers.”
The addition of Full HD movie capability to SLR cameras
and CSCs has spurred the growth in several types of accessories, including video tripod heads, external mics, and
audio recorders. “Video stabilizing rigs are also important,”
Vistek’s Parker says. Some brands like RedRock Micro
target pro videographers, but others are more affordable.
“Rigs are already very successful among those buying fullframe DSLRs and we’ll be importing some very well made
rigs, aiming at the customer with an EOS T4i or comparable camera.”
Bursach agrees, and mentions Gentec’s Sevenoak
Greg Poole, Vice President, Imaging Division, Fujifilm
Canada Inc.: “The trend is to buy something three steps
above the iPhone. Consumers are saying, ‘I’ve got two
compact cameras at home and a phone in my pocket all
the time. I’m going big or I’m going home.’”
Compact Shoulder Rig ($100) for CSC owners and the
larger Shoulder Rig ($170) for those using a compact
DSLR. “These are basic products but they work well with
the camera’s image stabilizer for sharp photos and smooth
videos,” Bursach states. “Accessories of this type offer
one way for a retailer to build sales; and we can provide
videos for their Websites to illustrate the use and the benefits of these products.” He adds that still cameras’ video
capabilities have also increased sales of the higher-priced
high-speed SD cards like the SanDisk Extreme series, and
of LED lighting panels such as the Optex 42 kit.
DayMen’s McKerron has a great deal of expertise in
merchandising so I asked him what strategies have been
successful in boosting accessory sales. “We’ve made
special displayers and marked out the Lowepro section at
major retailers. Packaging is important in order to make
the products look nice on the floor. Some retailers like L.L.
Lozeau do a great job with videos; they have large LCD
screens all over the place, showing all the features and
functionality of a bag for example. The right point-of-sale
materials can definitely get more incremental sales.”
Even in a declining accessory market, some retailers will
always succeed. McKerron believes the odds are best for
those who are “judicious on what they pick in terms of
quality and margin. They then advertise to get people in.
Retailers that do well are the ones who are creating traffic.”
Looking Forward
The first quarter of 2012 was rocky because of shortages caused by supply-chain disruptions; but most of that
was resolved by the start of Q2. The concern for 2013 is
consumer confidence. While the Canadian economy is
outperforming many others, the Euro-zone debt crisis, the
U.S. “fiscal cliff” and other global uncertainties are making
some Canadians jittery. Since a high percentage of Canadian exports go south of the border, worries about the U.S.
economy are particularly valid.
“Discretionary spending in general may already be
down, and there’s a tendency for consumers to protect
themselves in a weaker economy, repaying debt for example,” says McKerron. “Low interest rates lured them into
more debt and that could mean trouble if rates increase.
And most employees are not getting big increases in
income these days.” Canada’s economy is flat at best and
McKerron says he has not seen any leading indicators that
the market will rocket forward.
In spite of these realistic assessments, industry confidence remains solid. While he admits to being “nervously
optimistic” about 2013, Vistek’s Parker mentions that
increases in the U.S. real estate values are bringing people
back to work and creating some demand south of the
border. He also points to the Chinese economy, which will
grow by 8% in 2013 according to the World Bank. “It’s
gathering momentum, building demand, and that market
is absolutely enormous.” That should help moderate
uncertainty about the world economy and instil some confidence, he believes. “Everyone is concerned about Greece
impacting our economy, but the growth in China should
give us some optimism.”
While those of us in Ontario are nervous about our
economy, most of Canada is more buoyant, due to the
abundance of oil and other resources that can survive a
recession. While the price of a barrel was down to $86 at
the time of writing, Alberta and Saskatchewan are booming, McBain says. “There are lots of jobs in the West, and
in the oil industry you have some fairly high-paying ones.
There’s no problem with consumer confidence. I’m actually
hoping for good numbers in 2013 compared to this year.”
The final word goes to Poole, an astute observer of the
entire industry who’s looking forward to the future. “I
remain very optimistic for 2013 because of the quality and
the versatility of the product offerings that are out there.
There’s a new desire within consumers to upgrade to even
During 2012, several vendors introduced digital cameras
with built-in Wi-Fi, or Wi-Fi options. The 16MP Samsung
Galaxy Camera has both Wi-Fi and 3G connectivity, and
runs the latest Android 4.1 (Jelly Bean) operating system.
more expensive and more elaborate system cameras.
That’s great, because we would much rather sell a smaller
quantity of high-end cameras than a high quantity of lowend product.
“In our road map for 2013, we have some great products,” Poole continues. “But I don’t expect any less from
our competitors. If the market is shrinking, we’d better
start upping our game to get the consumer’s attention,
because we’re fighting harder for each sale. We all know
how tough it was in 2012 and it won’t get much easier
next year, but succeeding in today’s tougher, mature market is more satisfying in the end.” mn
In 2012, Lowepro introduced multi-purpose bags, such
as the Passport Sling II, with bright colour accents.
38 MARKETNEWS
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Innovations in Home Automation
CUSTOM CORNER
By David Birch-Jones
I still remember being an exhibitor at the first CEDIA show
more than 20 years ago, when it debuted at a resort in
Florida. A few dozen exhibitors banded together to show
home automation and custom integration systems and
related AV products to the trade. Back then, it would have
been hard to imagine that one day, CEDIA show organizers would have to choose venues based on maximum
available show floor exhibit space.
This year’s CEDIA Expo, which took place back in September, demonstrated that the industry can be summed
up in one word: “democratization.” The widespread adoption by consumers of smartphones and tablets has led to
the transitioning away from expensive and complex automation systems controlled by equally expensive dedicated
touch panels, to the empowerment of customers controlling multiple systems in the home with their personal
devices, aided by more affordable automation options.
To see where the industry is heading and what drivers
are leading the wider adoption of home automation to a
broader consumer base, I asked industry experts to give
their views on the issues, discuss challenges and opportunities for integrators, and make predictions on what’s in
store for the near future.
Savant’s Experience Centre is a 2,500 square-foot condo on Wellington St. W. in downtown Toronto, ON that demos
$300,000 worth of electronics, including 550 square feet of Lutron powered blinds, Definitive Technology speakers,
an 80-inch Sharp TV in living room and smaller displays in the boardroom and family room. All products are connected via Planet Waves fibre optic, and are controlled and automated through a full Savant system.
Smart Devices: A Threat
or an Opportunity?
It wasn’t that long ago that a deluxe automated home
would have a number of dedicated (and expensive) touch
panels, one for each main room, with additional touchpads
scattered elsewhere to round out the system. Collectively,
they represented a significant chunk of a system’s hardware
sales dollars. With the widespread adoption by consumers
of smartphones and the explosive popularity of Apple’s
iPad, automation vendors are de-emphasizing the traditional multiple dedicated touch panel approach in favour of
individual user control via smart devices. And, given their
inherent portability, smart devices allow for more control
points both inside as well as outside the home.
Addressing the transition from dedicated touch panels to
smart device control, Marcel Mukerjee, Control4’s Senior
Area Manager for Canada, notes that: “The way I see it
for my dealers in the last quarter is that there’s still some
confusion out there, but I still brand it as an opportunity.
Overview
• Inexpensive but highly sophisticated devices like smartphones and tablets have led to a transitioning
away from expensive and complex automation systems and touch panels
• The trend is now toward individual user control versus multiple dedicated touch panels
• Smart devices need to be embraced, and viewed as opportunities, not threats, if custom companies
are to succeed
• While Apple dominates with its iOS platform, there’s opportunity to support others, like Android and
the new Windows 8
• HDMI and Wi-Fi can still pose challenges in this space
• In 2013, dealers and automation companies need to find ways to keep up with consumers’ growing
media consumption needs
40 MARKETNEWS
MNDEC12.indd 40
Quite simply, as more people interact with touchscreens,
they feel more familiar with them and the familiarity lends
itself to integrating that interface to peoples’ lives. Because
that’s what we’re trying to do; sell an interface to which we
can then tame that technology so as to help them control
their lifestyle.
“The element of confusion,” he continues, “comes from
what dealers can achieve in terms of trying to bridge that
gap of simplicity. Sometimes, a consumer wonders why
he’s being charged more for a dedicated touch screen as
compared to, say, an iPad. For us, the big difference is a
protocol that can’t be achieved on that touch pad, such as
voice over IP, or a video intercom such as a door station.
In terms of true two-way interfacing, it doesn’t work very
reliably.”
Mukerjee feels the most important aspect of a dedicated
touch panel is having the functionality always on and
ready to go.
“If you have to press several buttons to get to your app,
and then to the actual action, that’s too many buttons already. The ideal is that you should be able to select a function and then touch the action and whatever you’re wanting
it to do is done automatically. Too many button presses are
just defeating the purpose of home automation.”
Lutron’s Richard Black, Director of Residential Product
& Business Development, admits that consumers are rethinking the costs and benefits of the touch panel, largely
due to the iPad, which he describes as the “the most
prolific of new generation smart devices. [It] certainly redefines what you think things should cost and what their
features and functionality should be.
“It seems initially the dealer is certainly threatened by
this ultra low cost super-powerful thing, but the awareness
thing has exploded,” Black advises. “People now expect
that they can control everything; they feel empowered
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CUSTOM CORNER
Apple, customers can buy for $200 an iPod touch, which
is a phenomenal access point. The amazing thing with
Savant’s application is that it is fully usable inside and out.
If you’re in the home with an iPod touch or happen to be
in Florida on somebody’s Wi-Fi network, and the integrator
that did your Savant system has set up remote access, you
can take that iOS device and remotely access your house.”
Jeff Singer, Director of Global Marketing Campaigns at
Crestron, agrees that smart devices and touch pads offer
“a tremendous opportunity. The popularity of the smart
devices, like the iPhone and the iPad, is great for us. It has
created awareness, driven demand, really sped up the sales
cycle and expanded the marketplace tremendously. I think
Apple has done what they set out to do. Their win is our win.
They’ve been a real catalyst to expanding our industry.”
Not Just Apple
sion of multiple Android or iOS panels in a way that he
can put money in his pocket.”
So how do automation companies replace the $300$500 they made by selling a dedicated touch panel in a
world flooded with $1.99 apps?
“From our perspective,” explains Ridenour, “we’ve got to
be able to create compelling feature sets that the handheld
device can’t. For example, a handheld hard-button remote
that is really simple to use is always more convenient than
an iPad. So, there’s an opportunity there, and that’s one of
the reasons that our HR2 handheld remote control exists.
For TV viewing and channel surfing with an iPad, it’s not
as enjoyable an experience.”
Middleton weighs in. “For us, they are the opportunity
moving forward. We don’t see small vendors in the channel creating a touch device of their own to economically
make sense. We embrace these third-party devices as
the future, versus trying to have people buy proprietary
hardware. Prior to the iPad coming out, we had our own
dedicated touch panels. The iPad launched in April of
2010, and by July of 2010, we had cancelled our own
touch panels completely.
“Coming back to our strategy, which is fully aligning with
While Apple’s iPhone and iPad have defined their respective
categories of smartphones and tablets, Android smartphones
now lead the sales charts. And Microsoft’s recent push for
Windows in the phone and tablet segments can’t be discounted, given the company’s dominance in the desktop OS
space. Our experts weigh in on how the different operating
systems are playing into automation system sales.
AMX’s TP Control is a touch panel application that can
run iOS and Android devices, with Windows 8 in the
pipeline. There’s a cost associated with them, since they’re
developed and supported in-house. “With a dedicated
touch panel, however, there’s a richer user experience, and
we can deliver features such as VoIP, which requires a true
two-way communication,” Xenopoulous points out.
Mukerjee thinks Windows 8 in portable devices could
turn out to be exciting. “Given Microsoft’s leadership in
the desktop world, there should be an easy transition for
consumers to gravitate to that platform,” he predicts. “But
given that they’ve been out of the space for so long, they
have a long way to go to and we’ll have to see what happens.”
“Our customers,” says Elan’s Ridenour, “typically tend to
be more iOS-centric, and with the exception of the Samsung SIII and the Motorola Razr, there really hasn’t been a
compelling high-end Android handheld device.”
Singer points out that Crestron’s Mobile Pro app is
engineered for scalability and open-platform compatibility. That means that a system configured to work with an
Apple device also works with Android. “So all your devices
work the same, and every member of the family enjoys
Richard Black, Director of Residential Product & Business Development, Lutron: “People now expect that they can control
everything; they feel empowered and connected. They’re
connected to their friends, they’re connected to the Internet,
they’re connected to work, and they’re connected, connected,
connected. There is now a huge opportunity for a dealer to
say to a consumer, ‘I can connect you’ to the home.”
Robert Ridenour, Brand Manager, Elan: “The opportunity is that the proliferation of smart devices has increased
the awareness of the possibilities with the public, and
has increased the opportunities for a dealer to say ‘We
can automate your home, because you’re carrying this
thing on your hip or in your back pocket. You can do
things with your house that you never could before.’”
While AV is still a major part of automation, it has become just one small facet of a whole-home system. Often just as
important are things like lighting control, along with HVAC.
and connected. They’re connected to their friends, they’re
connected to the Internet, they’re connected to work, and
they’re connected, connected, connected. There is now a
huge opportunity for a dealer to say to a consumer, ‘I can
connect you’ to the home. You go to people who have an
understanding, and you say ‘If you want to be connected
to your lights, your blinds, your HVAC, your security system, you have this device, you know about connectivity, I
can connect you’.”
Jean-Pierre Xenopoulous, Director of Sales at AMX
Canada feels that smart devices represent an opportunity
for the automation industry in terms of accessibility for
more users rather than limiting control systems to people
who know and understand them.
AMX’s touch panel sales, in fact, are slightly up, says
Xenopoulous. “I think that people are using smart devices
as complementary interfaces to the touch panels, and I
think that’s the best way of doing it, too. There should be at
least one dedicated touch panel in a system, because portable devices tend to move around. And with a dedicated
touch panel, you constantly have access to events that are
running, without the need to call up a specific app and find
a specific function and then do your modification.”
Brad Middleton, Savant Brand Manager at Evolution
Home Systems, echoes this point, noting that when an
iPad is docked on a wall, it becomes a touch panel in the
traditional sense. But he finds that most clients might have
one “traditional” touch panel per floor, for example, but
use their own personal devices; whether it’s an iPhone,
iPad, or iPod, to afford access to the system both in and
outside of the home.
Robert Ridenour, Elan Brand Manager, views smart
devices as something of a double-edged sword; “simultaneously an opportunity and a threat.” He elaborates.
“The opportunity is that the proliferation of smart devices
has increased the awareness of the possibilities with the
public, and has increased the opportunities for a dealer to
say ‘We can automate your home, because you’re carrying this thing on your hip or in your back pocket. You can
do things with your house that you never could before’.
“The previous way for a customer to connect to their
home system from afar was by using a voice mail system
and going through a series of prompts and hit keys to automate things, and it was very slow and tedious, and not
very interactive. The challenge for dealers inside the home
is that a consumer can go into a discount store and buy
an Android tablet for under $100, and they’re significantly
less expensive than a proprietary touch panel, and there’s
no way as far as I know for a dealer to monetize the inclu-
44 MARKETNEWS
MNDEC12.indd 44
12/13/12 3:13 PM
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CUSTOM CORNER
Despite competition from lower-cost “smart” devices, AMX says sales of its dedicated touch panels are actually
slightly up. This is likely because many installations include at least one main touch panel, with portable devices like
smartphones and tablets used as complementary control devices.
the same quality user experience.
Savant, however, has remained strictly iOS.
“We’ve not been supporting Android for a number of
reasons,” explains Middleton. “First, there are a multitude
of Android operating systems, including the latest Jellybean, which is only at around two per cent share; Ice
Cream Sandwich, which is around five per cent share or
perhaps a little higher; and most Android devices have a
three-year-old OS, such as Froyo, which has around 60 per
cent share. So, picking which one to target is a challenge.
Instead, we’re developing a cross platform rendered version of our application in HTML5 which will be compatible
with Android devices, BlackBerry 10 and Windows Phone,
and which will debut sometime in 2013. Still, for many
customers who may have an Android or other type of
phone, it’s often easier for them to pick up a $200 iPod
touch to control their Savant system.”
blinds, HVAC and energy management, among other
things, I believe that the precursor into the space is that
they for sure want audio control throughout the house. It’s
becoming a de facto for most custom built homes.”
Control4’s Mukerjee feels that lighting and HVAC are at
the top of the list. “I’d love to say that AV is the leader in
terms of consumer appeal, but where people spend the
most is in lighting. In terms of budgets, lighting is the one
area where budgets tend to go right out the window, and
it’s right up there with landscaping, which is very often
intertwined. If an integrator is experienced with lighting
control as well as AV, then they excel with AV on the
quote because they know how to sell the mood and how
to sell the actual add-ins. Security will also often be a
priority, depending on the client.”
When it does come to AV, Mukerjee finds that distributed audio is more important than even home theatre these
days.
“In the custom space, new homeowners as well as
renovators know that it’s possible to put audio in different
parts of the home, and not have it sound like commercial
background music. Things like Internet radio and audio
products such as Sonos have made it more accessible.
We embrace all platforms including our own, and Internet
radio is really helping that. People no longer have to invest
in large music libraries in order to have a wide variety of
music choices available to them.”
Ridenour seconds the distributed audio motion. “Our
Elan g! systems have around an 85 per cent attachment
rate for distributed multi-zone audio, which is by far our
biggest attachment. Multi-zone audio is the gateway for
the dealer to talk to the client about other sub-systems,
and with three or four of those, you can then get to integration and automation.”
Adds Xenopoulous: “I still think that control functions
such as lighting, shades, HVAC and security are as important to the consumer as ever, and these days, there’s
more emphasis on having a more green environment as
opposed to just simple control.”
Crestron is “going green” too, as Singer relays that homeowners are focused on creating energy efficient homes.
While audio distribution is still very important, it’s only
one part of a whole-house system, he re-emphasizes. “If
you sell an audio distribution system, and only an audio
distribution system, to a customer, chances are they might
be interested in a home theatre system. If you sell them
a home theatre system, chances are they might want the
lights to dim when they put on a movie. If you sell them
a home theatre and lighting control system, chances are
they might want to watch the same movie at the same
time in another room, say a bedroom or kitchen.”
Remote monitoring will also be a key feature going
What’s Driving
Consumers to
Automation?
Back at that first CEDIA show in Florida, theatre control
and distributed audio were the dominant themes. Nowadays, an automated home can have a dozen or more subsystems, including lighting, blinds/drapes, HVAC, security,
irrigation and a host of other control options.
What’s driving consumers to home automation systems
these days?
According to Savant’s Middleton, lighting control, including drapes and blinds as a natural lighting control function
is a primary motivator, followed by HVAC control, and,
tying in to both, energy management.
“Rates continue to increase,” he says, “and even time-ofuse billing has now come into play in Ontario. Customers
are saying to us that this is becoming something that
they’re much more aware of, and they believe the automation platform can help them try to live that green lifestyle.
“I think that distributed audio is very important with most
consumers,” he adds, “and the way the home automation
conversation often begins with the dealers is based on distributed audio. While consumers coming into our Savant
Experience Centre are interested in talking about lighting,
Marcel Mukerjee, Senior Area Manager for Canada, Control4: “If you have to press several buttons to get to your app,
and then to the actual action, that’s too many buttons already. The ideal is that you should be able to select a function
and then touch the action and whatever you’re wanting it to do is done automatically. Too many button presses are
just defeating the purpose of home automation.”
46 MARKETNEWS
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CUSTOM CORNER
Brad Middleton, Savant Canadian Brand Manager, Evolution Home Systems: “One of the common things we’re
seeing from telco and Internet providers is that they’re all doing these modems with integrated Wi-Fi routers, and
they’re abysmal. They don’t allow flexibility for port openings, they renew leases on DHCP tables every hour and so
on. So, if a dealer doesn’t sell a customer a solution because he’s hoping this budget router is going to work well for
them, he’s setting himself up for failure and in the end, that customer just doesn’t return.”
forward.
“I can do virtually a lot of my remote monitoring of my
house via my mobile app, so that’s one aspect that we
push,” Mukerjee explains. “It’s pretty handy for cottagers
as an example, they’re going home or they’re going to
their cottage, and want to make sure that everything’s
ready to go.
Through a new update to the MyControl4 app, which
will be available some time in Q1 2013, users will be able
to select their home and directly control it over the 3G
network on their smartphones.
“It’s nice and easy to check your house temperature,”
Mukerjee gives as an example, “see when the nanny came
in or the housekeeper came in, because you can get door
status checks and updates, as well as lighting and other
functions.”
HDMI – Still Crazy
After All These Years
I can recall a conversation I had a while back with a product manager at a major TV manufacturer about HDMI. He
was grousing about the myriad of problems caused by
HDMI handshaking between source devices and TVs, and
he said that, “I wish the guys who came up with HDMI
would be taken around back, and shot.”
And he was only referring to HDMI issues between
source devices and TVs. He wasn’t even addressing
whole-home HDMI distribution, which has caused untold
heartache for automation companies and integrators alike.
We asked our experts to give their views on whole-home
HDMI and where things stand today.
“One of the great things about distributed video these
days,” says Elan’s Ridenour, “is that the HDMI standard has
not been revised for a while. With HD-BaseT and a stable
48 MARKETNEWS
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HDMI standard, integrators are less afraid of committing to
product, and we’re seeing now good quality HDMI product
out there that can reliably distribute HDMI content. Integrators don’t have to be afraid that they’re spec’ing a job
and six months later when they’re finishing the job, there’s
another standard and they’re not going to have the equipment necessary to distribute that standard.”
Adds Middleton: “Prior to Savant shipping a product with
a user interface, the thing that was made first a number
of years ago when nobody was really into HDMI was our
HDMI switcher. So for us, we don’t even have teething
problems with HDMI. At the 2012 CES, we saw all manner
of manufacturers trying to get into the HDMI switching
world at a very inexpensive price point. And that means
manufactured in China by no-name companies. What
surprised me in the CEDIA channel is that some dealers
would purchase or uptake into this product assuming that
HDMI is as simple as the analog world. Some dealers are
just not understanding that HDMI truly is a skilled or a
high quality product and it needs to be done correctly. If
you’re just trying to drive it down to a cheap price point,
it’s not going to effectively work. I hear stories all the time
from customers, where one will tell me that they turn on
one TV in the house and all the other TVs in the house go
blank for the next minute and-a-half. We don’t have that
problem.”
As far as wireless HDMI is concerned, he notes that,
“Wireless HDMI is a dream for many people, and I think
we’re a long way off from that dream. If dealers can’t get
HDMI to work properly with wired, it will be amazing to
see if they’re going to be able to get it to work wirelessly.”
Savant fully supports all technologies associated with
HDMI, which means traditional HDMI wired, Cat5 baluns,
RGBHV baluns, and fully fibre-based systems. And Middleton feels the key for dealers moving forward is “to have
a flexible platform that allows them to choose whatever’s
right for that particular client, instead of one solution for
everybody that puts them in a box.”
While Crestron’s Singer opines HDMI is a great format
for connecting high-end devices in point-to-point configurations, or even basic switching systems, he argues that
when there’s a need for HD audio and video in a large
and complex distribution environment, “HDMI presents
some challenges, especially regarding audio.
“To overcome those challenges,” he suggests, “a modern
digital AV distribution system must be engineered from
the ground up to manage audio as thoughtfully as it manages video. Too many systems on the market treat audio
as merely an afterthought. This shortcoming results in
system designers and integrators having to take on these
challenges themselves, with inelegant systems of disparate
components. Time and money must be invested at each
job to overcome the same problems, over and over again.
Alternatively, the designer could simplify his design, but
the cost is a diminished experience for the end user.”
Singer says Crestron’s DigitalMedia product line was
designed to eliminate the complexities of mixing high
definition audio and video in one system, eliminating the
extra time, equipment, and troubleshooting associated
with less evolved approaches to solving HDMI’s audio
challenges.
“The progress has been pretty amazing,” enthuses Mukerjee. “It’s no longer the concern it was even as far as four
years ago. If you’re staying within a couple hundred feet
from the main matrix, you can run HD-BaseT over Cat5 no
problem, no loss. In some cases, we’re seeing some sync
issues. But those are usually hardware issues, and we’re
usually aware of those and when we steer people in the
right direction, things are quite fine.”
“These days,” adds Xenopoulous, “HD-BaseT is pretty
much the standard, and even though large manufacturers such as ourselves have solutions that address issues
such as HDCP, there are still some issues as far as source
devices and displays are concerned. So it’s not always
as easy as it should be, and it’s definitely not as easy as
analog.”
Through a new update to the MyControl4 app, which will be available some time in Q1 2013, users will be able to
select their home and directly control it over the 3G network on their smartphones.
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CUSTOM CORNER
widely accepted use of private RF networks, like Crestron’s
infiNET EX, for solid, robust communications in even the
most high-traffic wireless communication environments.”
Charging Ahead
Being able to control things like AV, lighting, HVAC, and security is important to consumers for the overall experience,
but also for energy management. And dealers can (and should) tout the “green” benefits of automation as well.
Distributed Wi-Fi:
How Important Is It?
Wi-Fi in the home is more important than ever, according
to our experts, given that Wi-Fi is now a feature staple
on upper-tier smart TVs, smartphones, portable media
players such as the iPod touch, and streaming devices like
Apple TV, Roku and Boxee Box, along with a host of other
devices.
As far as implementation issues are concerned, Middleton agrees that Wi-Fi is a great option for control, but feels
it isn’t a viable solution for high bandwidth video distribution. Savant is a fully IP-based product.
“If we come back to the consumer experience,” he
explains, “we may have taken an approach in our industry
that Wi-Fi is this simple plug-and-play thing that works.
And I agree when you’re dealing with simple packets of
surfing the Internet on the computer. But once you start
getting into high definition streaming with devices such as
Apple TV and Boxee Box, dealers have a huge opportunity
for their customers to create proper networking solutions
to give them a really robust experience for the customer
later. We know that when customers have IP-based
cameras and IP-based iPads, and they’ve put in Apple TV
streaming with AirPlay, that network has to be incredibly
robust.
“The danger,” he adds, “is for the dealer who’s selling
a customer a $70 Linksys switch, which is ridiculous and
which really shouldn’t be done. That’s where dealers
have the opportunity to rise above and get educated on
networking protocols done correctly so that they can effectively offer something for their customers that will give
them that long-term happiness with their system. If they
don’t, it is 100% fraught with disaster. One of the common
things we’re seeing from telco and Internet providers is
that they’re all doing these modems with integrated Wi-Fi
routers, and they’re abysmal. They don’t allow flexibility
for port openings, they renew leases on DHCP tables every
hour and so on. So, if a dealer doesn’t sell a customer a
solution because he’s hoping this budget router is going to
work well for them, he’s setting himself up for failure and
in the end, that customer just doesn’t return.”
What will the home automation industry be addressing in
2013?
Ridenour predicts that next year will be the year of the
wireless audio system.
“Sonos has gotten to the point where they dominate
multi-room audio distribution, but they’re not integrationfriendly, they’re not profit-friendly. But it’s a quality system
with a great user experience. They’re breaking what have
been the normal rules for integrating systems, because their
product is compelling. That rule is one remote works everything in your house; one interface works everything in your
house. I think the industry is finally catching up to the idea
that that’s not acceptable, and it’s affecting our multi-room
audio distribution sales, which is core to this industry.”
Ridenour says Elan is looking at how to disrupt the domination of multi-zone audio and move toward single remote
operation that’s “easier to use, and easier to install.”
On a larger scale, Middleton points to the clear trend
toward media consumption, and how that will affect the
automation industry.
“The question is how do we as dealers, vendors and
manufacturers give the consumer what they’re going to
want for media consumption? With Apple iCloud and
Google Play, we in our industry need learn a way to say
to customers ‘Yes, this is how we can integrate all of these
provided media solutions for you in a seamless way’, versus today where you have this little remote and this box
and this piece and you put them all together and hopefully somebody will figure out how to make it work. That’s
where our job comes in the automation space. To be able
to make all these things work so that the customer wants
to choose us, because the solution is integrated.” mn
Given the explosion in Wi-Fi-enabled devices, integrators really need to pay attention to the robustness of the
network, notes Control4’s Mukerjee. “The bigger question,”
he poses, “is how strong is the customer’s network? You’re
only as good as your back end, and usually where we see
the issues come across is in the hardware selection. We’ve
now become advocates for specific hardware combinations that we’ve tested and recommend.
If our guidelines are followed, from
our list of recommended products
from companies such as Linksys
and Apple, including commercial
product from companies like Cisco,
we know they work well.”
Mukerjee also has strong praise
for MetaGeek’s Wi-Spy diagnostic
tools, which consist of a USB Wi-Fi
analytic RF dongle paired with the
company’s Wi-Fi spectrum analysis
software. This lets an integrator
go into the home and get a clear
picture of which channels are
congested and which are free. The
integrator can then configure a
client’s Wi-Fi setup for the highest
throughput with the least congestion. The Wi-Spy tools start at $200
for the basic version, which analyzes “g” 2.4 GHz band issues, with
step-up versions starting at $500
that adds “n” 5.0 GHz analysis.
Crestron’s Singer addresses the
issue, noting that “Yes, distributing
Wi-Fi is increasing the number of
applications for streaming devices
that communicate back to the
network. The additional flexibility
doesn’t come without a cost; all
Wi-Fi products experience the
same intermittent issues with reCrestron’s Mobile Pro app is engineered for scaleability and open platform
gard to distance, traffic, and signal
interference. Wi-Fi has become open- compatibility so that a system configured to work with an Apple device also
works with Android.
ly accepted and allowed for more
50 MARKETNEWS
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XT LED 880
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Come see more of the 2013 Canadian Line-up at CES!
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MNDEC12.indd 51
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Social Enterprise:
The Retail Social Revolution
RETAIL TIPS
By Vawn Himmelsbach
Retailers have never before faced the challenges they do
today. Consumers are in control, and mobile technology
and social media are influencing buyer behaviour.
A consumer can go into any store, check competitors’
prices on their smartphone, and demand the same price
or go somewhere else; like Amazon or eBay; to find the
same product for a better price. But they also expect
top-notch service, or else they might end up Tweeting or
blogging about their dissatisfaction.
Retailers are experiencing a social revolution in how
customers, employees and partners connect. Some 150
million conversations are happening every day over social
media between businesses and customers, according to
Twitter and Visible Technologies. As a result, retailers have
to look at a more unified cross-channel experience, both
externally with customers and internally with employees.
The demand for enterprise social software is growing, as
companies look to improve communication and collaboration among employees as well as customers, according to
research firm IDC. Between 2011 and 2016, spending is
expected to increase to 42.4 per cent for enterprise social
software, IDC predicts in its Worldwide Enterprise Social
Software 2012-2016 Forecast. This means that software
will adopt Facebook- and Twitter-like features for workplace use, from profiles to micro-blogging to reviews.
What is Enterprise
Social Software?
Enterprise social software adapts social media capabilities
(similar to Facebook or Twitter) to the workplace, allowing
employees to communicate and collaborate the way they
do in their personal lives. It essentially creates a social
layer between workers and their applications, rather than
traditional, static modes of communication such as e-mail.
Examples might include major services like Facebook
or Twitter, or be as simple as micro-blogging, Dropbox or
crowdsourcing, but within an organization, and following
corporate guidelines around privacy.
52 MARKETNEWS
MNDEC12.indd 52
With five million Facebook fans and 300,000 Twitter followers, Cake Boss’ Buddy Valastro, who’s a big proponent
of “the cloud,” says social networking not only allows him to connect with show fans, but he can also keep track of
what customers are saying about his Hoboken, NJ shop Carlo’s Bakery. “If somebody has a complaint and someone
doesn’t answer it, there’s a paper trail. It keeps employees on the hook.”
For a retailer in particular, this would mean having a
presence on Facebook and Twitter, but also perhaps looking at enterprise tools to manage their social media, such
as the ability to mine Twitter for customer sentiment and
deal with customer complaints. This can be taken to the
next level via business software with social capabilities
built in that mimic Facebook and Twitter. This would be
used among employees, or with employees and partners/
customers.
As an example, Salesforce’s Chatter can be used to track
sales opportunities, customers and projects in real time.
The “social” element means that a salesperson can see in
real time when a deal is closed or when a project changes
status, for example. Files, questions and other forms of
communication can be shared in a way that everyone can
see (like a Facebook wall post to everyone in the company
or involved in a specific project, as opposed to an e-mail).
That way, people can interact in real time to provide ideas
and feedback, or to answer questions; customers can even
be included in this process.
The point is to get ideas flowing, increase productivity
and improve transparency across hierarchies and geographies, and it can be used in a number of areas of the
business, from marketing to customer support to human
resources. The benefit to enterprise social software is that
it takes into account security and privacy (rather than
employees using tools meant for the consumer space).
Some companies involved in this space include IBM,
Jive Software, Communispace, Telligent, Socialtext and
Yammer. Google has launched Google+ features specifically for businesses including new collaboration tools, and
companies such as Salesforce and Oracle are adding social
features to their software.
Why is social on the rise? Enterprise social networking
can help increase sales, improve customer service, and
speed up product development, among other benefits,
though the return-on-investment tends to be soft. Eventually, industry analysts expect all enterprise applications to
be social: it will just become the de facto standard.
In a survey of 700 companies in North America this
year, IDC found that 67 per cent were deploying some
kind of social networking system, up from 47 per cent last
year. And they’re using social media to interact both with
customers and employees.
“Retailers understand word-of-mouth and brand more
than anybody; that’s their DNA,” says Rob Begg, (former)
Vice President of Marketing with Radian6, a company recently acquired by Salesforce that provides insights about
social media through metrics, measurement, sentiments
and analytics reporting.
“A lot of retailers that I talk to are looking for ways to
stay top of mind,” he explains. “When not in-store, social
media is a great way to do that.” It’s a way to engage with
customers that are “fans” of the brand. “By extending that
Overview
• The demand for enterprise social software, which helps adapt social media capabilities to the workplace,
is growing
• The ease at which social media and mobile technology can be used means consumers expect more, have
access to more information, and can share their experiences more easily
• Social media is being used to interact with customers, but also internally for employees to communicate
with one another
• It’s important to portray the image of being an engaging, concerned, and genuine brand
• Social media is still seen as a form of “word-of-mouth” marketing without formalized strategies
12/13/12 3:13 PM
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RETAIL TIPS
into social media, it keeps those touch-points going in
a non-salesy, transparent way … I think (retailers) know
that hitting me with 970 e-mails doesn’t work anymore.
They’re looking for ways to be more engaging.”
In a social world, instead of blasting potential customers
with traditional advertising, you’re looking at what types
of content people “like” and are engaging with, and how
to amplify that to drive business. “Social listening” involves
understanding what people are saying about your brand,
including your competitors, then using that information
to become a better marketer, as well as an opportunity to
resolve customer issues and complaints.
“It’s a very disarming way of advertising, but it’s also
relevant,” says Begg. “The real future and promise is when
you tie it back to CRM (customer relationship management), so it becomes even more relevant.”
There are tools on the market to help companies respond
on social networks in an organized way, as well as tools to
publish and promote great content across social platforms.
It’s not a choice, says Begg. Customers are already there.
And size doesn’t matter; it’s less about the size of the business and more about the commitment to social media.
With a 1-800 number, only two people know you solved
a customer problem, for example. “On Twitter, all my followers and your followers know,” he says. It’s also done at
a lower cost with a quicker time to resolution, in addition to
providing the “halo effect” of being an engaging, concerned
and genuine brand. “That’s the opportunity, that creates
the ultimate goal,” says Begg. “At the end of the day, your
experience on social media will drive in-store sales.”
A lot of companies get weirded out by social media, he
adds. “Social media is not hard. What’s hard is being good
at marketing. If you’re already good at that, [social media
is] another platform and another channel.” It takes the
same care and energy to solve people’s problems in person as on the Internet, but “it’s the soul of the brand that
gets amplified on social media,” he continues. “If you’re a
jerk offline, you’re a jerk online. If they love you (offline)
they’re going to love you on social media.”
Social Enterprise
for Customers
The Men’s Wearhouse has stores across North America
and is typically viewed as a traditional and mature brand.
So it’s been faced with the challenge of relating that brand
to 13- to 17-year-olds: a brand that is associated with selling suits to their fathers.
Rob Begg, (former) Vice President of Marketing,
Radian6: “I think retailers know that hitting me with
970 e-mails doesn’t work anymore. They’re looking
for ways to be more engaging.”
Virgin plans to expand its involvement in social media through initiatives like a platform that would allow communication with customers on things like flight delays or connecting flight information via their seat-back video screens.
Earlier this year, the retailer decided to make a concerted effort to boost its prom business. You can’t rent a suit
or tux online; you have to go into a store to get fitted. So
the company started to look at ways to use social media
to drive in-store traffic, despite the fact it had never used
social media for such a purpose before.
“The solution to reach teens is to take prom and make
it social,” says Joe Nolan, Director of New Media with The
Men’s Wearhouse. The retailer worked with Radian6 to
build up its knowledge base about prom. As part of this
process, it analyzed four million mentions related to prom
and gained insights from that, identifying key influencers,
blogs, forums and major media sites. This was done not
just via Facebook and Twitter, but also using analytic tools
to deep-dive into the language teens were using.
The point-of-sale system was connected with Facebook,
which Nolan says is “one of the most technologically advanced Facebook tabs ever built.” Timing would be critical
in a campaign of this nature, down to times of day when
teens were engaging around prom, whether with friends
or competitive retailers.
The company’s Prom Rep Challenge went live in the
U.S. early in March and relied on Radian6 for tracking and
timing. The campaign offered teens a free tux rental after
five referrals over social media (for more, they received an
iTunes gift card).
The company also ran what turned out to be a successful blogger outreach program by identifying new social
influencers. “With so many limited marketing resources;
financial but also human resources; we had to optimize
our engagement all of the time,” says Nolan. “Sentiment
was important to our executives: What are teens saying
about our brand? These are our long-term consumers.”
With 150 major companies trying to grab a piece of the
prom market, “are we breaking through, are people hearing our message,” Nolan asked. “We had to really get our
numbers up. Social has mass appeal, so you have to reach
a lot of people to have a solid effect on your business.”
Despite the fact it was the first social media campaign
launched by Men’s Wearhouse, the company managed
to build up 10,000 Facebook fans. In its post-campaign
research, it found that mentions of “prom” and “Men’s
Wearhouse” grew from four million to 13 million. The
company saw its impressions increase by a factor of 50
with its target audience and at a massive cost savings. It
also had a 90 per cent engagement rate with video; about
65,000 views of the one-minute prom challenge video,
and viewers watched a minimum of 90 per cent of the
video.
The company also looked at how competitors, such as
Best Buy and Samsung, were successful around prom, and
will use that information to build a better campaign for
2013. “Parents are making the decision, so we’re targeting
parents more in the future, more than we did last year,”
Nolan advises.
But it’s not just about impressions or engagement, he
adds. “Did it drive foot traffic into stores? The answer is
unequivocally yes,” he says. “We’re an older, more mature
brand. Would that resonate with teens? Over five months,
out of every company involved with prom, we were one
of the top 15 brands,” he boasts of brands that included
Facebook, Samsung and Macy’s. Sentiment was 95 per
cent positive.
But there were challenges along the way. “The technology challenges that we faced with tethering 1,000 stores
with a Facebook app in real time; to have the human
element and massive technology element; those were the
two buckets we had to overcome,” says Nolan.
The campaign did, indeed, increase in-store foot traffic,
and that was something that could be measured. But the
company can also target these new “fans” of the brand,
keeping a consistent pipeline of communication and engagement. “Post-prom, we target them with our casual wear
like designer denim that resonates with those teens,” Nolan
explains. “We have a relationship, we have a trusted relationship. Now they trust us, now they understand us better.”
Walmart Labs, the retail giant’s innovation arm, is also
focused on social ways of engaging with customers,
particularly with marketing campaigns. One program that
it launched earlier this year was called Get on the Shelf,
which was a way to engage with the public and let them
have a say on what the company carries in its stores,
as well as provide a platform to small entrepreneurs.
(Walmart Labs has plans to launch the program in other
countries; Canada and the U.K. are likely up next.)
Typically entrepreneurs make the trek out to Walmart
Labs’ headquarters to pitch their products. The success rate
has not been high, says Guhu Jayachandran, Director of
Engineering with Walmart Labs. So the retail giant decided
to try something different by using social media.
The first step was to use crowd-sourcing to identify new
products. Entrepreneurs were invited to make a YouTube
video (screened by Walmart to ensure it was appropriate.)
Then consumers were invited to vote for their favourite
54 MARKETNEWS
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RETAIL TIPS
David Cush, CEO, Virgin America, spoke at the Dreamforce Conference in San Francisco, CA this past September. The
airline was an early adopter of social media, being the first airline to offer Groupon promotions.
its customer interactions took place over social media.
There wasn’t a lot of money for advertising, but Bonobos
also wasn’t taking advantage of a channel to get new and
existing customers excited about the brand. After heavily
focusing on social media for a four-month period, that
number jumped to 25 per cent.
“Some customers just don’t want to e-mail us, but with
Twitter and Facebook, that really ignited them. A lot of
people hear about us for the first time by seeing a friend’s
Twitter feed,” says Rote. “We use every interaction to be a
promoter of our brand.” If not, he says they’re missing out
on an opportunity to talk to the customer.
Currently the company is in the “awkward teenager”
phase of social media. “Things are changing really quickly.
We’re growing up, but we still have an awful lot to figure
out,” says Rote. “We can afford to make mistakes, we can
afford to experiment; we’ve been able to have a lot of
fun.” Bonobos has been getting active on Instagram, a free
photo-sharing program and social network, for example,
and trying to get involved with Pinterest, (a content-sharing
service that allows members to pin images, videos and
other objects to a virtual pinboard and share that through
a social network). And the company can make adjustments on the fly and redo processes as they grow.
If you don’t get onboard with social media, he adds,
you’re missing a chance to build loyalty with your customers, and turn customer service into a profit centre. “We
were leaving people out to dry,” he admits. “We have
more work to do, but it’s an opportunity to nudge customers toward being promoters.”
Social Enterprise
for Employees
Men’s Wearhouse is a brand known for selling suits to older men, but the company made a major push into social
media this year centred around prom in an attempt to reach the lucrative younger demographic.
product via SMS and Facebook. “We were hoping for a
few hundred; we ended up with over 4,000 entries. These
guys made it go viral,” says Jayachandran.
Without putting a lot of marketing dollars behind the
program, tens of thousands of votes were cast each day
(consumers could vote once per day), for a total of about
one million votes. Ten finalists battled it out to the finish,
with three winners. The first prize included having the winner’s product carried in Walmart stores and at Walmart.com.
Jayachandran said his team built out the platform in a few
months using a cloud-based offering, so it didn’t impose on
Walmart’s operations team. They were able to scale capability and manage the campaign with a small team. But building that out wasn’t easy, he adds. “Having done it, I realize
how many ways there are to do it wrong,” he continues,
recommending that retailers talk to someone who’s done it
for advice before embarking on their own initiatives.
“Our goal was not immediately to increase sales,” says
56 MARKETNEWS
MNDEC12.indd 56
Jayachandran. Instead, it was more of a public relations
effort to boost positive brand connotations, which could be
quantified with Tweets, Facebook posts and media coverage. “One of the things we’re trying to do is use online
data to target those customers with recommendations or
suggestions, trying to integrate that between online and
offline,” he adds.
Bonobos, an online men’s clothing retailer, is turning to
social media to track the customer experience, to make
sure nothing slips through the cracks, says John Rote, Vice
President of Customer Experience.
Only about five years old, it’s a young company still
trying to figure out social media. The concept behind the
company is to be fast, easy and personable, backed up
with a customer service team of “ninjas,” a limitless return
policy, and free shipping both ways.
The company had been active on social media for
about two years, but only about two-to-three per cent of
Having a presence on the Internet for employees is no
longer about static content on an intranet. Most employees complain they still have too much e-mail, yet feel
they’re not informed. And they still tend to work in silos.
Enterprise social networking is emerging as a way to help
coworkers collaborate, regardless of hierarchies or geographies, in a way that employees are used to communicating in their personal lives.
Intranet content is often static, outdated and hard to find.
Enterprise social networking is seen as a way to make
internal messaging and communications more alive, more
on the pulse, and, according to research from IDC and
McKinsey Global Institute, it can also enhance productivity. One-third of employees’ time is spent reading and
answering e-mail, while 19 per cent is spent searching for
and gathering information, so companies can stand to innovate in this area.
For the Coca-Cola Company, social media is connected
to a much broader strategy of becoming a more open,
knowledge-driven enterprise. Because we don’t know
what we don’t know, says Rachel Cain, Global Director of
Knowledge Sharing with the Coca-Cola Company, whose
job title was created specifically to speed up the flow of
ideas across the organization. Cain spoke on a retail panel
in September at Saleforce’s Dreamforce 2012 conference
in San Francisco.
This is becoming even more of a challenge as the
company moves into new markets, says Cain. Coca-Cola
turned to Salesforce Chatter enterprise social networking
and collaboration software to create new levels of speed
and transparency in connecting people with information.
“Today, that breaks down with e-mail,” she says. So far,
about 12,000 employees are using Chatter.
The 126-year-old company was founded on a secret formula, and that “secret formula culture” still resides in some
areas of the company, says Cain. The goal is to move
toward knowledge sharing, which is “not comfortable or
intuitive for a lot of our employees. So how do we begin
to break down some of those issues around transparency
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RETAIL TIPS
Brian Spaly, CEO, The Trunk Club: “…all things social
need to be logged and transcribed and available.”
and trust and sharing what people know?”
Coca-Cola’s marketing department is already connecting to customers through media. But gaining insights from
other stakeholders in the company through social media
is a new area, says Cain. And it’s not just about connecting
employee to employee, but about how it’s affecting the
bottom line.
The company’s CMO has a vision to double revenue by
2020, so that means working differently, says Cain. “We
think it’s disruptive as a platform, which is a good thing,”
he adds. “We don’t believe we’re going to push (Chatter)
to every single employee on their desktop, so part of our
strategy is to work with (departments) to help them understand the value Chatter can bring to their functions.” For
example, it’s being used for global meetings and virtual
breakout rooms.
“One of the challenges is people feeling very cautious
and nervous about this environment. It’s not something
everyone is comfortable with: what can I post and what
can’t I post?” Cain questions. “We haven’t put any guidelines on what you can post, except restricted information.” But they’re working with the various departments to
determine operational guidelines. “It is a social platform.
The last thing you want to do is burden that.”
Virgin America is also using Chatter to enable communication between employees and has since seen a 30 per
cent reduction in e-mail. “We look at social in a couple of
ways,” explains David Cush, CEO of Virgin America, who
also participated in the retail panel at Dreamforce.
Virgin America has always been active with social media; it was the first airline, for example, to offer Groupon
promotions. It also connects with customers through
various social media campaigns. But the company is also
starting to use social media internally to improve employee communication and collaboration.
When it comes to customer service, customers have found
the best way to get a response is through social media, not a
customer relations department. In today’s world, they expect
real-time solutions. Rather than waiting for a response after
an incident has occurred, they will send out a Tweet or post
a status update about what’s happening to them at that very
moment, and expect the problem to be fixed.
“With Wi-Fi, Twitter, now we can do that,” says Cush. Vir-
gin America has plans to take customer service to a new
level with its enterprise social networking platform that will
communicate with individual customers on their seat-back
video screens. A Virgin rep will welcome the customer,
and provide assistance with connecting flights or delays,
all in real time.
The company is also rolling out Chatter internally to
promote communication and collaboration across groups,
which is part of building a corporate culture, and potentially integrating customers directly into those conversations,
says Cush. Being able to tap into an assessment of their
peers, for example, is something that has never been done
before in their business, he adds.
“Investing in communicating with your people isn’t as
important to big established guys,” says Cush. “I think they’ll
wake up and realize they have to invest more in that.”
When it comes to external and internal communications,
size doesn’t matter. Businesses of all sizes are seeing the
benefits (and challenges) of social media.
Buddy Valastro is the master baker at Carlo’s Bakery in
Hoboken, N.J., who also spoke on the Dreamforce panel.
His reality-television show, Cake Boss, has been picked up
in 187 countries and is viewed by more than one billion
people. And Valastro also has five million Facebook and
300,000 Twitter fans. “People Tweet and Facebook me all
the time … I get a million and-a-half hits a week on the
Website. How do I convert that into dollars?” he says.
While he admits he’s not a “techie guy,” he says it’s
important to be on top of things, to be professional, particularly as his cake empire expands. “We truly believe as
a company that the future is in the cloud, the future is in
social media,” he says.
Enterprise social networking allows him to connect
with customers; what they like or don’t like about the
show, for example; but it also allows him to keep an eye
on customer service. “If somebody has a complaint and
someone doesn’t answer it, there’s a paper trail. It keeps
employees on the hook.” He believes businesses that don’t
get onboard with social media are going to be left behind
in the next five years.
“Our goal was to break down the barriers of e-mail,”
says Brittany Kniep, a Technician with BCD Travel, with a
North American office based in Atlanta, GA. “Often, you’re
not sure who to send it to, and after it’s sent, that communication and collaboration comes to a halt.” There are a
number of barriers to e-mail communications, such as not
knowing who to send it to, not knowing if they received it,
not knowing when or if they’ll reply, and communicating
across time zones.
Using social media, an employee can now post a question to a community of people within the company, and if
others need that information, they have access to that too.
“That’s powerful for any kind of question that someone
might have,” says Kniep.
In March 2011, when Japan was suffering from the
aftermath of a devastating tsunami, the company had so
many updates coming its way that getting information to
employees and travelers around the world was a challenge. Taking an enterprise social media approach, the
company was able to centralize its updates so employees
could quickly access everything they needed in one place.
They could also send video messages to employees on
the ground, creating a sense of community across geographies; an approach that has been far more successful than
uploading a video to YouTube and e-mailing the link to
employees, says Kniep.
According to research firm Frost & Sullivan, more companies are currently using social media for external purposes
than staff relations. But few are integrating social media
with their marketing campaigns and traditional acquisition
and retention programs.
At this point, according to Frost & Sullivan, social media is
still seen as a form of “word-of mouth marketing,” without
formalized strategies. These informal approaches are being
adopted at significantly higher rates by small business, and
Facebook is still a social media giant for external relations.
It may be a small market, but it’s growing fast. And it’s
becoming an increasingly important market, as companies
realize their Facebook page is becoming their de facto
homepage. According to IDC, enterprise social software will
be a US$4.5 billion market in 2016, up from US$800 million
last year, with aggressive growth particularly in the Americas.
For retailers, getting social; both externally and internally; is becoming a necessary part of doing business,
whether for brand management, customer and employee
engagement, or even driving in-store traffic. And though
it requires an investment of time and resources, it also
allows retailers to do more with less, for smaller players to
act big, and for bigger players to provide more personalized, customized service.
The Trunk Club, for example, is a personalized styling
service, where personalization is key to running a successful business. “We need to find ways to have not only
every e-mail and call get logged, but every Tweet, every
Facebook post; all things social need to be logged and
transcribed and available,” explains Brian Spaly, CEO of
The Trunk Club. ”We want to have everything available at
our fingertips to know about our customers.”
The company’s biggest competitor is Nordstrom, a major
retailer that has plans to spend US$500 million on technology over the next five years. These new social media
tools, as well as cloud-based technology, are allowing
smaller companies like The Trunk Club to compete with
the likes of Nordstrom.
“We can do more with a ton less,” says Spaly. “Knowing
what (our customers) are going to want, having it delight
you, every aspect of our technology spend is going to
make our salespeople bionic, smarter and faster.” mn
While small online men’s clothing retailer Bonobos claims to still be in the “awkward teenager” phase of social media,
the company is experimenting with everything from Twitter to Pininterest, and has even gotten active on Instagram.
58 MARKETNEWS
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12/13/12 3:14 PM
MNDEC12.indd 59
12/13/12 3:14 PM
Digital Signage Content that Grabs Viewers’ Attention
COMMERCIAL INSTALLATION
Marc Saltzman
Digital signage is omnipresent these days: in shopping
malls, airports, convenience stores and even taxicabs. A
big, bright, colourful and well-placed screen will certainly
grab people’s attention. But if the content itself is not sufficiently engaging, the impact of the signage campaign will
be minimal, experts warn.
More than any single factor, content is what makes a signage project successful. But how do you define compelling
content? What factors will grab the attention of passersby
and customers?
One solution to keeping content fresh and engaging
is to focus on themes, suggests James Ingold, Content
Curator at XQ Interactive Retail, a division of Vancouverbased iQmetrix. “For a customer passing by a store in a
strip mall every day on the way to work, a single new ad
or product may not jump out and encourage more than
a passive glance,” Ingold says. “However, if that store has
a strategy or periodically releases content with new and
unified themes across the store, the habits of passersby
are more likely to be broken. Themes could be seasonal
promotions, campaigns linked to local culture, or simply
new product launches,” suggests Ingold, who works out of
XQ Interactive Retail’s office in Regina, SK.
As an example, Ingold cites a project his company
executed for Airport Wireless, an electronics boutique with
locations in several North American airports. “XQ was implemented to augment the store design so that each interactive
screen has a customized playlist that corresponds to a few
display products that indicate the in-store departmentalization,” Ingold explains. “For example, a shopper walking into
the stores can quickly visually identify where the headphones are located, and then browse the stores’ inventory
on the XQ display. In this way, the store design and method
of discovering products is consistent with the products sold
there: easy to use, high-tech and information-rich.”
The digital signage present in a number of SaskTel stores
is another example of content created by XQ Interactive Re-
tail. “They’ve seen incredible success in engaging customers
with sales staff and walking them through the many options
of mobile devices and services,” says Ingold. “But as always,
the content has to be catchy. And the signage has to be
consistent with the brand and store design. It’s important to
design something that’s new, but familiar enough so that
current customers are not alienated by the change.”
Location, Location,
Location
“It’s very important to create compelling content, but the
content also has to be tailored for the environment,” says
Karem Banna, who until recently was Director of Sales
for Audio Video Innovations (AVI) in Burlington, ON. “For
example, if someone is sitting in a waiting room or restaurant, the time spent watching the screen will be much
longer than someone walking by a store window.”
AVI’s clients create their own content and supply it to
AVI to put onto the displays. Banna says they must have a
good understanding about the location. “This is not unlike
TV ads in that there has to be a clear understanding of the
target market,” he elaborates, “and also where the digital
signage is going to be placed, and how long an individual
will be in front of that particular screen. All this is relevant
information that must be taken into consideration.”
Tailoring content for a viewer spending five seconds
walking by a sign versus someone spending 30 minutes
in a waiting room will impact content development and ad
frequency a great deal, Banna adds. “Many larger clients
that have TV ads will run the same commercials over
digital signage to keep with brand identity; this consistent
messaging to the consumer helps reinforce promotions
and targeted sales goals.”
But digital signage isn’t quite like TV. Both use screens
populated with words and media to communicate a message to consumers. As Banna points out, with DS there are
normally multiple screens being used together, with colour
and movement to capture attention. Audio is usually a
lesser component, as the displays are usually in windows
or other environments where audio is not readily audible
or can become obtrusive.
If digital signage is being used in an environment where
people are waiting, such as a doctor’s office or airport,
RSS feeds seem to be one way of capturing and holding
viewers’ attention. “RSS feeds that can display relevant
fun facts or did-you-know questions are just one way of
capturing a shopper’s attention that is unique to digital
signage,” Banna comments.
What’s very beneficial to digital signage is content that’s
easily updated, allowing the DS message or advertisements
to be modified in a relatively short period. “This is a big difference from traditional printed signage,” Banna notes.
As an example, Banna says AVI has installed more than
400 screens placed in veterinary clinics. “The content
that runs over the digital signage network changes, and
is updated often, with information conveyed about how
to keep pets healthy and happy, and what signs to look
for specific illness that could be associated with a particular breed of animal.” At the same time, commercials are
inserted for pet-related health measures and products; and
Overview
• Content is critical for any digital signage project. To figure out what works, you have to determine
the nature of the audience and location.
• Factors that influence content include duration (how long will the viewer be looking at the sign?) and
frequency (how often do viewers return to the same location?)
• New digital signage technology can determine the viewer’s age and gender, then deliver customized
content. And new systems allow for interaction with consumers’ smartphones.
60 MARKETNEWS
MNDEC12.indd 60
James Ingold, Content Curator, XQ Interactive Retail:
“The more shoppers genuinely interact with signage
that offers education, entertainment and value, the more
they will engage with the brand and the products.”
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MNDEC12.indd 61
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there’s an RSS feed at the bottom of the screen relating
fun facts about animals. Says Banna: “This network is a
very successful one.”
As to where the content comes from, Banna says it can
come from the client itself, an advertising agency, the
dealer’s own assets or another company chosen to run
content over the digital signage. “For example, a clothing
store may run its own retail content, but also may run
content of the brands they carry. And periodically, they
may run content from another industry, like content from
the automotive space.”
Attention Please
Kirk Vanderleest, Vice President of Global Accounts for
Flixio, an award-winning video production house headquartered in Oregon, agrees with Banna on the purpose
and location of the signage. “To create digital signage
content that captures a shopper’s attention, you need to
first understand the goals of the content and the location
of the display,” he says. “For example, is this an in-store
product promotional piece? Company branding? Is the
goal to reduce perceived wait time in a lobby/waiting
room environment? Are folks walking quickly past the
displays? Are they sitting for 20 minutes in a medical waiting room? Is it eye-level or higher up? Is it at waist-level
for touchscreen use? Only after you understand the goal
and the specifics of the install can you create compelling,
engaging content.”
For example, Flixio creates, manages, hosts and pushes
touchscreen content to 400 CubeSmart self-storage locations in North America and the U.K. Flixio’s other national
clients include Best Buy, The Gap, Costco, Frye’s and Roku.
Understandably, how Flixio creates and delivers content
for CubeSmart differs its work with clothing retailer The
Gap. “With The Gap, we use striking, black-and-white,
high-energy, attention-grabbing branding pieces meant
to draw attention to their monthly promotional offering,”
Vanderleest explains. “This month was Black Pants.
“Content on a digital menu board at a restaurant will
be much different than an attention-grabbing, stop-youin-your-tracks piece in a retail environment,” Vanderleest
continues. “Content is the real test of engagement with
consumers and shoppers. If the content doesn’t flow, is
too small to read, has the wrong context or is the wrong
dimension, all the capital investment in the world won’t
equate to success.”
Scot Kerek, Canadian Manager, AVAD Canada Ltd.: “The
creativity of the signage can make or break its overall
success. It starts with understanding the viewing audience.”
Oregon City-based Flixio worked with The Gap to create digital signage content. The goal for Black Pants month was
to have high-energy content related to the clothing retailer’s promotional offering.
Audience and Timing
Even those who don’t create content understand its critical importance. Scot Kerek, Canadian Manager of AVAD
Canada Ltd, says DS without compelling content is D.O.A.
“The creativity of the signage can make or break its overall
success,” Kerek says, “but it starts with understanding the
viewing audience.”
Kerek says it’s key to figure out what customers are doing in the location where the DS is being deployed, why
they want to see this content, and if the message needs
to change based on time of day. “If you’re selling coffee,
for example, you may want a ‘cup to help you start your
day’ and energize you message,” Kerek says, “while on
your commute home, you may want a cup to ‘end your
work day’ and relax. That’s an example of a message that
should change through the day, even if the basic concept
remains the same.”
In addition to digital signage hardware, AVAD offers content development and delivery services. Kerek says there’s an
opportunity for a dealer to make a 25- to 40-point margin on
AVAD Content Provider. The dealer can remain in complete
control of the content part of the sale. “There are published
rates for single still slides, more complex pages, right up to
creative options with full-motion video,” says Kerek. “The
creative side of digital signage is almost limitless.”
Mirroring Banna’s advice, Kerek says content providers
must understand how much time the consumer will be in
front of the digital signage. If you have a captive audience,
such as people such as waiting in a line at a movie-theatre
box office, then you can probably have a slightly longer
message than just trying to target passersby. ”Either way,
messaging needs to remain short and sweet,” says Kerek.
Properly conceived client goals and execution of the
goals are vital to success. ”Ask yourself what’s the key
message you’re trying to convey, such as generating
brand interest, providing information, selling something,
education or entertainment,” Kerek says. In some cases,
the DS might serve as virtual salesperson and help viewers self-select a product through a guided sequence. This
Kirk VanderLeest, Vice President of Global Accounts,
Flixio: “You can’t have several hundred million smartphones out in the public consciousness and not have a
rising demand for interactive touchscreens.”
Angelo R. DeLuca, National Accounts Executive for
Display Solutions, LG Electronics Canada, Inc.: “If content
is king, then the display is Buckingham Palace. All great
content must have the complementary digital display
solution to showcase its beauty.”
62 MARKETNEWS
MNDEC12.indd 62
12/13/12 3:14 PM
A huge digital signage project implemented by Dcibel Communication for a Jack Astor’s Bar and Grill includes a video
wall composed of 25 flat panels.
would require an upgrade to interactive digital signage,
“which from a content perspective becomes more complex
from a management side to ensure success.”
On that note, Kerek says DS needs to be updated regularly as well. ”I read somewhere that the average person
will read or view something seven times, and then not
pay any attention to it again if it remains the same. If you
buy into that study, then if the same people are viewing
digital signage every day, then that needs to be taken into
consideration as well in terms of content refresh. If there
are always new people viewing it, then content may have
a longer shelf life.”
Dealers need to determine early on if they intend to
provide the content, have the client provide the content,
or farm it out to a third party. ”Many software companies
include basic slide designs that a dealer can use as a template to start from,” Kerek says. “So if a dealer is looking
to get started in digital signage content creation, this is a
good place for them to start.”
Signage as Art
Not surprisingly, panel vendors stress the importance of
hardware. “If content is king, then the display is Buckingham Palace,” says Angelo DeLuca, National Accounts Executive for Display Solutions at LG Electronics Canada, Inc.
“All great content must have the complementary digital
display solution to showcase its beauty. My prediction is
all static signage will go digital in the next five years.”
DeLuca says there are a number of “best practices” for
creating content with digital signage. Number one is to
use digital signage as art. “Maximize the technology for its
For Airport Wireless, a chain of electronics boutiques
located in airports, XQ Interactive Retail implemented a
signage network that helps shoppers find specific products, then browse the store’s inventory.
flexibility, high-quality definition, brightness and detail that
static signs could never come close to. We all need to push
the envelope for high-definition content and installations.”
Next, DeLuca says to spend the time to create “awesome
content” and the DS solution to showcase it: “Don’t take
‘no, that is too hard,’ ‘it takes too long’ or ‘it’s too custom
to scale.’ When you hear those objections, you should
be asking ‘why not’ or ‘who should we call that can help
make this work.’”
Like AVAD’s Kerek, DeLuca says it’s key to update content
often: “Enjoy the digital world we live in. You no longer
have to worry about printing, shipping and installation. The
time and cost you saved mean you can change it quickly
and often. Static signage becomes invisible quickly.”
And don’t forget about size and scale. “Bigger isn’t
always better, but it sure is fun,” DeLuca maintains. “Video
walls can scale to huge wall sizes for the fraction of the
cost of LED billboards. The clarity and detail means you
have no limit to the colour or detail for your content. 3D
projection is also outstanding when incorporated on the
sides of buildings or unique architecture.”
New Technology
The way in which content is created, updated and pushed
to viewers is constantly evolving. For example, Kerek says
DS screens aren’t only fed content by local media players
these days. “Content can be created remotely over the
Web, transferred back and forth until a suitable product
is defined, and then delivered to the digital signage site
remotely. It can be scheduled and updated as often as
necessary, all delivered over the Internet.”
Adds Ingold of XQ Interactive: “Though not new, the
infrastructures and implementations of Cloud-based technologies are constantly improving. They will continue to
be the source of further innovation of compelling signage
because they offer precision control across vast networks.”
New innovations in push technologies have enabled
even more rapid deployment of content updates, Ingold
elaborates. This is valuable for both retailers and consumers. “And push technologies, coupled with increasingly
specific location-based advertising, allows for increased
interactivity with signage,” he observes.
Consumers can no longer be considered passive recipients of advertising information; they actively research
product specs and follow user reviews before shopping.
“Therefore, the more shoppers genuinely interact with signage that offers education, entertainment and value, the
more they will engage with the brand and the products,”
Ingold states.
Ingold cites a recent successful project. “I created a
collection of cell phone cases with a concept that in-store
customers can easily engage with: Creature Week. By
merchandizing device accessories in such a way, a retailer
can target specific demographics or even influence the
current shopping habits of these demographics. Since this
signage is integrated with RQ4, iQmetrix’s point-of-sale
system, this interactive digital merchandizing content is
fun and effective as advertising a theme for the store, but
it is also actionable and allows for direct upselling of the
highlighted products.”
Banna agrees: “The evolution of digital signage is to a
full interactive experience. But it poses familiar contentdevelopment challenges, such as how to bring someone
over to the screen and get them to play with it.” As for
what works, Banna says motion of onscreen elements, or
callouts for people to play, will become important. “Even
an actual ‘touch here’ key is placed on the screen.”
Banna says there are now touchscreens that can be
mounted right onto store windows, in essence keeping
the store “open” 24 hours a day. “If the store window is in
a high-foot-traffic area at night or after-hours, this could
be very effective. Imagine a car dealership that is closed
on Sundays. A person could walk up to the store window,
shop the existing inventory, look for options, and then
confirm whether they would like a salesperson to contact
them on Monday.”
VanderLeest says Flixio has seen a “dramatic” rise in the
use of touch and interactive applications. “More than 50
per cent of our work over the last six months has been
driven by touchscreens. You can’t have several hundred
million iPads, iPhones and other smartphones out in the
public consciousness and not have a rising demand for
interactive touchscreens. And now with the launch of Windows 8, software designed principally for touch screens,
we anticipate the public appetite will grow even larger.”
VanderLeest says Flixio is also “bullish” on video walls
and larger-format displays. “By either cobbling together
several large-format TVs from NEC, Samsung, Philips or
LG, or using innovative tile options like Prysm, Christie
MicroTile and eyevis, we’re confident that video walls will
continue to multiply in use.”
AVAD’s Kerek says the connection between the DS and
the consumer devices will become more important. So will
cameras that can assess viewers’ individual characteristics.
Before delivering content, the signage system could detect
viewers’ height, sex, age and surroundings, as they move
in front of a digital signage display; and then tailor content
accordingly. “Imagine a digital sign that encourages you
to stop and purchase a compact umbrella as you walk by
without one in the rain,” Kerek says. “You might just be
tempted to stop in for a purchase.”
Max Stevens-Guille, Chief Technical Officer of ComQi, believes smartphone integration will become more prominent
in signage projects. ComQi provides content-management
systems, media players and other digital signage components. Even when touch-enabled, digital signage systems
don’t always encourage customer interaction, Stevens-Guille
maintains. “Many screens are either too large, or too public
for consumers to interact with,” he notes.
ComQi’s new Passport product solves this issue, StevensGuille says, by providing each piece of content on each
screen with a unique URL to which consumers can connect
with their smartphones. “This turns a one-to-many medium
into a one-to-one channel through which brands can connect with consumers,” he says. “The Passport platform offers
for a wide variety of experiences: learn about a product,
receive a coupon, check into a loyalty program, vote for a
favourite team player or play an interactive game.
“This technology bridges the virtual and the physical
and provides bricks-and-mortar retailers with the tools to
compete, while enhancing the shopping experience for the
consumer,” says Stevens-Guille. mn
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Caffeine Hit:
What’s New in Coffee Makers
APPLIANCES
By Sarah Jane Silva
Canadians are crazy for coffee. It’s the most popular hot
beverage in Canada, with a total of 14 billion cups consumed annually, according to Agriculture and Agri-Food
Canada. Despite tough economic times, consumers continue to remain true to their java predilections by opting to
brew coffee at home because of its affordability compared
to coffee-shop purchases. Although consumers value athome convenience when it comes to making coffee, they
refuse to compromise on quality. Canadian consumers are
knowledgeable about coffee and they continue to demand
a wider and innovative selection of coffee machines.
Market Snapshot
A new report entitled “What’s Brewing in the Canadian
Market Place,” found that two-thirds of Canadians are
brewing their drinks at home. “People are still looking for
ways to spend less, and are really benefiting from the
convenience and control of brewing at home,” confirms
Robert Carter, Executive Director of Foodservice at The
NPD Group, Inc. What is more, consumers are looking to
recreate coffee-shop quality coffee in their homes and are
willing to invest in higher-priced coffee machines, says
Michelle Parry, Merchandise Manager of Small Appliances
at Future Shop. “Our customers are very specific about the
flavour of their coffee, tea or other hot beverages.”
According to Euromonitor International, small appliances
such as coffee machines saw positive overall growth in
2011, registering 1% in retail volume growth and 2%
retail value growth. The coffee-brewing category exhibiting
the most impressive growth in recent years are the singleserve machines, which have been able to benefit from
the combined trends towards convenience, speed and
ease-of-use. “The more sophisticated single-serve devices
get, the more appealing making the perfect cup at home
becomes,” notes Carter.
In fact, major coffee and appliance manufacturers continue to target the Canadian at-home market with brewing
machines that use single-cup servings to make one cup
of café-quality gourmet coffee in minutes. These one-cup
brewing systems are expected to have a lot of appeal as
gifts during the holiday season. Parry anticipates that more
customers will continue shopping for their favourite coffeemaker brands in-store. “But with our expanded assortment
on Futureshop.ca, we expect to see increases through Web
orders this holiday,” she adds.
Drip Machines
Robert Carter, Executive Director of Foodservice, NPD
Group, Inc.: “People are still looking for ways to spend
less, and are really benefiting from the convenience and
control of brewing at home.”
Michelle Parry, Merchandise Manager of Small Appliances, Future Shop: “With our expanded assortment
of coffee makers on Futureshop.ca, we expect to see
increases through Web orders this holiday.”
According to Parry, drip coffee makers remain popular
among Canadian consumers. These no-hassle, automatic
brewing machines continue to be the go-to choice for a
lot of homes looking for a quick caffeine fix. Plus, they are
available in sophisticated designs that add instant charm
to your kitchen’s décor.
For instance, Krups’ KT600 drip coffee machine ($170)
will perk you up with its modern fusion of high-gloss
chrome, stainless steel and wood accents. Part of Krups’
Silver Art Collection line of sleek kitchen-counter appliances, this stylish brewer comes with a 10-cup thermal carafe
that keeps coffee warm for hours. Also, an illuminated on/
off switch lets you know when the coffee maker is brewing
and automatically shuts off when coffee has brewed. Conveniently placed water-level indicator windows on either
side of the machine make it easy to know when it needs
Overview
• Canadian consumers are trying to economize
by brewing coffee at home, rather than going
to cafés. But they don’t want to compromise
on quality.
• Single-serve pod machines are the hottest
segment of the coffee market right now,
accounting for 23% of unit sales
64 MARKETNEWS
MNDEC12.indd 64
12/13/12 3:14 PM
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APPLIANCES
The KT600 drip coffee machine from Krups has a 10-cup
thermal carafe that keeps coffee warm for hours. It’s part
of Krups’ Silver Art Collection of countertop appliances.
Breville’s YouBrew coffee maker has a built-in bean
grinder. Its Brew IQ system lets users choose their own
brew strength, flavour profile and serving size.
KitchenAid’s KCM222 coffee maker automatically adjusts the brewing process when making small quantities.
to be refilled.
Breville’s BDC600XL YouBrew drip coffee maker ($350)
lets you brew any size of coffee from a single cup to a
full carafe. You can grind your own beans and tailor the
brew for a cup, travel mug or carafe (ranging from two
to 12 cups). It comes with a built-in grinder (half-pound
bean hopper and integrated burr grinder), so you can
use freshly ground beans (or pre-ground coffee from the
store). Further, Breville’s Brew IQ System allows the user to
choose a desired brew strength, flavour profile and serving
size. It has five adjustable flavour settings and seven different strength options, as well as a programmable clock
and auto-start function, large backlit LCD with brewing
progress, and water-level indicator. An optional audible
alert lets you know when the brew cycle has ended. It can
use either a paper or a gold-tone filter that comes with the
brewer. Especially comforting is that all the parts on the
YouBrew that come into contact with coffee and water is
made with BPA materials. It also comes with a cleaning
brush for the burr grinder and coffee chute.
Part of KitchenAid’s Architect Series, the KCM222 14-cup
glass carafe coffee maker ($170) features a removable water tank and a one- to four-cup brew cycle that automatically adjusts the brewing process for maximum flavour
when brewing small quantities. Other features include:
24-hour programmability, a variable brew-strength selector, pause-and-serve function that stops the brew cycle to
allow for pouring a cup of coffee before the entire pot is
complete, a self-clean cycle with clean alert and a timesince-brewed feature that shows when the last pot was
made. The machine also comes with a flat-bottom brew
basket, a replaceable charcoal water filter and permanent
gold-toned filter. As well, the non-stick coated variable
heater plate is easy to clean. Brewing time is eight minutes, and the machine automatically shuts off two hours
after brewing. The Architect Series of counter-top electrics
is highlighted by a sleek, cocoa-silver finish.
A Future Shop top-seller is the Hamilton Beach Stay and
Go 45238RC ($100). It offers the option of brewing up to
12 cups, or simply brewing one “to-go” cup. This coffee
maker offers consumers a variety of ways to make coffee,
including a small-batch mode for optimal flavour while
brewing into travel mugs. As well, the large programmable
LCD clock is easy to read and see in the dark. The Stay
and Go includes a thermal carafe and two 14-ounce stainless steel mugs. Also, it can brew directly into either one
or two travel mugs or just the thermal carafe, and it comes
with a permanent gold-tone filter.
Espresso Machines
Espresso machines are popular among consumers because
they are flexible enough to meet all their coffee needs;
and they yield the best coffee, says Fiona Haig, Product
Manager for Krups Canada. Krups’ fully automatic Espresseria EA8250J4 ($1,000) grinds whole beans for each cup
individually, and has an LCD which allows users to choose
the strength of the dose, tamp the coffee, perform the
brewing and dispense coffees with a thick golden froth. At
the heart of the system is something called Thermoblock
technology that optimizes pressure, heating and brewing
for the perfect cup of espresso. After each brew, excess water discharges automatically to the drip tray; this ensures
better temperature control and superior taste. Automatic
rinsing, cleaning and descaling programs take care of the
rest. Krups also has a V.I.P. program that provides customers with product support such as defective machine
replacements and repair services.
The Saeco Xelsis Digital ID HD8946/47 fully automatic
espresso machine by Philips ($3,100) has a sleek and stylish
bean-to-cup system. Its fingerprint-recognition technology
recalls user profiles with the touch of a unique fingerprint.
Six one-touch beverages can be personalized by six differ-
The Hamilton Beach Stay and Go coffee maker comes
with a 12-cup thermal carafe, as well as two 14-ounce
stainless steel mugs. It has a small-batch mode for
brewing directly into the mugs.
Krups’ Espresseira espresso machine grinds whole
beans for each cup individually. It features Thermoblock technology, which optimizes pressure, heating and
brewing.
The Seaco Xelsis Digital KD espresso machine from Philips
lets six users program their favourite beverages. Its fingerprint-recognition system identifies the user, and brews an
espresso, cappuccino or latte to that person’s liking.
66 MARKETNEWS
MNDEC12.indd 66
12/13/12 3:14 PM
APPLIANCES
ent users, adjusting coffee length, intensity, temperature,
crema and body for the perfect espresso, cappuccino or
latte macchiato. The integrated milk carafe automatically
froths milk into your cup, and the automatic cleaning cycle
keeps the machine clean at all times. The exterior is made
out of stainless steel and chrome. The wide TFT screen
allows colourful pictures, so you always know what the
machine is doing or what it needs. Also, all compartments
are directly accessible, so refilling beans or water, emptying
the coffee-dump box or the drip tray is a cinch.
The De’Longhi EC860 die-cast aluminum pump espresso
maker ($700) features a patented automatic cappuccino
system. The built-in milk carafe steams, froths and pours
the milk right into your cup. After use, the milk carafe can
be placed directly into the fridge. Also, a built-in steam
wand produces hot water for tea and Americanos. The professional filter holder, with integrated cream device is suitable for both ground coffee and E.S.E. pods. The 35-ounce
water reservoir is removable and has a built-in water filter
that produces clean, crisp, odourless water for ideal shots.
has an easily removable 3.5-litre water tank with an internal carbon water-filtration system, temperature control, and
LED display that shows when to fill the tank, empty used
pods and clean the machine. Used pods automatically drop
into built-in storage (up to 30 pods) for easy clean-up.
The Nespresso D50U Machine ($200) by Nestle features
fully automated capsule piercing, brewing and ejection by
simply closing its slider. Other features include: a fast heatup, modular water tank, three pre-programmed cup sizes,
preferred cup size memorization, automatic off mode after
nine minutes, and cable storage. The container fits 11 (or
13 used) capsules. As well, it consumes 40% less energy
than machines in the same class. The U Machine (D50)
arrived in Canada in November. “Finally, we’re looking
forward to launching Nespresso nationally through stores
and on Futureshop.ca this holiday,” says Parry.
Accroutements
up to 12 cups (2.8L) of coffee. Powerful blade action grinds
beans finely enough for drip coffee or coarsely enough for
French Press brewing. It also grinds spices.
Similarly, if you want to sprinkle a little cinnamon on
your cappuccino, Krups’ F204 coffee and spice grinder
($30) will do the trick. The motor grinds spices and beans
from coarse to fine in seconds, and can yield ground coffee for up to 12 cups. It has a lid-activated safety switch
and is designed for easy pouring and handling.
Krups’ XL2000 milk-frothing machine ($150) is ideal for
creating latte froth or steaming hot chocolate. It includes
three automatic recipes for each button (cappuccino, café
latte and hot milk), with temperature and frothing speed
changing according to the selected beverage. The lid
prevents overflowing combined with the multi-directional
pouring rim. Its stainless steel housing with non-stick
coated interior is easy to maintain when it comes to cleanup. As well, it has a 10-ounce capacity with soft-touch
handle and easy-to-grip glass lid for a professional pouring
experience. mn
Recent market trends indicate that Canadian consumers
are interested in recreating that individualized artisanal
coffee-drinking experience found in upscale cafés. “Since
2010, Future Shop has seen a steady demand for pod-type
coffee machines,” says Parry. According to The NPD Group,
Inc., of the 2.2 million in-home coffee machines purchased
in 2010, 23% were single-serve brewers.
Recently launched, the Tassimo T55 by Bosch ($229) is
feature-packed: the height of the removable cup-stand can
be adjusted to fit cups, mugs, bowls and travel tumblers.
As well, the fully automatic brew cycle can be interrupted
at any time and can be extended manually, making it
easy to vary drink strength. With its built-in water-filtration
system, the amount of chlorine is greatly reduced. Flow
heater technology eliminates heat-up and start-up time, so
you don’t have to wait for the water to boil. Every beverage is ready in about a minute. It has an automatic cleaning program. When the T55 is not in use, it automatically
reverts to standby mode. It has a high-gloss finish, chrome
fittings and is available in four colours.
The Verismo V.585 System ($399) by Starbucks allows
consumers to make their favourite Starbucks espresso beverages, as well as brewed coffee one cup at a time. Available in silver and piano black, this is the first single-cup
system that combines Starbucks’ Arabica coffee, milk pods
made from real milk and Starbucks coffeehouse beverage
recipes with high-pressure Swiss technology. The machine
Breville’s Smart Grinder ($240) uses dosing IQ technology: it automatically calibrates the dosage each time you
adjust the grind coarseness.
The heavy-duty conical burr
grinder has 25 customizable
grind selections, and a diecast metal and stainless steel
body. The side dial lets you
scroll through the backlit LCD
and select from its custom
grind settings from French
press to the finest espresso.
It is equipped with a onepound air-tight hopper for
bean storage and can grind
directly into a paper filter or
five-ounce air-tight container
with cup guide. The hardened stainless steel conical
burr grinder keeps the heat
to a minimum, resulting in
less heat transfer and a more
consistent grind.
KitchenAid’s Blade coffee
grinder ($70) comes with a
four-ounce stainless-steel
bowl with etched markings
for bean amount (four, eight,
10 and 12 cups). The bowl,
blade and top cover are dishwasher-safe. It also has easy
Bosch’s Tassimo T55 pod single-serve coffee maker has a built-in water filtration
fingertip control, allowing
system for improved flavour. Brew time can be extended to increase the strength
you to quickly and quietly
of the beverage.
grind enough beans to brew
De’Longhi’s EC860 espresso maker has an automatic
cappuccino feature that steams milk and pours the froth
right into your cup.
The Verismo V.585 system uses Starbucks’ Arabica
coffee and milk pods, so users can make their favourite
Starbucks beverages at home.
Single-Serve
Pod Machines
Krups’ XL200 milk-frothing machine has three automatic recipes for cappuccino, latte and hot milk.
MARKETNEWS 67
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12/13/12 3:14 PM
SHOP TALK
by Wally Hucker
Got a retail story that should be told? Contact Wally Hucker at: [email protected]
HMV CANADA INTROS SUBSCRIPTION AUDIO STREAMING,
BRINGS BACK MP3 DOWNLOADS, & POPS UP STORES
The Vault is hmv Canada’s name for its audio streaming
service, which it launched on December 4. Subscription to
the service is $4.99 per month for unlimited access from
a personal computer. Web and mobile access combined
costs $9.99 per month. Subscribers’ playlists are stored
in ‘The Cloud,’ Shop Talk learned from Nick Williams, the
company’s President and CEO.
Unlimited access to over 12 million tunes in “the deepest
catalogue of music” is the big selling point for The Vault.
Tunes can also be downloaded as MP3 files, mostly at 256
to 320Kbps bitrates, for fees in the neighbourhood of 91¢
per track or $10 per album. The MP3 tracks are free of DRM
(Digital Rights Management) strictures, meaning there
should be no issues about sharing them.
To become a subscriber to The Vault, one must be over 18
or have parental permission, and give a credit card number.
At the launch date, hmv Canada offered a two-week free
trial without commitment to credit card payment.
As Ted Kritsonis pointed out on marketnews.ca, HMV
Canada’s entry into the streaming game is a little late, with
others such as Rdio, Deezer, and Music Unlimited beating them to the punch. Also, one would have expected
Canada’s largest music retailer, until 18 months ago part
of the largest music retailing organization in the world,
to have introduced streaming before this. However, as
Williams told Shop Talk the morning of The Vault’s launch,
“two thirds of (recorded) music consumed in Canada is still
physically purchased.” With those kinds of numbers, HMV
Canada had good reason to devote most of its energies to
selling CDs.
The company’s physical presence is still impressive,
113 stores from coast to coast. Five years ago it had 125,
but it is still filling a void in the DVD retailing niche that
opened up with the demise of Blockbuster. That physical
presence will increase. After the success of a pop-up store
that opened in Mississauga’s Dixie Value Mall in June, the
company opened another pair in Ontario, two in BC, and
one in Quebec. Next year, said Williams, 20 more pop-up
stores will open. Like its other stores in malls, he added, the
pop-up shops benefited greatly from heavy mall traffic on
Black Friday.
This is HMV Canada’s second kick at the digital downloading cat. Under previous president and CEO Humphrey
Kadaner, and previous owner HMV Group, HMV Digital’s
MP3 download service was introduced with much fanfare.
The service was on-again, off-again. Store staffers were
often unaware of its availability and would even refer
customers to iTunes.
Speaking of iTunes, there is a planned feature that
would search members’ iTunes libraries for tunes not
encumbered with DRM, and permit them to stream these
tracks via The Vault service. Williams also confirmed that
one needn’t subscribe to The Vault to purchase tracks and
albums for download, although this has not been widely
publicized, and is a little clunky to access. One must go to
store.inmyvault.com, and not through The Vault via the
HMV Canada Website.
Sixty hours after The Vault was launched, Williams told
Shop Talk that digital downloading had picked up nicely.
“Obviously,” he said of the hiatus after HMV Digital was
shut down a couple of weeks ago,“the downloading service was missed.”
BIG RETAILERS TAKE QUEBEC GOVERNMENT
TO COURT OVER FRENCH SIGNAGE
A group of major retailers, all of them based in the U.S.,
have taken the Quebec provincial government to court
over language laws that promote the use of French in
stores and other businesses. Best Buy, Walmart, Guess, and
Old Navy were among the plaintiffs in the case, which
went before the Quebec Superior Court in Montreal on
November 22.
These big retailers, Shop Talk heard from Nathalie StPierre, Quebec Vice President for the Retail Council of Canada, are frustrated that the “language police” have been
reinterpreting rules that merchants have been abiding by
since 1977, when The Charter of the French Language was
adopted by the province.
Retailers contend that they are abiding by the language
laws when they have their trademark name displayed on
their buildings. They further state that without any formal
change in wording, L’Office Québécois de la Langue Française is now espousing different interpretations of what
constitutes a French sign, and disregarding the status
that trademarked names have been allowed. The name
Eaton was allowed on those department stores in the past,
mused St-Pierre, because it was the name of the founder,
Timothy Eaton. Walmart, however, is not.
The businesses are also bristling from implications that
they will be liable for fines of between $3,000 and $20,000,
with increases for repeat offences. Instead of relying on
“policy interpretations” by bureaucrats, the businesses
decided to seek a ruling in court to clarify the sign requirements in law.
Their battle is not just a cultural one.There are serious
68 MARKETNEWS
MNDEC12.indd 68
financial and contractual implications. Not only will it be
expensive to change signs like Best Buy to something like
Électroniques Best Buy (or Meilleur Achat), or Walmart to Le
Magazin Walmart, many retailers rent space, and face lease
restrictions and bylaws on square footage of signs.The more
words on the sign, the smaller each word would have to be.
The Parti Quebecois government introduced legislation on
December 5 to revamp the province’s Law 101, and promote
more “Francization.” Not only will retailers’ signs be affected,
but other requirements for a French working and shopping
environment apply to firms with more than 25 employees,
whereas they now apply to those with 50 or more.
While the Parti Quebecois is seen as the instigator of this
confrontation, the new “interpretations” began under the
previous Liberal government of Jean Charest, notes StPierre. This was widely seen to be a political move by the
Liberals to increase popular support before the last provincial election. It will be interesting to see if the Liberals will
vote to defeat this legislation proposed by the minority PQ
government, and risk embarrassing themselves.
As for the court proceedings, St-Pierre in essence says,
don’t hold your breath. Nothing has happened except filing of papers and stating of positions. It could be a couple
of years before a trial. Meanwhile, lawyers for the merchants and bureaucrats will make proposals and counterproposals outside the court.
18th STOREFRONT FOR SONXPLUS GROUP
Cyr TV Électronique of Thetford Mines in southeastern
Quebec has joined Sonxplus Group as its 18th storefront.
Owner François Cyr confirmed that his shop in this small
city of 25,000 affiliated with Sonxplus as of December 1.
Founded in 1957 by his father in nearby Disraeli, François
Cyr moved the business to the larger community of Thetford Mines six years ago. The shop had been affiliated with
Stereo Plus’ sticker banner Zone Électronique for five years, until joining
Sonxplus.
The switch to Sonxplus comes
hard on the heels of a move to
larger premises in Thetford Mines in
October. The new store, says Cyr, has
2,500 square feet devoted to retailing. Televisions and home theatre,
audio, telecommunications, and IT
products like tablets are the principal products sold. One home theatre
room also doubles as a speaker
auditioning room.
Cyr says there has been no change
in the brands or categories handled.
Toshiba, Samsung, Sharp, Sony, and
LG remain the primary video lines.
The store is a Bell Mobilité Centre, and François Cyr
the rural surroundings make it a busy satellite centre. Bell ExpressVu, Shaw, and Cogeco are offered. Audio lines include
Harman/Kardon, Pioneer and Yamaha. Tablets by Samsung
and Toshiba are moving well right now, Cyr says. In addition
to retail sales, Cyr TV does custom home installations.
Cyr bought the business from his father 18 years ago,
and worked at the store for three years prior to the sale.
He currently operates it with three
employees.“We’re not on the main
street,” Cyr says,“but it is an important street. There are 5,000 or 6,000
cars which pass us everyday.” This
visibility, in his opinion, is important
to viability.
Sonxplus Group was co-founded
by Claude Viau 2004, and he is now
President and CEO of the cooperative. It is headquartered in Granby,
a small city in the Eastern Townships. Of its 18 stores, all but one are
located in Quebec, and most are
south of the St. Lawrence River. The
sole store outside the province is in
Rockland, ON, just east of Ottawa.
Sonxplus is a member of Power
Audio Video Group.
12/13/12 3:15 PM
MNDEC12.indd 69
12/13/12 3:15 PM
SHOP TALK
BIG CANADIAN REPAIR SPECIALIST BOUGHT
BY HUGE AMERICAN LIQUIDATOR
Dominic Renda, President and Founder, NESA Electronics
NESA, arguably the largest CE service centre in Canada, has
been bought by gigantic Liquidity Services Inc. Torontobased NESA specializes in repairing consumer electronics.
Liquidity Services Inc., sells refurbished and surplus goods
to over 200 countries and territories.
The deal should be of immense benefit to both parties.
A large part of Liquidity Services is selling returned and
defective CE products, and they get more money for ones
in good operating condition.
All of NESA’s 130 employees have been kept on.“All of
them now have employment contracts with Liquidity
Services,” NESA’s President and Founder Dominic Renda
told Marketnews. John Lee, Liquidity Services’ VP & General
Manager-Canada added,“This is about growth for both
companies.”
Liquidity Services expects the acquisition of the 26-yearold repair specialty company to add US$20 to US$25 million of revenue to the company’s annual revenues, which
are in the range of US$475 million. The company’s top-line
Gross Merchandise Volume is expected to surpass US$1.1
billion in its fiscal year 2013.
The sale was made in an all-cash transaction, with considerations for additional cash payments based on NESA
revenues and earnings in the next 24 to 36 months. The
deal closed November 1.
“We are excited to join Liquidity Services and combine our
respective services,” said Renda,“to create a comprehensive
reverse logistics solution for electronic and technology
product and an even brighter future for our growth, innovation and value for our clients and employees.”
While Liquidity Services will liquidate any assets in over
500 categories from helicopters to high-speed train rails to
iPads, it has found a niche in the so-called reverse logistics,
or reverse supply chain, across the full range of general
merchandise. Especially important are consumer electronics products.
In a nutshell, Liquidity Services buys returned, dated, or
damaged electronics from retailers, and resells them in
a controlled manner to protect the brand name and the
environment.“The retailers get money for product,” Lee
explained,“which they might otherwise end up paying to
have dumped in a landfill.”
The company calculates that it has diverted two billion
pounds of otherwise scrap material from landfill. Because
product is refurbished, or carefully classified as to condition and prior usage, the brand owners are protected from
consumer backlash.“The products, like notebook computers,” Lee noted,“don’t wind up in a flea market.” There is a
good market for inoperative units, he noted, among repair
specialists who want them for parts.
Most CE products are sold via online B2B marketplaces
such as liquidity.com in small lots, say three or seven TVs of
the same type, or 100 of the same headphone model.“We
keep a wide selection available online at all times,” Lee stated,
“and have about a two-week supply in the pipeline.” Lots are
sold by auction, with a five-day time frame for CE products.
Liquidity Services buys the goods outright from retailers,
as well as manufacturers and distributors, or works on a
consignment fee model. Including small merchants and
eBay power sellers, he says, Liquidity Services currently has
over 40,000 registered business buyers in Canada. Worldwide, it has over two million buyers.
Liquidity Services also operates a Website for consumers at secondipity.com where the public can buy “eaches,”
as the individual units are called. Free shipping is generally available on orders over US$35. The company also
has “white label” Websites dedicated to individual major
manufacturers to sell CE on eBay.
Currently, all CE product is stocked at various warehouses across the United States. Canadian retailers, however,
can soon expect their orders to be shipped from NESA’s
Toronto headquarters. Liquidity Services, Inc. will be consolidating its Canadian operation there as well.
“NESA’s expertise in repair and refurbishing can add
value to Liquidity Services’ product,” said Renda. Lee
concurred wholeheartedly.“NESA is our first repair facility,”
he noted,“and acquiring NESA will increase our supply
of saleable working electronics. And we can improve the
bottom line by selling more, and best-quality, products to
consumers.”
As for the public profiles, it will be business as usual,
only more of it, for the two companies.“We will gradually
introduce Liquidity Services into the brand recognition,”
said Lee,“but initially, we will leverage NESA and see where
it leads us.”
John Lee, Vice President and General Manager-Canada,
Liquidity Services
THE BRICK SETTLES CLASS ACTION SUIT
FOR FALSE ADVERTISING FOR $2 MILLION
The Quebec Superior Court in Montreal on October 27
approved a $2 million settlement by The Brick Ltd. in a
class-action suit over false advertising related to a “Do Not
Pay For 15 Months” financing option.
The purchasing plan in fact required consumers to pay
a $35 annual membership or attachment fee. Option Consommateurs, a Montreal-based consumer advocacy group,
took issue with the fact that the fee was not disclosed
to purchasers, and in 2009, filed suit against The Brick. It
also filed suit against Leon’s, which was charging $21 for a
similar plan.
Under the terms of the settlement, The Brick will
reimburse approximately 70,000 Quebec customers who
availed themselves of the plan and paid the membership
or attachment fee before May 1, 2010. Consumers who
paid the fee before May 1, 2009, will be mailed a refund
directly by mail in January. Customers who had paid the
$35 fee on or after May 1, 2009, and by April 30, 2010, will
be mailed a form to be completed and returned to Option
Consommateurs within two months. The forms will be
available and can be completed online, in both English
and French.
Quebec consumers who paid the $35 fee more than
once will be refunded for each payment.“If they paid for
two years,” Marketnews was told by Dominique Gervais,
a lawyer with Option Consommateurs,“they will receive
twice the refund.”
Gervais notes, however, that those customers will not
receive the entire funds they had paid The Brick. While
The Brick will cover most of the legal fees in the negotiated settlement, the members of the class action will bear
some financial burden and money will be deducted from
refunds. Maxime Nasr, a partner in the law firm Belleau
70 MARKETNEWS
MNDEC12.indd 70
Lapointe, which represented Option Consommateurs, told
Marketnews that total legal costs are $511,000, of which
The Brick will pay $322,000. The $189,000 difference will be
deducted from the refund cheques.
Gervais emphasized that “the $35 was not the problem.
It was that the advertising did not disclose the fee to the
customers.” The ads were corrected circa April 2010, she
added, hence the cutoff date for claims.
Option Consommateurs filed a similar claim against
Leon’s in 2009.“It was cut and paste,” Gervais told Marketnews, noting the only difference was that Leon’s had
charged a $21 fee. That suit received class-action certification, and is still pending.
These were not the first such suits by Option Consommateurs against a Quebec furniture-appliance-appliance
chain. As reported in Marketnews a year ago, the consumer
advocacy group launched a class-action suit in Quebec
against Brault & Martineau. It was settled in 2007.
12/13/12 3:15 PM
W W W . C A N T R E X . C O M
TOGETHER, we are STRONGER
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benefit from the most extensive support services in the industry.
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(www.nationwideprimetime.com)
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or in store media – Log on to Imediatube www.imediatube.com for examples
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UÊ*Ài«>ÀiÊÞÕÀÊi«ÞiiÃÊÜÌÊÕÀÊ7iLÊ>Ãi`Ê/iVV>Ê>`Ê->iÃÊ/À>}Ê*À}À>Ã
UÊ/>iÊ>`Û>Ì>}iÊvÊÕÀÊ7iLÊ-ÌiÊiÃ}ÊÃÕÌÃ
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>ÌÀiÝÊ >ÌÜìÊÀÕ«ÊÃÜÊÞÕÊÜÊÜiÊV>Ê}ÀÜÊ9"1,ÊÕÃiÃÃ
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For more information, call us today at 1-800-461-8313 ext. 5708.
–– TOGETHER, WE ARE STRONGER.
Make sure to inquire about our Private Label
1 . 8 7 7 . C A N T R E X
MNDEC12.indd 71
Appliance, Bedding and Furniture programs!
C O N T A C T @ C A N T R E X . C O M
12/13/12 3:15 PM
SHOP TALK
TAILBASE HIRES VP FOR U.S. EXPANSION
Ritchie was also president of FurnitureChannel/FurnitureFan.com between 2002 and 2005, taking the company from
severe losses into profitability by turning it into the largest online directory in the home furnishings industry. At one point,
FurnitureFan had over 10 million consumer visits monthly.
Tailbase has many Canadian CE retailers as clients. In the
last few months, the company signed another half dozen,
including Powerline Electronics in Guelph, ON, and Star
QUESTION OF THE MONTH
Sev Ritchie
“Hiring Sev Ritchie as our Vice President of Sales-U.S. is
a very important step in our U.S. expansion,” said Bob
Lapointe, President & CEO of Tailbase Inc., in an exclusive
conversation with Marketnews.“We already have a large
footprint in the United States. Sev brings a lot of experience to us, and will be a strategic asset in not only our
growth in the United States, [but also] in Canada.”
Ritchie started with Laval-based Tailbase on December 1,
the day after he resigned as executive VP of Web4retail, an
Internet marketing firm, headquartered on Madison Ave.
in New York City, which is a division of Keniston & Company. Lapointe indicated that Ritchie’s more than 10 years
of experience working with home furnishings retailers and
manufacturers to develop effective Internet solutions is
important to a rapidly growing facet of Tailbase’s business.
“Sev does CE and appliances,” said Lapointe, referring to
the two categories in which its clients have been the most
visible in Canada,“but his expertise in furniture is especially important. Furniture is an area of growth for Tailbase in
the sheer number of retailers who are handling it. His first
job is to establish a U.S. sales force.”
Ritchie will be based in Walpole, MA. Tailbase, which currently has its headquarters in Laval, just north of Montreal,
and another office in the eastern Montreal suburb of Ville
d’Anjou, will eventually open an office in the United States,
according to Lapointe.
In all, Ritchie has about two decades of experience in Internet marketing. According to his Web4 retail.com profile,
Ritchie “earned the prestigious C.E.C. designation, Certified
E-Commerce expert. He is widely recognized as the North
American expert in e-commerce retailing, e-mail list formation, and Internet marketing for the furnishings and home
related industries.”
Prior to working for Web4retail, Ritchie was COO of The
Kaleidoscope Partnership and executive vice president for
ayr1. There, said Lapointe, Ritchie helped ayr1 grow into
“the largest provider of Web solutions in the home furnishings, appliance, electronics, gift and home accessories
industries. He also previously served as the vice president
of marketing for RS Means, a publisher and information
provider in the science, medical, legal, risk and business
sectors. Ritchie transformed his traditional publishing
house division into a provider of online construction data.”
NEWS BRIEFS
Live Wire Audio Video Unlimited in the Tecumseh
suburb of Windsor, ON, closed up shop as of December 1.
Owners Rob and Paula Eyers have retired after 37 years
in the business. AVU’s Founder, President, and CEO Jim
Orr informs us that the Eyers sold the building at 11505
Tecumseh Rd E. and held a huge close-out sale. Live Wire’s
Website thanks its customers, and refers those wishing
installation services to Chris Moulder, their installer of a
dozen years. The site says Moulder is offering remote control programming, prewiring, and final installation. Travel
is said to be high on the list of things to do for the Eyers.
“We wish Rob and Paula well,” says Orr,“and know we have
many stores that are envious of their position.”
Hudson’s Bay Company completed its IPO (Initial Public
Offering) on November 26. It had offered 21,475,000
common shares at $17 each on the TSX under the HBC
code. Gross proceeds from the IPO were $365,075,000.
The offering consisted of a treasury offering by the
Company of 14,710,000 common shares, and a secondary offering by Hudson’s Bay Company (Luxembourg)
of 6,765,000 common shares, for gross proceeds to the
Company of $250,070,000 and to the Luxembourg entity
of $115,005,000. The net proceeds to the company will
be used to repay indebtedness. The offering was made
through a syndicate of underwriters led by RBC Capital Markets, BMO Capital Markets, CIBC, and B of A Merrill Lynch.
72 MARKETNEWS
MNDEC12.indd 72
Electronics in Toronto. In the same time period, Tailbase
signed on about a dozen American retailers that deal in
CE, appliances furniture and bedding. It signed its first
American client two years ago.
Between its two Montreal-area offices, Tailbase has 30
full-time and eight part-time employees. Lapointe told
Marketnews that his company will consolidate its Canadian
operations in one new location by August 2013.
Did the recently increased duty-free allowances for cross-border trips ($200 for a 24-hour visit;
$800 for a 48-hour trip) affect your Black Friday sales?
Mark Plourde, Décocentre Lavasseur Centre Hi-Fi Sélect, Edmundston, NB:
“This year was the best Black Friday ever for me. This was our third Black Friday. The manufacturers gave
prices to compete with the U.S. We didn’t feel the effect of cross-border shopping. It’s a small town on the
other side of the river with a pulp and paper mill that is not doing well.”
Philip Meyburgh, Commercial Electronics, Vancouver, BC:
“We did a Black Friday sale. We had ads in newspapers and on radio, and had good results. It’s difficult
to tell if the new cross-border limits had any effect. The general Internet purchases from the United States are affecting
us more. Customers come in and ask the price on something. When we say ‘$1,200,’ they whip out their iPhone and say
‘Amazon has it for $1,100, can you meet that price?’
“We say,‘Thank you for being honest,’ and we usually match the price. We’ve held back however. The Pioneer low-end
receiver’s Canadian cost is 15 per cent higher. An astute U.S. retailer will sell at our cost, so we don’t stock the bottom models.
“So we’re more affected by the inequality of Canadian prices and inconsistent enforcement of limits at the border.
People are bringing in (excess values of) stuff without paying duty. They are supposed to pay seven per cent on consumer electronics not made in the North America. (NOTE: The special extra duty rate is on purchases of up to $300 more than
the $800 personal exemption allowable after 48 hours in the U.S. Applicable GST, HST or PST is payable, as they are on all goods
being brought back to Canada.)
“It’s not a level playing field; but in general, Black Friday didn’t affect us and we fought back effectively. Our first Black
Friday was last year, and it was not talked about in Vancouver. This year it’s at the top of the mind.”
Mike Godfrey, Don’s Photo, Winnipeg, MB:
“We did Black Friday this year and last year. I don’t have a lot of data on cross-border shopping, but I don’t
believe it affected us at all, based on the fact that our numbers went up this year. Our only stores near the
U.S. border are the three in Winnipeg. The ones in Saskatchewan and Alberta are too far away. Sales were
up at two and down at one in Winnipeg.”
Frank Ferrera, Marsh TV, Sarnia, ON:
“This was our second Black Friday. Sony helped us out with some really good deals on TVs and home theatres, so we were
able to capitalize on them, but sales were down. Although manufacturers are trying to help, cross-border shopping sure
didn’t help and sure isn’t making it easy to compete. I know for certain sales are way down. On Black Friday there usually
is a bit of a spike, but we didn’t get it this time.”
Andrew Tepperman, Tepperman’s, Windsor, ON:
“Two of our four locations are right across the border from the U.S. We were one of the first home furnishings retailers in our area to promote this U.S. holiday to Canadians. We began years ago just promoting electronics. Now we do all categories.
“Canadian shoppers in our region have been buying in the U.S. for decades. However, due to the proximity, they are generally making day trips that impact three areas: items that have a large price discrepancy, for example, food and clothing; easily transportable products that do not require warranty service; and categories
with a greater selection in the U.S.
“For Black Friday, we promote electronics, appliances and furniture. While we all know how low the prices can get on
40 inch TVs, many Canadians who have been shopping in the U.S. for decades know that most of these ‘barn burners’ are
limited. The items we sell are over $200, with many being over $800. With most of the consumers making day
trips, the change in the duty-free allowance has not had an impact.
“In some cases on the furniture side, where there is no duty due to NAFTA (North American Free Trade Agreement) and
the items being made in North America, only a major price variation, the availability of niche items not carried in our market, such as ultra-contemporary furniture, would be compelling enough to shop in the U.S. A consumer is still responsible
for paying the Ontario sales tax when the item is imported.
“Whether it’s Black Friday or Boxing Week, we bombard the market with advertising and back it up with substantial
quantity. Our largest store closest to the border has a large distribution centre attached to it, so consumers know that if
they wait in line at our store there is a very good chance that we will not only have the item, but they can pick it up next
door from our distribution centre.”
Manny Kang, Audio Video Unlimited, Coquitlam, BC:
“For retailers closer to the border, it does make a difference. For example, our Coquitlam (head-office corporate store) is about a half-hour from the border. We have customers coming in to our store that were
mentioning they would be going to the U.S. for Black Friday deals.
“Our Black Friday sales were good; but I feel they still could have been better. Our Partner Stores further
from a border reported great successes.
“The perception for Black Friday deals being cheaper in the U.S. is strong in our market. All major news channels and
retail Websites show lineups and deals and all are fed from U.S. channels. They are painting that picture, and the Canadian
consumer buys it.
“The big U.S. retailers do it right and really make the individual deals ‘exclusive’ for the one day. In Canada, we have
retailers starting to call it things like ‘Black Friday Weekend’ or ‘Black Friday Week.’ To me, that says that I can go to the
U.S. stores on Friday and if I don’t find deals, I can still visit my local Canadian retailer for some sort of deal. The Canadian
retailer is not creating urgency; and from what I saw, most offered pretty standard sale prices that can be seen in any
weekend promo in any given month.
“I’m sure Black Friday efforts will improve in Canada over the coming years, but the increase of personal exemptions
does not help. If you take Black Friday out of the equation and look at any given weekend, the Canadian consumer is now
spending much more money in the U.S. Canadian independent stores, in any type of business, located within half to one
hour from a border are suffering or closing.
“The U.S. businesses are buying media airtime in our market and promoting 48-hour vacations (in Seattle) and the
exemption-limit changes to our consumers. The customer might save $100 on a TV, but is spending $300 to stay two
nights and other expenses while they are there. The U.S. businesses are winning this retail battle.”
12/13/12 3:15 PM
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SHOP TALK
BLACK FRIDAY WEEK IN CANADA NEXT YEAR?
for example, slashed $1,000 off Samsung’s 60-inch
UN60EH6000 LED television, offering it at $1,199.99 for the
five days. Several other TVs featured deep discounts, and
$200 was knocked off the $800 Canon Rebel T3i digicam,
with a $70 Canon sling bag thrown in. A six-page Black
Friday-Cyber Monday flyer was put out by Sears Canada.
Inside was an insert page devoted to CE.
This was Best Buy Canada’s first Black Friday event,
although the fourth for sister banner Future Shop.“We’re
seeing and hearing that a lot of Canadians want to stay
and shop here,” said Danielle Jang, Communications Manager for Best Buy Canada,“and we want to offer something
to keep them here.” Counterpart Elliott Chun of Future
Shop indicated that Black Friday and Cyber Monday sales
have been rising each year, but both banners seem more
geared to promoting the latter sale date.
“Cyber Monday,” according to Chun,“is the secondbiggest on-sale event of the year, behind Boxing Day.”
This was the third Cyber Monday for Future Shop, and the
second for Best Buy Canada. Both started Cyber Monday
sales Sunday, November 25, at 10 a.m., and continued
them until Tuesday, the 27th at 10 p.m.
Sears too sought to cash in on the ethereal aspect of Cyber Monday. It sent its Web subscribers exclusive e-mailed
offers throughout the day. Items offered thusly were available only online.
Just as Boxing Day sales have grown into Boxing Week
sales, it looks as if the Canadian trend for the American
import Black Friday is to be less intense but longer. With
sales starting earlier and lasting longer north of the border,
perhaps next year we will see the debut of Black Friday
Week.
Whether this is good or bad for Canadian CE retailers,
depends on one’s point of view. In the opinion of Manny
Kang, AVU’s VP of Sales & Marketing, as expressed in Question of the Month above, American retailers are likely to sell
more because shoppers know that the deals are limited
to one day. Other Canadian retailers seem to like the more
leisurely extended approach to Black Friday.
More than one analyst has stated that Canadians are
far less involved in Black Friday mania than American
shoppers. Only a tenth of Canucks, as opposed to a third of
Yanks, indicated a penchant to purchase. Generally, travelling to the U.S. was directly in proportion to proximity to
the international border. Quebec was an exception. Only
15 per cent of Montrealers were inclined to head south,
contrasted to 25 per cent last year.
Regardless, retailers here found homegrown ways to
appeal to the urge to splurge. Sears Canada kicked off its
Black Friday specials on Thursday, the American Thanksgiving Day, and continued specials on consumer electronics,
major appliances, fitness machines, and snow blowers
right through Monday, November 26. The rest of the
retailer’s sale goods were discounted four days, Thursday
through Sunday.
Outside Sears’ flagship store at Yonge and Dundas
Streets in downtown Toronto, with both a Best Buy and
a Future Shop within a short block, lines were short by 9
a.m., with the few shoppers who arrived two hours before
the 6 a.m. opening expressing bemusement at the lack of
queuing competition.
Nonetheless, some good deals were to be had. Sears,
TALES FROM THE FLOOR
Once again, Shop Talk has managed to find a seasonal story for the last Marketnews print
edition for the year. This tale is a gift to all our readers from Chris Porteous, Co-Owner and
Co-Founder of La Boutique Électronique in Montreal.
“It was 18 years ago,” Porteous begins, revelling in the recollection as if it was yesterday,
“when we used to be open until 9 p.m. in December. It paid off sometimes. About 8:15 two
evenings before Christmas, a middle-aged woman and her buddy rolled in after attending a
Christmas party, and they were obviously in good spirits.
“‘I need a karaoke machine,” she said,“‘and I need it now.’ I heard an employee say that he
was sorry, but we didn’t carry any. I ran downstairs to try and make a sale.” Porteous is of the
opinion that a retailer should always make an effort to satisfy the customer, and sell something in the process.“Especially if I have to be there until nine at night,” he adds.
“‘But we do have these Sony mini systems,’” I told her.” In those days, Porteous recalls, karaoke was a very limited market,
with tunes on LaserDisc. Retailers selling karaoke LaserDisc players and discs were usually limited to urban areas with a
high number of Oriental customers.
“That’s fantastic,’ she exclaimed, after he had explained that the Sony machine had a karaoke feature which removed
the centre vocals from almost any CD or cassette track.“Can you bring out two?”
Of course, Porteous was delighted to have another fetched for the lady, who then asked,“Have you got other stuff I can
give my kids for Christmas?”
At first he was bemused as he showed her around the shop, as she blurted out,“I’ll take one of those, and two of these.”
“I started worrying when they went into the home theatre room, and wanted to know how much this system was.‘It
can’t be that much,’ she said. I told her it was $6,000.
“‘Can you wrap this?’ she asked. We said we could but I was worried she was going to try a credit card scam. Instead, she
yanked out her purse.‘Count this,’ she said, and handed me about $4,000. I’ll pay you the rest when you install it.’
“We agreed to install the next day, which was Christmas Eve. Our team arrived early the next day, and she left with her
kids, then came back in the afternoon. Our team gave a demo, and then it was time to pay.
“‘Where’s my purse?’ she shrieked.” The woman then accused the team of stealing her money, and the team denied it,
saying they had been in her house all the time, and she was welcome to search them and their truck.
“Oh my God!” she cried.“Follow me.” She jumped in her car and raced off, leaving the installation crew in their cube van
trying to catch up on icy rural roads leading to the local ski hill. The two vehicles arrived at about 3 p.m. when the majority
of skiers had abandoned the slopes for the day and had come inside to warm up.
“It was a huge room,” Porteous relates. The après-ski scene was in full swing.“There were hundreds of kids. Her purse
was there in the middle of a picnic table, where it had been since 8:30 in the morning.
“Not only did she pay our team, but she tipped them well for accusing them of theft, and wished them a Merry Christmas.
“It proves that you should never let a customer leave without having tried to satisfy their needs. Never say,‘No, we don’t
have that.’ Say,‘We have this model in stock and it’s great.’”
MINI RETAIL Q&A
Name: Chris Graham
Company: United TV Stereo,
Coboug, ON
Years in this industry: Since
1946, 66 years
Hobbies: Languages (French
studies), electronics building
How did you get into this industry?
I left school at age 14, to apprentice as a TV technician in
Belfast, UK
If you were not in this industry, what would
you be doing?
I’d be a teacher, of electronics or French, or electronics in
French.
Tell us about an interesting encounter you have had in
your retail business career.
This would be back about 1970, and a gentleman from
Czechoslovakia, George Jelinka was working for us, doing
service. (The late George Jelinka went on to own Elektra TV
in Cobourg for over 30 years. His escapades in the early days
of home video are the stuff of local legend, perhaps fit to be
featured in Marketnews anther time.)
George would always come back from our customers in
the country with fresh vegetables. One time we got a call
from a customer who said her TV would not turn off. Music
kept playing, even when it was unplugged.
George went on the service call and phoned from the
customer’s house.“She’s right,” he said. So I went over to her
house. And there was sound even though it was unplugged.
“This can’t be,” I said. It turned out to be a musical Christmas
card on top of the set. We had never seen one before.
Do you find tradeshows worthwhile?
Yes and no. I don’t attend a lot. Some people may get a lot
from them, but I don’t. Everything is on the Web. We know
about product before the show, and it’s not like the old
days picking up lines.
What would you deem the most influential product
introduction of your time?
Colour TV. It increased sales and service, and servicing
them was more interesting. All the manufacturers had
good service seminars.
Which was the best year of your life in the industry
and why?
That’s a tough one. I’ll go back to 2010. The reason? I
started taking a day off during the week.
Where do you see the industry going?
Like most TV retailers, I don’t like the way the industry is
going, due to price erosion. Today it takes just as long to sell
a $500 TV as it did to sell a $5,000 TV a few years ago. Low
prices have almost destroyed the service business. I don’t
see any future for young people in the service business.
74 MARKETNEWS
MNDEC12.indd 74
12/13/12 3:15 PM
MNDEC12.indd 75
12/13/12 4:07 PM
MARKETNEWS
BlackBerry starts fresh with BB10
Kiyomi Rutledge, PR Manager at Research in Motion (RIM)
previews a developer prototype of the “Dev Alpha B” operating on the upcoming BlackBerry 10 system. Final hardware,
however, won’t be revealed until early next year.
It will be roughly another month and-a-half before we
get to see the latest BlackBerry platform, BB10, which RIM
is quick to clarify is a completely new operating system
versus an upgrade. But a private briefing gave us a glimpse
into the new platform.
On January 30, Research in Motion (RIM) will reveal the
first two devices to operate on BlackBerry 10. Currently
known only as Dev Alpha B, the touch-only developer
prototype device we saw (there will also be a QWERTY
and touch model) was thin and sleek with a large screen
(roughly about 4.75”). But the main focus is on BB10, which
promises to revitalize the BlackBerry platform in the wake
of falling market share, increased pressure from the market
leaders, Android and iPhone, and now new competition
from Windows 8 and its slew of manufacturer partners.
It’s not so much what sets BB10 apart from the others as
it is how the new OS finally brings RIM back into the fold.
There are intuitive menu icons, with everything controlled
via swiping motions. Integrated hubs combine information from various social networking sites, calendars make
it easy to see details of each attendee at a meeting and related e-mails, and application switching lets you separate
business and personal content into two unique views. And
there’s quick and seamless operation via a new HTML5
browser that RIM says boasts markedly faster load times
than other platforms (though this would also be impacted
by the user’s wireless connection and location, among
other factors.)
The mandate, says PR Manager Kiyomi Rutledge, is to
encourage a free flow among apps and tasks. This means
you won’t find that “back” button you’ve come to love on
BlackBerries; but RIM swears you won’t need it. To move
from one app to another, just swipe upwards, side-to-side,
or even slide over ever so slightly to take a peek at e-mails
or calendar entries without having to leave the app you’re
in. Recent apps are saved to memory, with eight active
frames showing up at once; the most recent at the top, left
for quick and easy access.
There will also be significant input improvements. First,
the virtual keyboard incorporates grey frets between each
row of letters, just like you’d find on a physical QWERTY
keyboard. This extra space helps users avoid accidental letter pushes. And if the system notices that you’re often hitting “R” when you mean to hit “T”, for example, it will adjust
spacing on the sensor behind the keys to help avoid the
issue going forward. Predictions are of the word following
the one you’re typing rather than continually adjusting
that same word. For example, type “how,” and the word
“are” will pop up under the “a” key. Touch “a” and swipe up,
and the word will automatically appear next. Chances are
then, the word “you” will show up under “y,” aiding in completing that common sentence. The phone will continue
to learn your frequently used phrases and words, and
customize predictions based on this. You can also program
up to three languages so predictions will adjust based on
the words you type (e.g. type “Merci,” and “beaucoup” will
appear under the “b” for auto-completion.)
Perhaps the most “fun” feature of BB10, however, is Time
Shift within the camera application. Activate it, then snap
a photo and you’ll have the ability to “rewind” or “fast forward” approximately two seconds prior and two seconds
after the shutter actually snapped to correct for pesky
photo errors like closed eyes, moving limbs, or someone
looking away. If it’s a group photo, you can select individuals to correct, manipulating the photo until it’s perfect.
Once saved, only the original will be kept and all other
photo information deleted to make room on the device.
Unfortunately, further specifications on the camera aren’t
available at this time.
And, of course, the devices will incorporate the new
BlackBerry Messenger with BBM Voice for making free
phone calls over Wi-Fi networks.
Will this be enough for RIM to keep its loyal following of
BlackBerry fans interested, and prevent those on the fence
from choosing a competitor? According to the latest IDC
research figures, BlackBerry currently sits comfortably in
the third spot for smartphone operating systems worldwide with 4.7% market share, behind Android’s 68.3% and
iOS’ 18.8%. But Windows is creeping up, currently with
2.6%, but projected to reach 11.4% by 2016. RIM, meanwhile, is forecast to drop to 4.1% share.
Since it’s a new platform altogether, not an upgrade,
current BlackBerry owners would have to have enough
confidence in the brand to buy into BB10 rather than opt
for a competing platform once it’s time for a new device.
It may be a tall order for RIM to not just keep fans, but also
move them over to the new platform, plus acquire new
customers in the wake of such enticing competition. But
from what we’ve seen so far of the new intuitive OS, the
company may just be able to pull it off.
Further details about the handsets won’t be disclosed
until January 30, along with pricing and partner carriers.
www.marketnews.ca, Search News: bb1 beaucoup
- Christine Persaud
Using the Time Shift feature of the BB10 device’s camera, users
can correct things like closed eyes in one or more persons in a
photo. Just tap the person’s face and slide the tear drop icon
left or right to rewind or fast forward a few seconds before or
after the shutter release. Locate the proper expression, resave
the image, and voila! A perfect shot.
Ted’s Take: Microsoft Surface Pro
price will have to come down
Microsoft revealed that it would be releasing the Surface
Pro hybrid tablet PC to the U.S. market in January at a
starting price of US$899 for the 64GB model. The price was
expected to be considerably higher than the current Surface RT that came out in October, but is the device’s price
too high for it to have a chance of success?
Considering that we’re talking about a full-fledged Windows 8 PC that shouldn’t have any major limitations for
the user, maybe it’s not such a bad deal. On the other hand,
once you go to 128GB and add the touch keyboard cover,
you’re looking at a price tag in excess of US$1,200. Some
will say that a MacBook Air costs about the same and has
similar specs, which is indeed true.
The Surface Pro is also a tablet, first and foremost, and
adding the Touch Cover essentially turns it into a functioning PC. With access to Microsoft Office and an array of
other Windows apps, isn’t this the best of both worlds? You
have what appears to be an ideal combination of creation
and consumption, particularly since the Surface Pro would
ostensibly be able to run apps from both the Windows
Marketplace and those downloaded from a Web browser.
This is precisely what some of Microsoft’s partners are
attempting already. The Surface Pro is actually a tad late to
this party. The types of hybrid PCs coming to market from
HP, Dell, Lenovo and others right now are similar in their
basic concept. You have a clamshell form factor like any
other laptop, but then you pull off the screen’s half of the
unit, and you then have a tablet.
This concept has been tried before with little success.
Lenovo had first proposed such an idea a few years ago,
but to be fair, it was dragged down both by Windows 7
and a market that wasn’t quite ready for such a product.
Windows 7 wasn’t tablet-friendly, and so any tablets made
76 MARKETNEWS
MNDEC12.indd 76
to work on that operating system were already doomed to
failure. Surface Pro and others like it are different because
of the software meant for them.
In that sense, Surface Pro has a realistic chance. Where it
may go wrong is in its design. I’ve noticed it myself when
using a Surface RT. Propped up on a table or desk, the
lightweight, slim and stylish form factor looks great, and
isn’t hard to manage or type on, thanks to the impressive
Touch Cover keyboard. However, once I tried to emulate
that same experience on my lap, it didn’t work. The kickstand design on the back wasn’t meant to be resting on a
person’s legs, which is why it’s not only a little uncomfortable, but also terribly non-ergonomic.
This is where it has the potential to alienate customers.
Being a hybrid tablet PC, Surface Pro should be a pleasure
to use in almost any working scenario. There’s an implication in the product marketing that using this on the couch
only requires the tablet half. What about users who want
to lean back on a couch or recliner chair and do some
word processing? They won’t get too far unless they are
sitting at a desk or table.
The problem for Microsoft is all of this is lost to a consumer who is fixated on the price. At over US$1,200 after
taxes for a 128GB model with a Touch Cover, it would
seem that the premium being paid is precisely for that
full hybrid experience. But what if you don’t get the Touch
Cover? Then it’s US$999 for the 128GB model alone. Sure,
that’s double the storage capacity of the iPad, and in this
case, Microsoft has also packed in a full desktop OS, not a
mobile one. Except Microsoft then has to explain how an
OS that is easily 15-20GB in size makes sense for a device
with lower internal storage at such a high price point. After
that, they then would have to sell consumers on the idea
of buying a copy of Office, which won’t be included.
All that said, it’s unlikely Microsoft is aiming for every
type of consumer out there. This is definitely a niche product, and it will almost surely be undercut by the company’s
own OEM partners. It’s premature to suggest that the
Surface Pro will be dead on arrival, as some pundits online
have said, but it’s equally hard to see how it will be a really
successful product.
Of course, it could do far better than anyone expected
and forever change the concept of what a Windows tablet
PC is. If consumers buy into that, then the bigger story
won’t be how well the Surface Pro sold, but rather how it
changed their conceptual view of what a Windows computer is supposed to be.
www.marketnews.ca Search News: surface pro
—Ted Kritsonis
12/13/12 3:15 PM
MNDEC12.indd 77
12/13/12 3:15 PM
MARKETNEWS
Computing in 2012: The year that was
Steven Sinofsky
No, 2012 was not the best year ever. It’s been a year of
transitions, of false starts, and of unrealized potential. A
year of depressed economy and slowing markets. But also
a year that showed off its genuine sparks of hope all the
more brightly.
Windows pains: In the digital world, the biggest news
was obviously Windows 8. It’s not every year that sees
a major new version of the world’s dominant personal
computer operating system. And the arrival of a major
challenger in the burgeoning tablet space.
But it was an oddly low-key arrival. Eschewing the
pyrotechnics of past launches, Microsoft shoved Windows
8 unceremoniously out the door at the end of November.
Then celebrated even more oddly in early December,
by parting company with the software’s chief architect,
Steven Sinofsky.
Windows 8 itself turned out to be an odd product. To be
sure, Microsoft needed a strong new Windows strategy
to counter the mounting tide of mobile devices. But the
company may have gone a bit overboard in embracing all
strategies simultaneously.
The result was a sort of Swiss Army OS, combining a radical new touch-tablet interface, the traditional PC desktop,
pervasive cloud services, and even a connection to the
smartphone world through Windows Phone.
Appropriately enough, a month after its release, Windows 8 seemed well on its way to being both a success
and a failure. User reactions and early market reports were
as mixed and contradictory as the product itself.
Hybrid hardware: One thing that’s been all good,
though, is the sudden burst of design innovation that
Windows 8 spawned among hardware manufacturers.
An amazing variety of new Windows 8 and Windows RT
devices has sprung up, filling most every imaginable niche
between the ultra-portable tablet and the ultra-powerful
desktop PC.
Some of these products are sure to fare better than others. But with so many new options, it’s hard to believe that
consumers won’t find something worth spending their
hoarded pennies on.
Apple abridged: Apple, of course, remained the
900-pound gorilla in the jungle of portable digital gadgetry. (At least, as far as profits were concerned.) The Apple
story this year is more about what didn’t happen.
The company didn’t ship any revolutionary new items.
And, in particular, it didn’t launch its long-anticipated assault on the living room TV. There was no major revamp of
the Apple TV media player. No Apple-branded TV set. And
no third-party TV with Apple technology built-in.
Instead, major news sources reported this fall that
negotiations between Apple and TV providers had stalled.
Presumably because Apple wanted to control more than
just the UI.
This failure to capture TV could be seen as Apple’s
‘bridge too far,’ the point at which its relatively unopposed
advance finally ground to a halt. But such a view might be
premature. Apple’s TV bombshell could still be in a trajectory for 2013. In fact, CEO Tim Cook apparently made a
vague reference to this in a early December interview.
This should be a topic to watch closely next year. Both
Cook and Apple need to pull another rabbit out of the proverbial iHat, to prove that the old magic is still alive. And
the fragmented smart TV market is potentially vulnerable
to an iPhone-style blitz.
Google gizmos: Apple’s most immediate rival for the TV
turf would seem to be Google. And this year did in fact see
the arrival in Canada of at least one media player based on
Google TV. However, the Sony Internet Player with Google
TV turned out to be a solid, but less-than-dazzling product.
The potential is there. But whether Google will regroup
for a more effective foray in 2013 is anybody’s guess.
Google did do considerably better with its established
Android platform. Android 4.0 (Honeycomb) was released
late in 2011, and was well received this year.The largely
performance-oriented Android 4.1 (Jelly Bean) met with further approval this summer. Marketshare continued to grow.
Over-the-top Disney: As far as digital content, one of
the year’s biggest events was the announcement in early
December that Netflix had signed a deal with Disney.
Netflix will add many classic films to its library, and gain
the ability to present new Disney films on-demand, in
roughly the same timeframe as premium pay-TV or Blu-ray
releases. Regardless of the financial outcome for Netflix, it’s
a significant milestone for over-the-top (OTT) services.
Copyright righted: Another significant event, specific
to Canada, was the long-delayed passage this summer of
new copyright legislation. Bill C-11 gave various important
consumer rights the force of law, and capped liability for
non-commercial infringement at $5,000. That amount
should be too low to encourage the kind of scattershot
lawsuits that have plagued U.S. consumers in recent years.
On the downside,‘digital locks’ were given legal strength
as well. So while consumers now theoretically have the
Personnel Appointments
Nadel Enterprises Inc., a manufacturer and distributor of imaging product, has appointed John
(Jean) Charbonneau as its new Director of Sales.
With more than three decades of experience in the imaging industry, Charbonneau was most
recently with Canon Canada. Prior to that, he was with Minolta Canada.
In his position, Charbonneau will be responsible for overseeing the overall strategic direction,
continued growth and management of sales activities in Canada for Nadel. He will work to expand
the company’s footprint with various brands; and will also be responsible for Nadel’s OEM division
of private-label products.
He can be reached via e-mail at [email protected], by mobile at (416) 706-6334, or, as of
January 7, in the office at (416) 745-2622.
Paradigm Electronics Inc., a speaker design and manufacturing company, has appointed Paul
Grove to the position of Vice President North American Sales for the Paradigm and Anthem brands,
effective immediately.
Grove will be responsible for managing the North American Sales of Paradigm and Anthem
products. Additionally, he will continue to be the Vice President of Sales at MartinLogan, an affiliate
of Paradigm and Anthem.
Premier Mounts, a hardware mount manufacturer, has appointed Kathy Bent its new Chief Financial Officer. Previously, Bent was the company’s controller.
In this position, Bent will be responsible for planning, implementing, managing, and controlling
all financial-related activities of the company.
Bent has been with Premier Mounts for eight years, having started as a senior financial analyst.
Earlier this year, she became the controller.
Bent can be reached at (800) 368-9700; or via e-mail at [email protected].
The Ouya gaming console
right to ‘back up’ a DVD onto a home-theatre server,
they paradoxically lack the right to bypass the disc’s CSS
encryption.
Still, it’s a significant step forward, considering the madness that’s overtaken copyright and patent law globally.
Games afoot: The one part of the electronics business
that’s seen perhaps the most positive developments this
year is interactive gaming. These went largely unnoticed,
other than by hard-core fans. But the longer-term commercial consequences could be more visible.
First, there’s been the rise of fan-funding site Kickstarter.
com as a viable alternative to the big game publishers for
incubation of new content. Several famed game developers
came out of hiding to raise seven-figure Kickstarter backing
for projects the publishers weren’t willing to take on.
A number of hardware ventures did equally well. Ouya,
an Android-based games console, raised almost US$2.6
million in its first day on Kickstarter, effectively pre-selling
20,000 units without spending a dime on marketing.
Funding ultimately reached over US$8.5 million. Units will
sell for US$99, starting next year.
The Oculus Rift, a 3D virtual-reality headset, raised almost $2.5 million, 10 times its goal of $250,000. Consumerpriced units could appear late in 2013.
Steamed open: Second, there was Valve Software’s
beta-test launch of its Steam online game-retailing service
for GNU/Linux. This will create a migration path for the
company’s 50 million active customers, from Windows or
the Mac, to the open-source world.
At the start of December, Valve also launched Big Picture
mode, a new Steam user interface, designed for gamepad
controllers and large-screen TVs.
Valve announced no plans for world domination, but
it’s not hard to connect the dots. Taken together, all these
events suggest that the centre of gravity may be shifting.
Napster and MP3 were grassroots developments, but
they effectively broke the dominance of the huge music
publishers, and facilitated the entry of new hardware
makers like Creative Labs and Apple. This year just might
mark a similar turning of the tide against the big console
manufacturers and game publishers.
Pi chart: For a final ray of hope, consider the Raspberry
Pi this spring. A palm-sized, Linux-based motherboard,
manufactured in Wales, it sells for US$25-$35, sans case
or power supply. It can do just about anything, but some
assembly is required. In fact, rather a lot of assembly.
Nonetheless, the Raspberry Pi Foundation (a UK registered charity) took several hundred thousand orders
within the first few days, had reportedly sold a half-million
boards by the fall, and may be on-track to hit one million
units by year-end.
The market for fully-assembled PCs has repeatedly been
called ‘dead.’ But the market for genuinely visionary digital
products seems to be very much alive.
www.marketnews.ca, Search News: sinofsky raspberry
—Frank Lenk
ERRATUM
In the article titled Audio Video: Listening to the Computer
that appeared in the October issue Vol. 37 No. 10 of Marketnews, we indicated that “quite a number of albums” could
not be downloaded from Canadian IP addresses from
foreign sources like Linn due to licensing restrictions. In fact,
Linn advises that all titles at www.linnrecords.com can be
downloaded in Canada with the exception of titles released
under the Universal family of labels. In total, more than 500
titles are available to Canadian users. We apologize for this
oversight and any confusion it may have caused.
78 MARKETNEWS
MNDEC12.indd 78
12/13/12 3:15 PM
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businesses. And avoid surprises like unexpected pricing shifts … or polar
bears. Metaphorically speaking.
To learn more visit npd.com or call us at (866) 444-1411.
Connect with us on:
MNDEC12.indd 79
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MARKETNEWS
Samsung Canada announces Smart Galaxy Wi-Fi & 3G Camera
The Samsung Galaxy Camera with 3G + Wi-Fi and Android
OS became available in Canada on December 7. The only
current digital camera with the Android 4.1 (Jelly Bean)
operating system plus 3G connectivity, this 16MP model
is definitely a groundbreaker for the industry. Aside from
those aspects, there’s the gorgeous 4.8-inch HD touchscreen LCD and 21x zoom lens, plus many features for
photography that make the Galaxy far more desirable
than a smartphone for picture-taking.
While many digital cameras now include built-in Wi-Fi
connectivity, only one other model, the Nikon s800c, runs
an OS, the older Android 2.3 (Gingerbread). The Samsung
Galaxy adds 3G capability to dual-band Wi-Fi with Channel
Bonding for extra speed; with the fast, smooth v. 4.1 OS, it
will operate like a smartphone in all aspects, but for data
only and not voice. That consists of browsing and the
ability to add any of the 600,000 apps from Google Play or
the Samsung App Store, including image editors such as
Instagram (pre-installed) and Photoshop Express.
Camera features: The Galaxy Camera, with built-in flash,
is very versatile, offering a wide range of features, including a 21x f/2.8-5.9 optical zoom lens, with image stabilizer,
that provides a 23mm-483mm equivalent range; it retracts
when not in use, making the camera quite compact.
Meanwhile, 16MP images and Full HD 1080p videos
(30fps) are captured with a 6.16 x 4.62mm CMOS sensor; it’s
the same size as the chip in many digital cameras and substantially larger than those in most smartphones. Processing
is completed by a fast 1.4GHz Exynos Quad-Core engine.
Using Smart technology, the camera provides a series of
15 automatic modes; other options for operation include
Casual, Auto and Expert; the latter allows for manual adjustment of aperture, shutter speed, ISO and other functions.
In-camera image editing and adding of special effects
is possible with a set of 35 features in Photo Wizard mode
and with the Paper Artist app that became popular on the
GALAXY Note II.
Images and video clips can be stored in the 8GB of builtin memory or on an optional memory card inserted into
the micro SDSC/SDHC/SDXC slot.
Price and availability: In Canada, the Wi-Fi + 3G Galaxy
camera, in white only, is sold through Black’s stores (owned
by Telus) and the Samsung retail stores; the 4G version
available in some countries will not be sold here, at least
initially.
The camera is $599, or $499 when purchased with a
Galaxy smartphone. When purchased as a stand-alone
product with a data add-on (including data share plans),
the price drops to $549. In Canada, Samsung will provide
an extra battery (retail value of $50) for free.
www.marketnews.ca, Search News: smart galaxy wi-fi
—Peter K. Burian
Magellan creates GPS/back-up camera combo kit
Magellan’s new RoadMate 5255T-LM is a combination GPS
navigation system and back-up camera kit that is being
sold as a complete safety package for Canadian drivers.
Sold exclusively through Canadian Tire Corp., the
system automatically switches from navigation mode to
a rear-view monitor once the vehicle is shifted in reverse.
This allows the driver to see what’s behind him and avoid
potential obstructions, then resume turn-by-turn directions to his desired destination once the car is put into
drive. It can also assist in parking in tight spots, which will
be especially helpful during this busy holiday shopping
season.
The navigation portion consists of a 5” touchscreen, free
lifetime map updates and traffic alerts, and features like
Landmark Guidance (which advises to turn at landmarks
like gas stations or stores rather than street names), Traffic
Camera Alerts (which warns of upcoming red lights or
speed cameras), Junction View (a realistic view of the road
and highway signs), BestParking.com (aids in finding parking lots as well as their hours of operation), and OneTouch
for bookmarking and assigning favourite destinations. It
also includes CAA/AAA TourBook information that provides access to restaurants, accommodations, attractions,
events and campgrounds in Canada and the U.S., as well
as locations for member discounts.
The Magellan RoadMate 5255T-LM and Back-Up Camera
package sells for $289.99 (MSRP).
www.marketnews.ca, Search News: roadmate 5255t-lm
Archos combines gaming and Android tablet
Games are, of course, accessible in some form on every
Android-based mobile device. But Archos’ new GamePad
takes them to another level by incorporating actual physical game button controls.
Designed as a tablet, the GamePad includes 14 physical
buttons and dual analogue thumb sticks that come with
Archos’ patented mapping tool, which allows for linking
virtual controls within a game to the physical controls.
Archos says this works even with back-catalogue games
that weren’t made for physical controls. Players can use the
drag-and-drop interface to map a game quickly; and the
mapping profile for each game is saved so it will automatically load subsequent times that gamers log on to play.
Based on the newest Android Jelly Bean 4.1 platform, the
GamePad affords full access to Google Play and Google
Mobile Services.
Gaming is a big part of the mobile experience. Archos
Founder and CEO Henri Crohas says that Android device
users “spend more than nine hours a month gaming on
their devices.” However, Crohas claims that many aren’t
“completely satisfied” with the touch screen experience.
As a tablet device, the GamePad has a 7” (1,024x600) fivepoint capacitive touch screen with 3D graphics, 1.6GHz dualcore processor, 8GB storage (with a microSD slot that can
hold up to 64GB more), and a mini-HDMI port for connecting
to a TV. It measures just 10mm thin and weighs 330 grams.
The GamePad is available now in Europe, but won’t
hit the North American market until the first quarter of
next year. It’s selling price in Europe is 149.99 euros which
translates to about $193 Canadian bucks, though North
TomTom updates Android app
TomTom has released a new update to its navigation app
for the Android platform, optimizing it for use with the
latest slew of handsets, including the Samsung Galaxy S3,
HTC One X, and Google Nexus 4.
Improvements to the app include a better download
manager that can complete downloads without interrup-
80 MARKETNEWS
MNDEC12.indd 80
tion, even if the user pushes the app to the background.
Maps can now be stored on the phone’s SD card (where
available) by default, to help free up space. The Driving
View has also been updated; while a postcode entry is
more flexible. The app can also find locations from the
phone address book more reliably.
The app has now been optimized for use on phones
with screen resolution between 800x480 pixels and
1,280x800. It can also run on most Android tablets.
Additional features of the navigation app include an
offline and navigable map; free lifetime map updates; IQ
Routes for determining the fastest routes based on the
time of day; live traffic updates; speed camera alerts; destination search results; continued turn-by-turn guidance
while on the phone; seamless integration with Android
smartphone contacts; advanced lane guidance; and spoken street names.
The TomTom Navigation for Android v1.1 is available
for download now from Google Play. An introductory
offer has been extended for the holiday season, offering
the app at a discounted price of $49.99. Those who have
already purchased the app can enjoy the update for free.
www.marketnews.ca, Search News: tomtom android
American pricing has not yet been confirmed.
www.marketnews.ca, Search News: archos gamepad
Nintendo announces
Wii Mini; available
exclusively in Canada
On December 7, Nintendo Co., Ltd. released the Wii Mini
gaming console exclusively in Canada for SRP $99.99.
The device is smaller
than its predecessor. It
comes in matte black
with a red border, while
red Wii Remote Plus
and Nunchuk controllers come in the box,
as do the sensor bar,
power adapter and
standard composite
cable.
Accessories like the Wii Balance Board, Wheel and Zapper are compatible with the console.
The Wii Mini works with the more than 1,400 disc-based
Wii games, but does not have Internet capabilities, nor can
it play Nintendo GameCube games.
www.marketnews.ca, Search News: wii mini
12/13/12 3:15 PM
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another upper section, to make the shoe match what was
being worn. I thought it was a great idea, and so I bought
limited quantities for stores. The bottom line is they didn’t
sell well, and were discontinued six months later.
Tell us about an interesting encounter you have had
in your buying career.
Buying gave me the opportunity to attend many tradeshows and events over the years and I have had the
opportunity to meet many celebrities and athletes such as
Michael Jordan, Wayne Gretzky, Wendel Clark, Joe Thiesmann, Alicia Keys and many more.
BUYER’S BIO
Pat Reilly
Stats:
Name: Pat Reilly
Company: Staples Canada
Position: Vice President, Divisional Merchandising
Years in this industry: 35
Hobbies: Playing and coaching baseball
Q&A:
How did you get into this industry?
Right out of school I applied to Canadian Tire and accepted a job in its accounting department. I worked there
for about two years and then saw an opening in merchandising as a buying assistant. I applied for it and got the position. I did that for four years, and then was promoted to
buyer in sporting goods. After a few years, I was promoted
to senior buyer.
If you had a lot of experience in another industry,
please tell us some details about it and why you left it.
For my first 13 years, my experience was in the sporting goods business with Canadian Tire. I always had the
desire to try something on my own, so I left to start a
sales and import company, selling to big box retailers in
the hardware and sporting goods industries. Most retailers were trying to cut out the middleman to reduce costs
and deal direct. Unfortunately, I was the middleman with
some companies, so I decided to move on and landed
a job as the national accounts manager with a plastics
manufacturer in Toronto. It was a good fit for awhile, but
I wanted to get back into buying. I landed a job with Consumers Gas Appliance Centre as a senior buyer for its 20+
stores. I was responsible for buying categories such as gas
fireplaces, fridges, stoves, air purifiers, and microwaves.
After only one year, a good friend of mine started working
with Staples. He told me that it was a great company that
was still relatively new, and it had an opening for a senior
buyer. I applied and got the position. That was in 1997,
and the rest is history.
Do you find tradeshows worthwhile? If so, what is
your favourite one?
Tradeshows tend to give you a sense of where the market
is going: what is popular, what colours are in style, etc.
They are definitely important from that standpoint, plus it
gives you the opportunity to see some of the smaller vendors you normally wouldn’t see. [My favourite tradeshow
is] CES in Las Vegas. It is a huge show that allows you to
see the latest tech products.
What would you deem the most influential product
introduction of your time?
It would be all the Apple products that have launched
since day one. The amount of worldwide demand for
Apple products is nothing that I’ve seen since being
in retail.
What is your favourite aspect of your job?
It is kind of like running your own business. You are
responsible for the profit and loss in your area, and can
make changes to your business as you see fit: increase
the footage in the stores; decrease the advertising; go
aggressive with pricing to drive share, etc. Also working
with and leading a great bunch of people every day, who
you spend more time with than your own family, makes
it fun.
What factor or factors really drive your business?
Please give an instance that wouldn’t have happened had it not been for one of these factors.
First, reputation. Staples has a very good reputation in the
market across Canada, one that people can trust. They
know we have knowledgeable staff that stands behind
our products. Competitive pricing and assortment is also
a driving factor. If Staples didn’t have all of the above, its
marketshare in the tech categories wouldn’t be as strong
as it is today.
As for your job, what are your strengths
and weaknesses?
Strengths: I’m approachable, analytical, open to new ideas,
a good listener; I like to have fun on the job, and win.
Weaknesses: I can’t tell you them, or you will use them to
your advantage.
Where and from whom did you learn your job?
Have you passed on any skills to newcomers?
I had some good bosses along the way that have taught
me a lot. Hopefully, I’ve passed on some skills during my
tenure to the newcomers. One of which is to not be afraid
to fail. Learn from it and move on.
What advice to newcomers to your business do you
think is essential to pass on?
Try new things and learn from them. If they worked, why
did they? If they didn’t work, why not?
Do you have a favourite memory of your time in
the business?
There have been many over the years. It is hard to isolate
just one. Taking a chance on something and watching the
sales and category grow in marketshare is always very
satisfying.
Who are some of these people who have influenced
you most in your career?
Alex Doughty, my V.P. from Canadian Tire and Pete Gibel,
my current boss and V.P., are the ones that stand out for
me. Gary Quinnell would be another person. He was a
partner in my business and is currently a peer at Staples.
He’s also a great friend that has taught me a lot over the
past 30+ years.
Which was the best year of your life in the industry
and why?
Probably back some 10 years or so, when the sales were
high in the double digits every week.
What unusual special skill or knowledge do you
bring to the job which helps you and your company?
Where and how did you acquire it?
Having had the opportunity to work on both sides of the
fence, selling and buying, has no doubt helped me in my
career at Staples. Understanding a bit about what makes
the manufacturers tick helps with negotiations sometimes.
Also, having been a small business owner, I have a good
understanding of what they need and expect, which helps
in my current position. mn
If you were not in this industry, what would you
be doing?
I’ve always had a passion for the music industry. Searching
the world for the next big artist would be a great job to have.
What is the most unusual product or service a rep
or company has pitched to you? Did you buy it? Any
regrets about buying or not?
In my days at Canadian Tire, I was responsible for athletic
footwear and clothing lines. A company out of New York
developed a line of running shoes with zippered tops.
They were pretty cool at the time and allowed consumers
to zip off the upper section of the shoe to replace it with
Pat and his Staples team strategize over which products to feature for an upcoming flyer.
82 MARKETNEWS
MNDEC12.indd 82
12/13/12 3:15 PM
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