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The Future of the Car Audio Aftermarket

Will there be a place for CDs in the head units of the future?

November 11, 2010 By Ed Sachs
11
I was surprised after reading a recent article, "RIP CD-Based Car Radios by 2016", written by Amy Gilroy in CE Outlook, about the demise of CD players in new cars after 2015 or 2016. It was not the premise of the article itself that surprised me, but rather a quote from Andy Parsons of my former company Pioneer Electronics.

Parsons noted that there are more than 200 billion CDs currently in use and that number doesn't include DVDs. "We think that the huge installed base of disc-based packaged media will need aftermarket support for the foreseeable future, probably well beyond 2015. Successful [older] formats can persist for a surprisingly long time — you can still find a couple of in-dash cassette players in our lineup, for example," he explained in the piece.

I know Andy very well and he is a fair fellow, well-spoken, most likable but so totally wrong on this issue. Andy knows very little of the 12-volt business and only recently was put in charge as spokesperson of all things Pioneer in the U.S. His background is not in car audio.

There may indeed be a big number of CDs in consumers' hands today, as he states, but there was a lot of vinyl out there at one time as well. There may also be a high number of closets in this country with bell-bottom trousers hanging inside of them. How many VHS camcorders are in people's homes today? The issue here is that Andy's comment speaks to a deeper revelation as to why his company continues fighting (in an uncharacteristic manner, I might add) to recapture lost market share.

By virtue of his statement, one can only surmise that no one at Pioneer is looking outside the "heavy metal" manufacturing production model of a traditional car stereo manufacturer. Someone needs to think about what's going to eventually replace the traditional hardware that currently occupies the hole in a vehicle's dash.

If some attention isn't directed that way soon, 2015 will have come and gone and along with it all those manufacturers that tried to milk the last drop from the teat of their old cash cow. For that matter the entire cow will have passed on.

Let's look at some specifics. Currently some 40 percent of all cell phone sales in the U.S. are smartphones. Trust me on this one or Google it yourself if you don't believe me.
 

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11

COMMENTS

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Most Recent Comments:
steve gardne - Posted on November 17, 2010
I agree with the last two comments. Yes all technology is destined to be out done @ some point in the future. However I also think the time line for New England is much further out. The west coast is normally the first to embrace new technology and trends and like the jet stream they eventually reach us in a watered down effect. I have always said the economy is similar, the west coast, notably Ca. always seems to be on a roller coaster ride, by the time it reaches N.E. it's more like a speed bump. We never get to experience those great heights but also never crash quite as hard either. The tech side seems to follow the same paths, we are by no way backward but are not always so quick to change. Of course the other situation presently is also a slow to revive economy, so I concur, we will be seeing the old trends a little dragged out I'm sure. Pioneer like all our Mfgs. have given in to buyer mentality, the latest being the Wal mart mentality ---"What's the cheapest thing you got?"
hopefully we will respond;" the one that doesn't work very well--would you like one of those or something possibly just inexpensive instead" . We defiantly have to start talking quality again, and stop this futile erosion of pricing to ground Zero. Any one who thinks they can sell on margin have already gone out of bossiness, even if they haven't realized it yet. You have to fight for every dollar and selling yourself has never been as important as is today.Good luck to all Mfg's- Dist- Reps-and front line dealers. We will need it to survive the onslaught of the World Wide Slim Ball Businesses.
Michael Buckner - Posted on November 15, 2010
Ed,

You were so right with the first sentence of your speech at Pioneer's NSM in 2006, and you're right now. After leaving Pioneer, I was glad to move over into the home automation sector of CE where profit can still be had. There's one ingredient, however, that will change all of 12 Volt -- Google's self driving vehicle. Aftermarket electronics dealers will need to be poised for this one by 2015 for sure, as it will be a game changer.
Sal Leon - Posted on November 14, 2010
Ed, your takes on the 12 Volt industry are always very well received , For the most part, they are forward thinking and right on the mark.

Please stay away from politics in your articles. Remember, friends don't let friends listen to Fox News.

Keep writing those thought provoking articles and stay away from tea bag rallies.
Gary Garner - Posted on November 12, 2010
You and I go way back together, Ed. As I am sure you will also remember, I have been hearing the "doom and gloom" story about car audio since the days of the old "Dashboard Democracy" campaign in the 80's. We were told then that unless the consumer's "right to choose" was protected, car audio as we know it would be gone in a matter of a few years. That campaign actually sued Chrysler and won - albeit for only a couple of model years.
I strongly agree with J. R. Stocks that staying ahead of OEM has not only created demand, but it has always kept the independent car audio retailer out in front. Car audio's ultimate demise will not be attributed to any one particular aspect of the injdustry, but to a combination of events fueled by simple greed!
Greed is the basic factor that has caused our current economic debacle, and the aftermarket manufacturer's continued quest for market share, regardless of how they get there and whom they hurt in the process, will cause the downfall of car audio as we know it.
Instead of concentrating on market share and "who can beat whom to first base", why not try a really novel idea; develop consumer friendly, usable products now that we can sell and install at a decent profit margin. We can no longer make it selling $69 CD players that cost us $50!
Will the last independent car audio retailer please turn off the empty display board when he leaves?

Respectfully,

Gary H. Garner, CEO (retired)
Garner's Stereo Center, Inc.
Fletcher, NC
Dr. Skeptical - Posted on November 12, 2010
Andy Parsons FTW.

eom
Mark Giovannetti - Posted on November 12, 2010
I thoroughly enjoyed Ed Sach's insights regarding the future of the car audio aftermarket.
Steve Bishop - Posted on November 12, 2010
Hey Andy Parsons
Ed is right and you are ( along with Pioneer) as usual , dead wrong.

btw Andrew - loose the condescending attitude - it has never served you well .
J. R. Stocks - Posted on November 11, 2010
First let me say regardless of what position Ed takes on a topic, his column always gets you thinking. Thanks Ed I look forward to each and every Sachs report.

As for this topic, I have no crystal ball so I won't even begin to tell you what the future holds for the shiny discs or the demand in 2015 for devices compatible with them. I believe that the future of mobile electronics in the aftermarket depends on whether the products we offer are relevant to the consumer and create consumer demand. Who could argue with that right…..well think about this.

For years the aftermarket was ahead of OEM. That created demand. Today we have OEM products like the Ford/Microsoft Sync system. Who is ahead of whom now? In this case I doubt Ford is trying to stay ahead of the aftermarket. They are trying to stay ahead of the other automobile manufacturers, their competitors, and they are doing so through innovation. Is there a lesson to be learned here………

I believe strongly in the manufacturer/retailer partnership and those who we are engaged with are our “vendor partners” so please do not misunderstand. I am not pointing the finger at the mobile electronics manufacturers as a whole or any individual manufacturer(s). As a merchant if the products we have to offer the consumer are not relevant then we as retailers are not relevant. The future of the 12 volt industry depends on the products we make available to the consumer and those products must be innovative and one step ahead of the OEM. With many of the aftermarket manufacturers also being manufacturers of these OEM products, one would think they could keep up.

Is consumer awareness the issue or is offering something relevant to the consumer the bigger issue? Of course there is room for improvement on both fronts. In the meantime could we at least stop the race to zero in a fight for market share between manufacturers? Is reducing the price of an entry level single CD player going to make more consumers go out and buy more single CD players or is it all about market share? How does this help our industry? Keep that extra $10 a unit and put it to R & D and get innovative.

If any of this makes sense then someone please stop the race to zero with in dash navigation as well. If that race is all about market share, then for the good of our industry please build a better product, be more innovative, and differentiate yourself if you want to gain market share. Perhaps through innovation we will become more relevant to the consumer and there will be a bigger market to share.

Respectfully,
J. R. Stocks
General Manager
Freeman’s Car Stereo Inc
Andy Parsons - Posted on November 11, 2010
It looks like my friend Ed was not made aware of the entire quote I provided for Amy Gilroy’s original story. The first part was: "We agree that USB-connected devices will continue to grow in importance, but there is a massive population of Compact Discs and DVD's out there -- more than 200 billion CDs alone...." What I believed to be a completely non-controversial – and reassuring – statement about legacy format support appears to have been misinterpreted by Ed as somehow resisting or denying the growing importance of smartphones as content sources. Nothing could be further from the truth. Pioneer continues to embrace the future with open arms, most recently being among the very first to support iPhone-supplied Pandora Internet radio in our newer Navi units that shipped this year.

While Ed is quite correct that the majority of my background is not directly in the 12 volt business, I think the original discussion was simply about legacy format support, which I do happen to have some experience with. I joined Pioneer in 1982, with most of my career so far spent in product development and planning with 120 volt products, and I can say with conviction that Pioneer has always done our best to support the formats we’ve promoted to consumers in the past, including CDs, cassettes, vinyl and even Ed’s shelves of LaserDiscs, as long as there has been market demand. This should be comforting to both him and all the rest of us who have invested many thousands of dollars in content in these formats and are not quite ready to throw it all away just because something new has come along.

Fortunately, and to the original point I was trying to make, this is not an either/or choice – we can and will support both the old _and_ the new in our products. I’m certain that Ed, who also spent many years of his career at Pioneer, will readily acknowledge that promoting innovative new formats is a how Pioneer has remained a leading company in both the 12 volt and 120 volt industries for many years.

Finally, as for who Ed should will his 2014 CD/smartphone/iPod/etc. car navigation head unit to, all I can say is that I hope to see him continue to use and enjoy it for many years to come, perhaps even beyond the time when navigation assistance will no longer be a luxury for him.

-- Andy Parsons
SVP, Advanced Product Development & Corporate Communications
Pioneer Electronics (USA) Inc.
Barry Vogel - Posted on November 11, 2010
Why do you MAKE me do these things?
In a nutshell, and in my humble opinion; You are wrong. I have no doubt that the progression you speak of will come to pass. But not by 2015. I can give a litany of real world examples of why I know this to be true, but suffice it to say that in the trenches, at street level the consumer still wants CD. It will decline, and the decline will accelerate exponentially most likely in the next 1 to 2 years. That said; You are wrong. There will be CD business to be had in appreciable numbers in the year 2015.
The problem is that without that street level input, you are a victim of the techno-hype. You read, you see, you know what is coming. What you are not seeing that in the 12 volt world the message is not nearly so clear to the consumer. The proof is in the consumers who are iPod users yet insist on a CD player in their replacement decks. Why? Because! Mechless decks draw attention, but sales are still light. You are on the right track sir. Just the wrong time line.
Tony Sorrtelli - Posted on November 11, 2010
I do think you are on the right track, but your timeline is off. What the stats you refer to are for large markets. The vast majority of rural communities will continue cd, fm, and yes even AM! And to beleive it will change completly in the next 5 years is folley. There does need to be a change in what is considered an offering from car auio shops & companies like Pioneer. Where you will replace internal parts of factory equipment, insted of trying to swap it out. That is the future of car audio, reguardless if it is in a mother ship or flux capacitor powered delorian.
Click here to view archived comments...
Archived Comments:
steve gardne - Posted on November 17, 2010
I agree with the last two comments. Yes all technology is destined to be out done @ some point in the future. However I also think the time line for New England is much further out. The west coast is normally the first to embrace new technology and trends and like the jet stream they eventually reach us in a watered down effect. I have always said the economy is similar, the west coast, notably Ca. always seems to be on a roller coaster ride, by the time it reaches N.E. it's more like a speed bump. We never get to experience those great heights but also never crash quite as hard either. The tech side seems to follow the same paths, we are by no way backward but are not always so quick to change. Of course the other situation presently is also a slow to revive economy, so I concur, we will be seeing the old trends a little dragged out I'm sure. Pioneer like all our Mfgs. have given in to buyer mentality, the latest being the Wal mart mentality ---"What's the cheapest thing you got?"
hopefully we will respond;" the one that doesn't work very well--would you like one of those or something possibly just inexpensive instead" . We defiantly have to start talking quality again, and stop this futile erosion of pricing to ground Zero. Any one who thinks they can sell on margin have already gone out of bossiness, even if they haven't realized it yet. You have to fight for every dollar and selling yourself has never been as important as is today.Good luck to all Mfg's- Dist- Reps-and front line dealers. We will need it to survive the onslaught of the World Wide Slim Ball Businesses.
Michael Buckner - Posted on November 15, 2010
Ed,

You were so right with the first sentence of your speech at Pioneer's NSM in 2006, and you're right now. After leaving Pioneer, I was glad to move over into the home automation sector of CE where profit can still be had. There's one ingredient, however, that will change all of 12 Volt -- Google's self driving vehicle. Aftermarket electronics dealers will need to be poised for this one by 2015 for sure, as it will be a game changer.
Sal Leon - Posted on November 14, 2010
Ed, your takes on the 12 Volt industry are always very well received , For the most part, they are forward thinking and right on the mark.

Please stay away from politics in your articles. Remember, friends don't let friends listen to Fox News.

Keep writing those thought provoking articles and stay away from tea bag rallies.
Gary Garner - Posted on November 12, 2010
You and I go way back together, Ed. As I am sure you will also remember, I have been hearing the "doom and gloom" story about car audio since the days of the old "Dashboard Democracy" campaign in the 80's. We were told then that unless the consumer's "right to choose" was protected, car audio as we know it would be gone in a matter of a few years. That campaign actually sued Chrysler and won - albeit for only a couple of model years.
I strongly agree with J. R. Stocks that staying ahead of OEM has not only created demand, but it has always kept the independent car audio retailer out in front. Car audio's ultimate demise will not be attributed to any one particular aspect of the injdustry, but to a combination of events fueled by simple greed!
Greed is the basic factor that has caused our current economic debacle, and the aftermarket manufacturer's continued quest for market share, regardless of how they get there and whom they hurt in the process, will cause the downfall of car audio as we know it.
Instead of concentrating on market share and "who can beat whom to first base", why not try a really novel idea; develop consumer friendly, usable products now that we can sell and install at a decent profit margin. We can no longer make it selling $69 CD players that cost us $50!
Will the last independent car audio retailer please turn off the empty display board when he leaves?

Respectfully,

Gary H. Garner, CEO (retired)
Garner's Stereo Center, Inc.
Fletcher, NC
Dr. Skeptical - Posted on November 12, 2010
Andy Parsons FTW.

eom
Mark Giovannetti - Posted on November 12, 2010
I thoroughly enjoyed Ed Sach's insights regarding the future of the car audio aftermarket.
Steve Bishop - Posted on November 12, 2010
Hey Andy Parsons
Ed is right and you are ( along with Pioneer) as usual , dead wrong.

btw Andrew - loose the condescending attitude - it has never served you well .
J. R. Stocks - Posted on November 11, 2010
First let me say regardless of what position Ed takes on a topic, his column always gets you thinking. Thanks Ed I look forward to each and every Sachs report.

As for this topic, I have no crystal ball so I won't even begin to tell you what the future holds for the shiny discs or the demand in 2015 for devices compatible with them. I believe that the future of mobile electronics in the aftermarket depends on whether the products we offer are relevant to the consumer and create consumer demand. Who could argue with that right…..well think about this.

For years the aftermarket was ahead of OEM. That created demand. Today we have OEM products like the Ford/Microsoft Sync system. Who is ahead of whom now? In this case I doubt Ford is trying to stay ahead of the aftermarket. They are trying to stay ahead of the other automobile manufacturers, their competitors, and they are doing so through innovation. Is there a lesson to be learned here………

I believe strongly in the manufacturer/retailer partnership and those who we are engaged with are our “vendor partners” so please do not misunderstand. I am not pointing the finger at the mobile electronics manufacturers as a whole or any individual manufacturer(s). As a merchant if the products we have to offer the consumer are not relevant then we as retailers are not relevant. The future of the 12 volt industry depends on the products we make available to the consumer and those products must be innovative and one step ahead of the OEM. With many of the aftermarket manufacturers also being manufacturers of these OEM products, one would think they could keep up.

Is consumer awareness the issue or is offering something relevant to the consumer the bigger issue? Of course there is room for improvement on both fronts. In the meantime could we at least stop the race to zero in a fight for market share between manufacturers? Is reducing the price of an entry level single CD player going to make more consumers go out and buy more single CD players or is it all about market share? How does this help our industry? Keep that extra $10 a unit and put it to R & D and get innovative.

If any of this makes sense then someone please stop the race to zero with in dash navigation as well. If that race is all about market share, then for the good of our industry please build a better product, be more innovative, and differentiate yourself if you want to gain market share. Perhaps through innovation we will become more relevant to the consumer and there will be a bigger market to share.

Respectfully,
J. R. Stocks
General Manager
Freeman’s Car Stereo Inc
Andy Parsons - Posted on November 11, 2010
It looks like my friend Ed was not made aware of the entire quote I provided for Amy Gilroy’s original story. The first part was: "We agree that USB-connected devices will continue to grow in importance, but there is a massive population of Compact Discs and DVD's out there -- more than 200 billion CDs alone...." What I believed to be a completely non-controversial – and reassuring – statement about legacy format support appears to have been misinterpreted by Ed as somehow resisting or denying the growing importance of smartphones as content sources. Nothing could be further from the truth. Pioneer continues to embrace the future with open arms, most recently being among the very first to support iPhone-supplied Pandora Internet radio in our newer Navi units that shipped this year.

While Ed is quite correct that the majority of my background is not directly in the 12 volt business, I think the original discussion was simply about legacy format support, which I do happen to have some experience with. I joined Pioneer in 1982, with most of my career so far spent in product development and planning with 120 volt products, and I can say with conviction that Pioneer has always done our best to support the formats we’ve promoted to consumers in the past, including CDs, cassettes, vinyl and even Ed’s shelves of LaserDiscs, as long as there has been market demand. This should be comforting to both him and all the rest of us who have invested many thousands of dollars in content in these formats and are not quite ready to throw it all away just because something new has come along.

Fortunately, and to the original point I was trying to make, this is not an either/or choice – we can and will support both the old _and_ the new in our products. I’m certain that Ed, who also spent many years of his career at Pioneer, will readily acknowledge that promoting innovative new formats is a how Pioneer has remained a leading company in both the 12 volt and 120 volt industries for many years.

Finally, as for who Ed should will his 2014 CD/smartphone/iPod/etc. car navigation head unit to, all I can say is that I hope to see him continue to use and enjoy it for many years to come, perhaps even beyond the time when navigation assistance will no longer be a luxury for him.

-- Andy Parsons
SVP, Advanced Product Development & Corporate Communications
Pioneer Electronics (USA) Inc.
Barry Vogel - Posted on November 11, 2010
Why do you MAKE me do these things?
In a nutshell, and in my humble opinion; You are wrong. I have no doubt that the progression you speak of will come to pass. But not by 2015. I can give a litany of real world examples of why I know this to be true, but suffice it to say that in the trenches, at street level the consumer still wants CD. It will decline, and the decline will accelerate exponentially most likely in the next 1 to 2 years. That said; You are wrong. There will be CD business to be had in appreciable numbers in the year 2015.
The problem is that without that street level input, you are a victim of the techno-hype. You read, you see, you know what is coming. What you are not seeing that in the 12 volt world the message is not nearly so clear to the consumer. The proof is in the consumers who are iPod users yet insist on a CD player in their replacement decks. Why? Because! Mechless decks draw attention, but sales are still light. You are on the right track sir. Just the wrong time line.
Tony Sorrtelli - Posted on November 11, 2010
I do think you are on the right track, but your timeline is off. What the stats you refer to are for large markets. The vast majority of rural communities will continue cd, fm, and yes even AM! And to beleive it will change completly in the next 5 years is folley. There does need to be a change in what is considered an offering from car auio shops & companies like Pioneer. Where you will replace internal parts of factory equipment, insted of trying to swap it out. That is the future of car audio, reguardless if it is in a mother ship or flux capacitor powered delorian.