Interview: Harry Wang on the Holiday Shopping Season
Harry Wang, of Parks Associates, is the leading analyst covering the digital picture frame space. We spoke with him in February 2007 to get a basline of what was happening, and what could be expected to happen, this year in the digital frame space. Most companies in and observers of the space expect that the holidays season 2007 will be a major break-out event for the digital frame space. We decided to check in with Harry again to see what he is expecting.
What has been the most important development in the digital frame market in 2007?
I am sure there will be new and exciting developments in the next four months right into Christmas, but so far the most important development this year has been the entry of major discount stores into the (digital) photo frame retail business, expanding the reach of the products to thousands more retail points of sale.
It seems like ease of use is one of the biggest hurdles standing between frames and broader adoption right now. How well are manufacturers doing in making their frames easy to use?
I have seen good and bad user interfaces and menu sequences, but the challenge of a wireless frame always starts with the connectivity with the home network for inexperienced users.
Are frame prices where they need to be yet to spur broad adoption?
The lower the better for adoption for sure, and there is always downward pressure on the manufacturers for a lower price, but they also have to consider their own margin as well as the margin for retailers. Given the recent tight supply situation of the key cost-driving component-the LCD panels, some vendors’ hands are tied to certain extent that they cannot afford to cut price aggressively this year, unless they are willing to sacrifice profitability for market share.
How would you judge the efforts of frame makers in the retail space in 2007?
There was some brand shuffling at the beginning of the year, and I assume there will be some changes at retail again this quarter as retailers gear up for the important Christmas season.
We’re rapidly approaching the 2007 holiday buying season, which is expected to be crucial for digital frames. What do you expect for this season?
Another fantastic one.
What companies are you keeping a particularly close eye on as we head into the holiday season?
I am looking at three types of brands: the well-known ones, the rising stars, and retailers’ own brands.
Who do you expect to emerge from the holiday season as the big winner or winners?
We will let the market data speak for itself, stay tuned …
When we spoke in February, you said you hoped the market would weed out the weak vendors. I don’t think we’ve seen that yet. Do you expect that in 2008? Who might get weeded out?
I believe some underperforming vendors are at a crossroads and the 2007 Christmas season might be their last bet before they throw their towel. Retail shelf space this coming 4th quarter will be pretty difficult to get, supply of LCD panels and rising cost are also big issues for them to cope with. It will be a rough season.
Not including HP or Viewsonic, who seem like they’re going to enter the space soon, do you expect any big entries into the market in the first half of 2008?
That’s the fun part of an analyst’s job. But I do have some secrets to keep for myself.
Do you still expect that the transition from traditional digital frames to wireless ones will begin in earnest in mid-2008?
I do. It takes a while for this new feature to be accepted by the targeted consumers of the photo frame, but the timing (mid-2008) looks right for the wireless frames to get into play because of rising number of households with wireless connections and vendors’ desire to further differentiate their brands from the “me-too” products. Believe it or not, Apple’s new wi-fi iPod might be the right catalyst for people to pay attention to Wi-fi multimedia home networking
What needs to happen between now and January for you to declare the holiday season a success for digital frame companies?
The sales of the holiday season depends on two factors: 1) Whether the photo frame remains a popular gift idea, which in my opinion is an affirmative “yesâ€, 2) whether the volume shows the trend that consumers start to buy it for themselves or buy the second unit. Retail coverage is already pretty broad, so the metrics I pay close attention to is the average store sales compared with last season. Upward trends will be the winning indicators. For vendors, they must get broad retail penetration as well as good mixture of marketing tactics to make the 4th quarter a success.
