Signature Q1 2009 - (Page 11) State of the Headset By Anthony Reese Consumer perception of the mobile phone has evolved in recent years from novelty to necessity. As a result, the Bluetooth enabled headset market has taken on an evolutionary life of its own. Percentage growth is not as large today as when the market was smaller, of course. Yet overall sales remain strong, and the market is getting crowded. In fact, producers of premium products face a challenging climate of commoditization. This is complicated here in the United States by a new class of users entering the market in response to hands-free laws in five states, Washington, D.C., and the Virgin Islands, as well as in specific jurisdictions in other states. For example, the California Wireless Telephone Automobile Safety Act of 2006, which went into effect 1 July 2008, has had a much greater impact on adoption than earlier hands-free laws in smaller states, when the market was less mature. Even as early as last May, sales of Bluetooth wireless headsets in California’s four major markets had ballooned to four times the national average. The law affects more than just California’s 23 million drivers: Bluetooth enabled headsets are now a virtual necessity for people traveling to California for business and pleasure. Other states, including Massachusetts and Hawaii, are considering following California’s example. Some states will quickly adopt handsfree legislation and others will lag, but the fuse has been lit. Initial headset adoption fell into two basic market niches: business professionals for whom headsets are a productivity boost, and technology enthusiasts who naturally embrace state-of-the-art products. Now hands-free legislation is bringing in people who are accessing headsets not because they choose to but because they must. The surge in sales is leading to fundamental changes in the marketplace. As headsets become more acceptable, more consumers will demand the benefits of higher-quality headsets. And style is becoming increasingly important, with consumers wanting headsets that act as fashion accessories. Products once targeted at people who self-select for the market are now being purchased by people who don’t know that headsets and phones have to be paired, or even whether their phones have Bluetooth technology. Fortunately, improvements to the Bluetooth core specification are enabling easy pairing, with fewer steps. All the more critical, then, that headset manufacturers and cell phone manufacturers adopt the latest Bluetooth specification. So what will be the future of headset use as cell phone penetration grows and wireline usage continues to erode at an annual rate estimated at 4 to 6 percent? As adoption of Bluetooth enabled headsets continues to grow, that future should prove to be very interesting indeed. Anthony Reese is director of the Mobile and Entertainment Portfolio at Plantronics, Inc. “As headsets become more acceptable, more consumers will demand the benefits of higher-quality headsets. Style is also becoming important.” — Anthony Reese, Plantronics, Inc. Bluetooth Special Interest Group | 11
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