Can Generation Y breath new life into an old brand like RCA?
That's the question facing Thomson Consumer Electronics which bought the RCA brand in 1978.
On Tuesday, RCA announced it had started shipping the Lyra -- its entrant into the Gold Rush of Internet music. The cell-phone-sized digital music player allows users to encode CD music using PC software and then download about 30 minutes of near-CD-quality music into a removable memory card.
While Thomson is the first major consumer electronics maker to introduce an MP3 player in the US, one analyst thinks it faces a rough road to success. "RCA, as a brand, is not exactly rolling off of people's tongue when they think of digital music," said Mark Hardie, digital music analyst at Forrester Research. "RCA is no longer selling to its core audience." Instead, the company best known for making televisions and other electronics now must remake its image for a whole new crowd: Generation Y.
"To Gen Y, RCA is going to mean something different than to their parents," Hardie said. "That's what is going to make or break it their strategy."
The conception of the Lyra speaks volumes about Thomson's willingness to follow a new direction. More than two years ago, Thomson engineer Tibor Csicsatka's teenage son pointed out the cool digital music technology to his father. "He said, 'Dad, you need to really look at this,'" Csicsatka told ZDNN Wednesday. Little did his son know that Thomson owned eight of the 18 patents on what would become the most popular encoding format for music, MP3.
Salvaged from the digital motion picture compression technology known as MPEG-1, MP3 encoding allows music to be compressed to one-tenth of its normal size, so that 1 minute requires as little as 1MB of hard disk space. That compression allows ten times more music to fit on a hard drive, or a song to be sent to a friend ten times faster over the Internet. With that solid foundation, Thomson embarked on a new strategy aimed at a market Forrester predicts will hit 3 million units in 2000. "We have the retail channel's ability to reach a large market," said Jeff Scott, business and product development manager at Thomson's Advanced Audio group. "We intend to put this into stereos, cars and as many other places as possible. It's a standard strategy for RCA."
Hardie agrees that traditional consumer electronics makers' ability to supply the market could be the key factor in early success. "The Rio and Nomad are dripping out product a handful at a time because of problems," he said. "RCA -- I would expect them to be a bit better prepared than Diamond and Creative. I think their success is contingent on how much product the company can get into the market."
Diamond Multimedia's Rio player has had the run of the market for almost a year, and recently Creative Labs Inc. released its Nomad player. Both companies are counting heavily on their digital music players to hoist them out of a PC-only market. The real challenge for Thomson will come when Sony enters the market with its digital Walkman in January 2000. "Just based on its brand name, Sony will do well," said Hardie.
That gives Thomson three months to beef up its brand with the Gen Y crowd.
Take me to the MP3 Special