Hands-free law drives big marketing opportunities
Gadget retailers know California's new hands-free law means many consumers will need to buy new gadgets--and they're taking full advantage of the opportunity.
A good number of Californians think the state's new hands-free cell phone law will bode well for public safety, if a random sampling of consumers by CNET News.com is any indication. But gadget retailers have their own reason to cheer--they're reaping the cash benefits.
While they won't quote their sales figures directly, retailers such as RadioShack, Plantronics, and Headsets.com say they've seen a jump in sales of Bluetooth and other hands-free devices in the past month. The law goes into effect Tuesday, with a similar law taking hold in Washington state the same day.
"We have definitely seen increased interest in all things hands-free these weeks leading up to the law," said Charles Hodges, RadioShack's national director of media relations. "Based on the number of people that drive in California, we made sure stores are well-stocked for customers."
Not only are stores well-stocked, they're making the most of the sales opportunities with highly visible promotions and advertisements.
Visitors to Best Buy stores are greeted with signs reminding them that the law is coming and headsets are for sale. If Web surfers do research on Parrot headsets, they'll come across a playful petition to make the parrot California's new state bird (the bird is a mascot of the company, which wants to stress that it helps people comply with the law by making hands-free devices).
On TV, California residents might catch Ford's new commercial for its SYNC voice-activated in-dash system. At RadioShack, some workers will even suggest to shoppers at the checkout counter that they just may be in the market for a new Bluetooth headset.
"Some people say they already have one, and others say tell me more about Bluetooth," said Alex Bashiri, store manager at a RadioShack on Market Street in downtown San Francisco. He said that after he gives information and demonstrations of Bluetooth headsets, most people are sold.
"When they buy it, I tell them, 'Now you are legal,'" Bashiri said.
The new law, the California Wireless Telephone Automobile Safety Act of 2006, or SB 1613, was signed by Gov. Arnold Schwarzenegger in September 2006.
It makes it illegal to hold a handset to the ear while driving. Technically, that means drivers can still dial a number and text with the cell phone away from their head, although the legislation may soon crack down on texting, as well.
An additional law going into effect Tuesday, SB 33, targets teenagers, prohibiting them from any cell phone activity in the driver's seat, even if they're hands-free. Both laws were drafted by State Sen. Joe Simitian (D-Palo Alto) and introduced in 2006.
The first time drivers are caught violating either law, they will be fined $20, and after that, each ticket will rise to $50. According to the California Department of Motor Vehicles' Web site, there is no grace period and no warnings, because of the media blitz surrounding the new law.
Even with all the press, headset company Plantronicssaying 44 percent of people who would be affected by the law were unsure of when it was being implemented. And 72 percent didn't know what the law encompassed.
That's why the company expects peak times for headset sales to be four weeks before and six weeks after the law's start date. Plantronics is basing that projection on sales information in New York, where chatting on a cell phone while driving became illegal in 2001. Washington, D.C., New Jersey, Connecticut, and the Virgin Islands followed suit.
Plantronics, based in Santa Cruz, Calif., also has seen higher sales of its Bluetooth-enabled headsets, with most of the growth aimed at products in the mid-price range of $20 to $30. Corporate spokesman Dan Race says he believes people are going to comply with the law by buying such headsets instead of paying a $20 fine. Race also said many consumers are also using the law as an excuse to upgrade their existing Bluetooth gear.
"The interesting thing is that a lot of consumers in California and Washington are very tech-savvy, so they are upgrading or looking in the mid- to high-priced category," Race said.
For those consumers who are unaware of the new law, one visit to Plantronics' Web site will change that. The company has launched its very own "hands-free city," where users can click on a digital-city destinations--airport, college, home office, cafe--for tips on which headset is best-suited for that location. The hands-free city also has plenty of information about hands-free laws, as well as a link to Plantronics' online store.
"Our campaign is focused on education and awareness...we educate people about the headsets that we have available and create awareness about the law," Race said. "And once people use a headset, they find a way to use it outside of the car and in the office or at home."
Other companies outside the gadget industry, such as AAA--which offers travel and automotive services, including insurance--are educating residents of California and Washington about the hands-free legislation.
According to Michael Geeser, AAA spokesman for Northern California, the company has touched upon the new law at major events, like last week's Nascar Infineon race in Sonoma, and also visited high schools to spread the word about how the new law affects teen drivers. The Web site also contains an FAQ for residents of the two states.
"We don't promote products, but at every opportunity we've touched on where people can go to get information," Geeser said.
AAA may not be promoting products to the public, but it is suggesting them to its members. In the hands-free section on its Web site, it offers member discounts on products from Plantronics and Magellan Bluetooth-enabled GPS systems.
Bluetooth headsets certainly aren't the only option, but most retailers make them seem like the most popular way to make your cell phone hands-free.
According to Mike Faith, CEO of Headsets.com, corded headsets are falling by the wayside, making up less than 10 percent of his company's online merchandise. His companyto people ticketed by the news hands-free laws.
Bluetooth headset sales may stay on the rise because several additional states, including Hawaii and Massachusetts, are considering their own laws similar to California and Washington's. No state has yet proposed a ban on driving with a hands-free device. In 2007, the Bluetooth market raked in $1.7 billion in revenue, growing 15.5 percent since 2006, according to IDC industry analyst Ajit Deosthali. With more pending legislation requiring residents to purchase the gadgets, he says the market will keep growing.
"There's no question about it. These legislations are definitely going to help the industry," Deosthali said. "Also, the prices are going to start dropping, and competition will increase as more and more players join the headset industry."
According to Deosthali's research, the cell phone market currently makes the largest chunk of Bluetooth revenue (60 percent), with headset sales coming in second. However, a new market is emerging in automobiles.
Bluetooth technology is already available in many high-end vehicles including those by Lincoln and Mercedes. As Bluetooth becomes cheaper, Deosthali predicts the technology will spread to mid-priced cars. Ford's SYNC, which has its own California-focused campaign, carries the Bluetooth technology in its economy car, the Ford Focus.
"At one time air bags were only in specific cars. It's the same thing," Deosthali said. "It will take time for it to come down in price, but then it's not difficult to integrate."
If more states decide to pass hands-free laws, Bluetooth, the auto industry, and gadget retailers may reap the benefits again and again.
"Some states have partially adopted this law," Deosthali said, "but the full implementation for California is a good thing, when you think about overall safety." He noted that California has more drivers on the road than any other state and will thus set an example for the rest of the country: "The largest automotive market in the U.S. will lead the way."