Universal Electronics Sees Pivotal Role in Transition to Voice-Based Connected Home
Universal Electronics Inc. (UEI) is on track to move from alpha to beta testing of its Nevo Butler smart home hub late this quarter, with plans for a market introduction by year-end, said CEO Paul Arling on the company’s Thursday Q1 earnings call. The company is “actively engaged” with several tier one accounts and eyes commercial deployment in early 2020, “if not sooner,” he said.
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Arling said at the core Nevo Butler is a voice-enabled AV platform that will allow manufacturers to add voice control to products that didn’t have it before, giving manufacturers not currently offering a voice product a “faster and easier” way to adopt it. Interest in voice spans cable, satellite, broadband, telecom, and other channels, he said: UEI sees a “major movement” toward voice-enabled entertainment.
Companies that may not have the ability or plans to develop voice will also be able to leverage UEI’s technology to enable revenue-generating services via additional products, Arling said. Implementations will vary by customer. In addition to the hub, other hardware -- AV control products or sensors -- could be associated with a system, he said.
On its next-generation remote control business, Arling said most, “if not all,” major MVPDs in higher ARPU (average revenue per user) countries plan at some point to come out with an advanced product similar to what UEI has integrating two-way communication, IP and cloud-enabled technology. UEI recently added Verizon FiOS as a customer, he said. Some of Universal's subscription broadcasting-channel customers are expanding into broadband-enabled over-the-top video services via advanced streaming set-top platforms based on Android TV and TiVo-enabled platforms, said Arling.
In its home automation channel, UEI is working with Ring, Daikin and Train, and in smart TV, it added a “major TV platform” to join QuickSet customers Sony and Samsung.
Responding to an analyst question on UEI’s penetration of the advanced remote market, Arling said it’s virtually 100 percent. “There may be one” that isn’t, but most are working with the company, he said. Some customers have multiple vendors, but UEI still reaps revenue share: the company licenses IP, chips and other technologies to allow customers to have multiple vendors. “In most cases, we're involved with the technical development of the platform," he said.
Discussing the company’s decision to transfer manufacturing to proactively offset impact of Section 301 tariffs, Arling said Universal is undergoing the “daunting task” of moving 40 percent of production volume from China to its facility Monterrey, Mexico, and a third-party plant in the Philippines. “Because this factory transition was driven by punitive tariffs put in place last year, we have been trying to accomplish as quickly as possible what would normally take place over a 2-year time period,” Arling said. It’s on track to complete the transition to Mexico this summer. Shares closed 11.5 percent higher Friday at $43.41.