Red, Blue, what ever you do - Vote

The upcoming election is the most important in decades.  Me?  I am one of those "socialists" that Sarah talks about.  Whomever you are and whatever you believe, take responsibility for it and vote.  Its good for the country.  Then go listen to some music, its good for your soul.

Bull in a China Shop...

Consumer electronics are coming to the end of the age of deflationary pricing, and also the end of affordable, innovative cosmetic design.  Because of circumstances in China, the last 10 years have been an industrial designer's dreamland.  We have been spoiled, and we take it for granted.  Cool designs will still be possible but at increasingly higher prices, well out of the reach of most of us.

I recently returned from the Shenzen area of China where most of NHT's manufacturing partners reside.  Shenzen is only an hour from Hong Kong by ferry.  I am told that the area was historically marshland and fishing villages.  30 years or so ago, the Chinese government opened the area to foreign investment offering low cost leases for factory locations and now the population is 60 million and growing.

In most places in the world, very little changes over the period of a year or two.  China is not like most places and the changes are constant and remarkable.  Where there were jumbled, unpaved roads, there are now wide, tree lined boulevards.  Traffic lights and road signs abound, and more importantly the local populace is paying attention to them as if they are rules instead of loose guidelines.  Bicycles and feet were the main form of transportation for most workers two years ago, now its motor scooters and cars.  Highways and toll roads have appeared connecting the area to other major urban centers.  The typical office worker has gone from dull, company supplied uniforms to modern fashion that rivals most places in Hong Kong.  The government has recently introduced reasonable minimum wage laws with benefits, and consumerism is growing rapidly as the standard of living increases.

The amazing thing about China is the speed at which it caught up in manufacturing and design capability.  By 2001 you could find some of the finest craftsmanship the world has ever witnessed, and on a huge scale.  It was intoxicating.  Factories were going up in a matter of weeks throughout the province.  You could discuss an idea for a new part in a morning meeting and it was not uncommon to find a prototype, still warm from manufacturing, on the conference room table upon returning from lunch.  For the first time in years we were no longer bound by cost constraints.  Any design, no matter how complex, was possible to produce and often at mass market prices.  It was so easy.  We got lazy and complacent.

In 2008 the hammer fell.  Costs in our industry increased by 30% or more this year. Consumers have not even seen the impact of this yet, but soon will.  A substantial part of the sudden increase is due to the rising standard of living in China, but it also came from the rising prices of the world's dwindling natural resources.  Some believe manufacturing companies will move to the next low cost, underdeveloped country.  I think not.

In my opinion there are a specific set of circumstances that made China the powerhouse it is and those same circumstances are also the reason we have run out of practical places to go next.

Western Europe and the US watched Japan's prowess in manufacturing efficiency emerge over a period of 30 years.  As the standard of living rose in Japan, the crown moved to Taiwan where efficiency met lower cost labor.  This lasted 15 years or so, then it all moved to China where the investment and skills of the automated world met the largest, untapped and under paid labor pool.  This combined with the existing logistic infrastructure in the Pacific Rim and the proximity of Hong Kong, the world's largest free port, makes China the perfect location.

Certainly there remain countries with abundant low cost labor.  However most of them have little or no infrastructure in place to support mass manufacturing and are geographically difficult to get to.  The investment required would be many times the amount used in building China.  And don't forget that our declining and increasingly expensive  natural resources only exacerbate the problem, making costs higher no matter where products are made.

So what does all this mean to you and I?

It means that manufacturers are going to have to become clever again about design. We are going to have to choose what is important and give up on the "nice to have" features if we want to remain affordable.  It means we are going to have get smarter, work harder and maybe for the first time learn real marketing.

For consumers it means mainstream products are going to be more expensive, or they are going to lose desirable cosmetic and feature elements to which we have become accustomed.  It means that people will have to make choices that they will live with, not throw away.

Any upside?  Possibly.  It is my personal belief that this can be good for all of us in the long term.  Hopefully costs will equalize geographically, creating more local jobs and local industries.  While more expensive, product quality should improve and rapid obsolescence should diminish as we hold onto products for longer periods of time.  Brands should become more differentiable than recent times, which should allow for more market stratification and improve the "gene" pool.

Like diminishing oil reserves are forcing us to re-examine our choices in the cars we drive, the trips we take, the food we eat and the clothes we wear; my guess is that people will look at electronic purchases in the same way and begin to buy more intelligently and less impulsively.

 

Music in the air

Are you noticing all the music related coverage in the news lately?  Its everywhere.  Reports of 2 channel gear sales being up, a small, but solid resurgence of vinyl, new music sites and availability for downloads.  Wow! 

One of the predictions from last winter's CES was that once DRM went away, there would be new markets opening for music through the internet.  Markets that have appeal to lots of different tastes and lots of different grades of resolution.  It is starting already.

If you want to hear and own very high rez music, go to hdtracks.com.  HD Tracks is a new venture from Chesky Records that allows members to purchase and download music from their catalog, uncompressed, lossless and DRM free.  You also get album art and notes accompanying any download.  HD Tracks is in its early stages and will be expanding its offerings and formats in the future.  You can hear what a high quality download sounds like right now for free.  HD Tracks is offering an album, called the Ultimate Download Experience.  This offer ends on June 30, so check it out soon.

Its not the intent of my blog to promote specific companies.  However these exciting times for music enthusiasts and we need keep each other informed.  Within a day or two, our website will feature a music links tab on our home page.  As we hear about new sites, new artists and new music, we'll post them as a resource.  Feel free to let us know about your discoveries and we'll post those too.

got them consolidation, fragmentation, liquidation blues

One of my favorite blogs is the Audiophiliac.  Steve Guttenberg is the culprit and while I am not a high-end guy in practice, I agree with a lot that Steve has to say.

In late April, D&M Holdings Inc., announced that their brands Denon, Marantz, Snell Acoustics, Boston Acoustics, Escient and McIntosh were up for sale.  Steve voiced concern that these brands, most of whom have a long history and quality reputations, may change for the worse depending on the intent of potential new owners.  I have to agree with him.

There have been a significant number of brand roll-ups in our industry by large corporations and/or investment groups over the last 10 years.  Historically, many of these consolidations have not been successful.  They seem to take place as market segments approach maturity, as they appear to be lucrative investments.  Even with those that have gone reasonably well, the new parents have rarely been able to maintain the focus and innovation of the companies they have acquired.

Brands like NHT and McIntosh have been fortunate.  We've managed to survive, largely because the original group that held onto the founding principles remained intact.  But we still changed, and if we're honest we would tell you that it has not been for the better.  

In most cases however, the acquired brands become shells.  Frustrated employees move on.  Sooner or later, the consolidations are broken up and sold off in pieces. Many smaller (and an increasingly number of larger) brands do not survive the fragmentation process and simply disappear.

As sad as this repetitive cycle seems to those of us that are familiar with casualties, I suspect this process may be part of a broader market mechanism that allows Consumer Electronics to reset.  Shed some of the old for the new.  Usually this happens in small pieces but every once in a while, it seems the whole industry turns over.

In my opinion, we are in the middle of another great "brand flip" in audio.  It happened during the 60's when most of the important companies were either American or European.  Our friends in Japan and the rest of Asia took the business by storm and broadened the market substantially.  Now yet again, new brands are proliferating at a remarkable rate, this time from the global high tech sectors.

"Brand Flips" are more than just new names doing the same thing better or cheaper.  They are an indication that consumer desire has shifted on a large scale.  Consumers are looking at new companies for new solutions.  And the new companies are enjoying the growth.  This could explain why D&M is letting go and I would expect that there will be many others like them in the not too distant future.  Its not anyones fault, its not mis-management, nor greed.  The world is moving on... you know, evolve or die.

There are always positives and negatives.  There are always survivors who can adapt and change successfully with the times.  The positive aspect of all the new brands and applications is the reaffirmation of energy and health that our industry needs. Passion, innovation and dedication don't disappear, they transfer to the next generation of companies.  

And while losing brands that seem like old friends is difficult, its important to maintain perspective about audio gear makers.  The real product of our industry is the art form (music, film, spoken word), the hardware is just the current delivery service.

Strange Days or: How I stopped worrying and learned to love MP3's

At this year's CES, I was invited to participate in a panel discussion, the title of which was "High End Demo's in an IPOD World".  The premise revolved around the industry opinion that there are now millions of consumers that think compressed music is "the music" and high fidelity is dying because of it.  Assuming that anyone cares to hear the difference it ultimately leads to the question, "Where do you go to hear a truly high quality, full-resolution recording?"  

We all know there are not nearly as many audio retail outlets around and that audio is really no longer as prevalent a hobby as in the past.  But wtf?  Are we as an industry blaming the disappearance of hi-fi retail shops on the IPOD instead of a lack of consumer interest in traditional gear?  Does anyone out there think that just maybe, audio manufacturers have avoided change for the last 20 years and we are now paying the price?

Personally, I love MP3's (and other compressed formats).  Music is so easy to acquire and it is so inexpensive.  A buck for a DRM-free track on Amazon?  Fine with me, I can afford to take a flyer on something I have never heard before.

I mean, what's the risk?  That these same consumers will never experience the joy of sitting in the sweet spot grooving on minute details of the recording  and passing judgement on the image which might be pulling slightly to the left?

Guess what folks!  Even during stereo's heyday, 90% or better of all music listeners didn't know or care about the "sweet spot".  Hopefully they listened for the content, because it made them happy or sad, or provided nothing more than a pleasant diversion from the rest of their day.  Hopefully they still do.

This is what I love about personal media players and the ability to listen on demand to whatever you find interesting.  Consumers that embrace IPOD-type products are listening to more music than ever before, in quantity and variety.

We audio manufacturers have gotten so full of ourselves that we forgot why we got into the business in the first place... tunes.  We made the gear more complicated and expensive.  Plus we told the market that movies are cooler.  While the virtual world was moving on, making products simpler and more fun, the message we sent was "you have to do it our way".  We lost touch with our customers, and we won't get them back unless we change.

Let give you an example.  Recently I got back into playing music after a hiatus of over 30 years.  Once I was sure I was going to stick with it, I decided to set up a home recording rig.  The technology available for recording is amazing, but in most cases it is not simple.  My goal was to make music, not become an engineer.  I went through at least 5 iterations of gear and software, finding each too time consuming, and cumbersome to learn and use.  Then I found Garage Band, an Apple notebook and an inexpensive audio interface from Tascam.  Within an hour I was laying down tracks with nearly all my focus on the content, not the technology.  If this is not a lesson for our industry, I do not know what is.

I have learned something else as well.  There is no way to take music away from people, no matter how hard we might try.  And we have tried.  Along with gear, music got expensive.  The record industry spent millions trying to stop P2P sharing, blaming downloading for the downturn in music sales.  It could have nothing to do with the fact that before being available on-line, there was no way to hear new music without shelling out $15 -$18 per disc.  I still believe that an everyday, sub-$10 price for CD's would have kept that format alive for many years to come, and I also believe that greater access to broadband would force the music industry to find alternate means of selling recordings no matter what.

But it is too late and none of this really no longer matters.  The industry did not pay attention to its customers and they have taken the music back.  We can now listen to whatever we want and we can buy it so affordably, there is no reason not to.  We can afford to experiment again.  I truly believe that music appreciation is growing because of these formats.  Artists are connecting directly with their fans; it's amazing.

Check the growing sales of turntables, vinyl records, stereo receivers and bookshelf speakers.  Music is almost as important as oxygen.  It will always find a way to flourish.

And I know one other thing:  If there is music, there will be audio companies that provide the playback gear, although you may not recognize their names unless we wake up.

The Importance of Xd

It wasn't long after getting into audio that I realized speakers are the weakest link in the audio playback chain.  At the same time it was clear they also are the key to creating the magic... occasionally.  Listening to the right recording, in the right room and in the right mood shows us that replicating the live performance is possible but only when the stars are aligned a certain way and all the mojo is working.

It makes no sense to me that enthusiasts will fuss over a tenth of a percentage point in amplifier THD, all the while listening through loudspeakers that at their very best produce 10 times more distortion.  These contradictions were the reason I got into the loudspeaker business.  There just had to be a better way.

Every decision made in passive (and most active) speaker designs involves compromise.  Acoustic designers have to prioritize and balance electrical and mechanical distortion, frequency and time domain response, not to mention guessing what the listening room will be like.  This is one reason why they all sound different, and why any speaker will sound different based where it is placed.  Drivers and crossovers are imprecise, clumsy devices and choosing the right combinations rely as much on intuition as science.  While our industry has made some improvements over the years, there is very little we can do to advance the craft as it is.

While NHT was working on analog technologies such as our Focused Image Geometry (a method for minimizing the effect of the room on sonic playback), on the other side of the planet one of early pioneers of DSP and a co-founder of Fairlight was working on digital solutions for improving loudspeaker performance.  We met each other some years later and Xd was born.

The belief that we held in common with our new partners at DEQX is that the speaker really must be corrected first, then room correction was feasible, at least in the low frequency range.  When you can control both frequency and time domain response, and provide steep digital filters through software, most of the compromises we've lived with for years disappear.  Driver design then has one real purpose; to minimize mechanical distortion.

Don't misunderstand.  It still takes a good acoustics engineer to achieve quality results.  The interesting thing about software-based correction is that it gives designers a whole new pallet of tools and possible directions.  It means we can build smaller, affordable systems that will outperform traditional products by huge margins and they can be placed almost anywhere in a room.  In addition, the amazing resolution is so revealing you can actually hear a difference using better quality components.  And while a sub-$1000 dollar DSP corrected system will  blow any existing passive system away, there will be room for higher end systems.  This leaves lots of room for multiple speaker brands and lots of potential choices for us listeners.

So Xd goes on the "shelf" for a while.  Our first effort proved what we wanted it to, but the hardware is outdated, and there are better, faster, cheaper chip sets out there that we need to work with.  Back to the design caves we go, hopefully others in the loudspeaker field will join the effort and advance the technology quickly.

 

Disco Daze

NHT is not particularly fast at product development but when we finally get it ready to produce, we typically have a product that really performs well for its intended purpose. 

With every new product, the important details are labored over every step of the way.  By the time it is finished, we have taken it home, listened in every conceivable scenario, corrected problems, argued about voicing, and listened some more.  When done, that new product has become a part of our brand psyche, and part of the family.

This is why I hate discontinuing products.  It feels to me like abandoning a favorite pet by the roadside. But if you have taken the time to read this blog you know that NHT is once again a small, independent company.  This has forced us to look at what we offer and reduce the models to a select line of our best and most successful speaker systems.  

The changing - and contracting shape of the traditional audio business is diminishing the supplier base; another reason to take a long hard look at what the consumer market considers relevant. For years NHT bought drivers from a number of suppliers located primarily in Japan and Europe.  While more expensive, we supported these companies because of their investment in innovation and parts consistency, two key elements for building great-sounding speakers.  There are lots of driver suppliers springing up in Asia, and many are quite competent, but they do little R&D and most lack consistent suppliers for their components.  This actually has less impact on our new product development as we can design around problems, but makes supporting older models increasingly challenging.

Lastly, the newest reason for discontinuing speaker models: technology.  Electronics makers have been dealing with this for years, but not us speaker guys.  Our fundamental technology has not changed since 1940... at least not until recently.  In NHT's case, it's called Xd.  Xd represents the advanced use of DSP in the correction of loudspeaker performance.  Even though we began shipping Xd two years ago, the underlying technology is still considered radical and new.  It is dependent on microprocessors and is expensive to implement even in its most basic form.

Our original model is still one of the most amazing sounding loudspeakers I have ever heard, and we firmly believe the technology represents the future, which is why we decided to put it on hold until a new design is complete.

This is a longer story - stay tuned for part 2.

Happy Birthday and why are you still here?

NHT turned 21 on December 18, 2007.  Oddly enough, it was also the same month that I and another employee "lifer" bought our company back.  It has been bought and sold now 5 times since 1990.  Each buyer got caught up in the brand's reputation for great sounding products. Each had their own vision of how they could make us a big commercial success.  Each of them failed.

No company can withstand that many different strategies.  NHT should be dead and gone, but here we are... the cockroach of speaker brands lives on. There are lots of people that think they know the reason.  Some say it's the passion of those working here, some say we are the most stubborn folks on the planet.  Personally, I think it is because NHT is a craft.  We love music here in a big way and designing each new speaker is like making a new instrument.  We let our hearts and hands guide the development. This is not a recipe for big business and we "get" there is no chance of us ruling the audio earth.  That's ok though.  When it's all over for us humans, the cockroaches will be checking their tunes out on their NHT's.