How It’s Made Series: Beats By Dre

[Timbo2]

In some of the recent reviews here at ASR I've seen lot's blame thrown about at finance people, marketing people and finally engineers. I've always been of the opinion that it's an organization as a whole that's responsible for what it produces. Pointing the finger at just one group usually isn't the reason for bad product - that blame should go to the C-Suite.

I haven't seen this discussed here before, but it's possible I missed it. A venture capital firm did its best to estimate the BOM for a pair of Beats by Dre headphones. You'll note that it too TWO tries because at the time they were so popular the first pair they analyzed was counterfeit.

How It’s Made Series: Beats By Dre

Follow up with genuine product:
How It’s Made Series: Yup, Our Beats Were Counterfeit (But They Cost About the Same to Make as the Real Ones)

So by the VC firm's estimation the retail priced $199 headphones have a BOM of about $20. My favorite part is their estimate that almost 1/3rd of that is packaging!

 

[RayDunzl]

I bet they couldn't make one pair for $20, packaged or not.

 

[Frank Dernie]

In some of the recent reviews here at ASR I've seen lot's blame thrown about at finance people, marketing people and finally engineers. I've always been of the opinion that it's an organization as a whole that's responsible for what it produces. Pointing the finger at just one group usually isn't the reason for bad product - that blame should go to the C-Suite.

I haven't seen this discussed here before, but it's possible I missed it. A venture capital firm did its best to estimate the BOM for a pair of Beats by Dre headphones. You'll note that it too TWO tries because at the time they were so popular the first pair they analyzed was counterfeit.

How It’s Made Series: Beats By Dre

Follow up with genuine product:
How It’s Made Series: Yup, Our Beats Were Counterfeit (But They Cost About the Same to Make as the Real Ones)

So by the VC firm's estimation the retail priced $199 headphones have a BOM of about $20. My favorite part is their estimate that almost 1/3rd of that is packaging!

The BOM cost of the typical products I was aware of, like hifi and a car is ~10% of retail.
For consumer electronics back in the 1970s I remember the single most expensive part to produce in the box was the instruction manual, they economise by not making one in recent years.
The rest of the costs aren't negligible though, and back when I was involved the markup made by the manufacturer was smaller than that of the distributor or retailer despite the risks being bigger. Also the BOM is kept low by heavy investment in specialist machinery to make the parts at a low individual price.

A senior engineer at a car maker I know told me the marketing budget per unit was more than the BOM cost of the car, fwiw.

 

[pozz]

In some of the recent reviews here at ASR I've seen lot's blame thrown about at finance people, marketing people and finally engineers. I've always been of the opinion that it's an organization as a whole that's responsible for what it produces. Pointing the finger at just one group usually isn't the reason for bad product - that blame should go to the C-Suite

Organizations are strange things. In some, the CEO is really the head. Maybe more noticeably when that person is also the founder. In others, the top brass do not so much manage as give a sense of direction, or are consulted only for strategic decisions, and aren't really involved in operations.

These days the controlling party is commonly external. A fund of some sort, or an investment committee, or a board of investors. Some are pretty hands off apart from offering advice, and leave the company with a lot of discretion, maybe giving approvals or something of that sort. Others step in and dictate the day-to-day.

Question is: are there any massive, global audio-related organizations whose first priority is a quality product?

 

[Timbo2]

Organizations are strange things. In some, the CEO is really the head. Maybe more noticeably when that person is also the founder. In others, the top brass do not so much manage as give a sense of direction, or are consulted only for strategic decisions, and aren't really involved in operations.

These days the controlling party is commonly external. A fund of some sort, or an investment committee, or a board of investors. Some are pretty hands off apart from offering advice, and leave the company with a lot of discretion, maybe giving approvals or something of that sort. Others step in and dictate the day-to-day.

Question is: are there any massive, global audio-related organizations whose first priority is a quality product?

True enough. The best CEOs still set a culture where where people are encouraged AND empowered to produce quality product even if the CEO isn't directly involved.

OTH, with a name like D+M Group I don't expect much. You can infer it just from the name. The entity has changed ownership and structure something like six times in 18 years. I'm not expecting much in terms of direction or empowerment from the C-Suite other than figuring out how to keep enough cash flow coming to service the debt load from various buyouts, restructures and acquisitions.

Edit - My bad I missed one! American company Sound United LLC is the current incarnation of D&M.

 

[bigguyca]

True enough. The best CEOs still set a culture where where people are encouraged AND empowered to produce quality product even if the CEO isn't directly involved.

OTH, with a name like D+M Group I don't expect much. You can infer it just from the name. The entity has changed ownership and structure something like six times in 18 years. I'm not expecting much in terms of direction or empowerment from the C-Suite other than figuring out how to keep enough cash flow coming to service the debt load from various buyouts, restructures and acquisitions.

Edit - My bad I missed one! American company Sound United LLC is the current incarnation of D&M.

Charlesbank Capital Partners. a private equity firm, is the ultimate owner of D/M.