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"Secrets" about the consumer audio business you may find interesting

Vacceo

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Blasphemers!
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Yes.

That has been what I've been told as well. OTOH, China factories do seem to have a problem with making near useless items if no one holds their feet to the fire. I think of some power supplies in Chinese gear I've looked at. If a device will see 1 watt or .95 watts, they will put a a 1 watt rated device in it. They do that all the way thru. Just basic rule of thumb would be to use a 2 watt device in that situation. Such an item will work, some of them surprisingly last some time. Most of them are not going to last very long. While using those with a simple rule of thumb safety factor will last a very long useful time. If the Chinese facility had a recognized name with value they would not stoop to this to make money. When they are insulated from that, they have no reason to do otherwise. It pains me that those selling this gear elsewhere don't do their homework, and see they don't mind selling such products.

Yet China can make some very good top level gear when the customer commissions it.
Perlisten manufactures their speakers in China. Those are not cheap not poorly built. So yes, blame the developer, not the guy in the assembly line.
 

Operandi

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Good write up. I've worked for a couple tiny manufacturing companies and what you said matches my experiences. I struggled to understand why they were doing things certain ways. Over time it became clear to me why the slick features and low cost I've come to expect from mass produced products are just not possible to do profitably on a small scale. The cost of specialty items is very high. But that gives them a certain prestige as well. As a kid I noticed a paradox that the more perfectly some things were made, the lower they were valued because the precision and consistency betrayed an advanced technique of mass manufacturing, while hand made stuff had subtle imperfections that were a sort of proof of work.
You can't make generalizations like that. It leads to blanket conclusions which is my whole problem with this post and promoting it to the front page.

To use the bike industry as another example several years ago Look came out with Zed 2 a one piece carbon fiber crankset (both arms, and the axel) built around a 65mm bottom bracket standard. Making a one piece crankset is pretty insane and takes a very high level of precession to make it work. It was also made in the EU (France I think) to nobody's surprise it was insanely expensive (65mm bearings alone cost $100+ each). It never became popular so by all accounts was a commercial failure as mass producing it would be impossible but it was pretty much the lightest and stiffest crankset you are ever going to get. Not worth it to most people but undeniable performance and engineering.

GaN amps, ribbon tweeters, multiple magnet elements in motor structures, in drivers would be comparisons to the audio industry. They are all expensive to implement due to material costs, or the difficult nature of their manufacture so they remain niche market and low volume but they all have inherently different performance characteristics that don't exist in similar products that can be produced cheaper in mass.
 
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Tim Link

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You can't make generalizations like that. It leads to the wrong conclusion which is my whole problem with this post and promoting it to the front page.

To use the bike industry as another example several years ago Look came out with Zed 2 a one piece carbon fiber crankset (both arms, and the axel) built around a 65mm bottom bracket standard. Making a one piece crankset is pretty insane and takes a very high level of precession to make it work. It was also made in the EU (France I think) to nobody's surprise it was insanely expensive (65mm bearings alone cost $100+ each). It never became popular so by all accounts was a commercial failure as mass producing it would be impossible but it was pretty much the lightest and stiffest crankset you are ever going to get. Not worth it to most people but undeniable performance and engineering.

GaN amps, ribbon tweeters, multiple magnet elements in motor structures, in drivers would be comparisons to the audio industry. They are all expensive to implement due to material costs, or the difficult nature of their manufacture so they remain niche market and low volume but they all have inherently different performance characteristics that don't exist in similar products that can be produced cheaper in mass.
I see your point. There are some places where the little guys can nudge in and do profitably what the big players can't. If the market for something is tiny, but that tiny market will pay a lot per item, that's where interesting things can happen. Even then, I've noticed that often these products will have some rough edges and quirks that a more mainstream product wouldn't. That can add to the charm if they achieve the elite performance claimed and the quirks aren't too annoying.
 
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Operandi

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I see your point. There are some places where the little guys can nudge in and do profitably what the big players can't. If the market for something is tiny, but that tiny market will pay a lot per item, that's where interesting things can happen. Even then, I've noticed that often these products will have some rough edges and quirks that a more mainstream product wouldn't. That can add to the charm if they achieve the elite performance claimed and the quirks aren't too annoying.
Absolutely. Sometimes it is just about the niche, boutique charm of having something crafted on a smaller scale. You just can't throw all low volume high-end gear into the same category, RAAL ribbons, and Orchard Audio amplifiers are doing something that is inherently different that is directly attributable to how they are made. They are a poor value by almost anyone's measure but thats not the point and thats not what they are going after.
 

OWC

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You can't make generalizations like that. It leads to blanket conclusions which is my whole problem with this post and promoting it to the front page.

To use the bike industry as another example several years ago Look came out with Zed 2 a one piece carbon fiber crankset (both arms, and the axel) built around a 65mm bottom bracket standard. Making a one piece crankset is pretty insane and takes a very high level of precession to make it work. It was also made in the EU (France I think) to nobody's surprise it was insanely expensive (65mm bearings alone cost $100+ each). It never became popular so by all accounts was a commercial failure as mass producing it would be impossible but it was pretty much the lightest and stiffest crankset you are ever going to get. Not worth it to most people but undeniable performance and engineering.

GaN amps, ribbon tweeters, multiple magnet elements in motor structures, in drivers would be comparisons to the audio industry. They are all expensive to implement due to material costs, or the difficult nature of their manufacture so they remain niche market and low volume but they all have inherently different performance characteristics that don't exist in similar products that can be produced cheaper in mass.
Not great examples of the audio industry.

The whole point is that the alternatives ARE performing similar or even the same.
Or within practical context, all those things don't have many advantages anymore.
Keep in mind that any product or solution is just another set of compromises.

Although some people seem to believe some things are just God-like "perfect".

But to write things in the spirit of the opening post;
Companies can very easily produce certain techniques much much cheaper, but you also don't wanna smash your own windows.
Development, technology and profits/business are not always agreeing with each other.
 

pseudoid

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Thank you for the great post about the inner, business workings of the audio industry and most consumer products.
I feel like I just graduated from ECON-201 and ended up with a headache by page 7.
The thread got interesting again when a few replies about alcohol and t*t* bars were posted.;)
The centerfold-worthy nudey-shots of the B&K, Sumo and the MarkLevinson definitely was like a few shots of caffeine.
Unfortunately, the cut-throat inner workings of this industry really adds distortion to my pleasure of music… like pineapple pizza would put a bad taste in my mouth.:facepalm:
 

Tim Link

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Thank you for the great post about the inner, business workings of the audio industry and most consumer products.
I feel like I just graduated from ECON-201 and ended up with a headache by page 7.
The thread got interesting again when a few replies about alcohol and t*t* bars were posted.;)
The centerfold-worthy nudey-shots of the B&K, Sumo and the MarkLevinson definitely was like a few shots of caffeine.
Unfortunately, the cut-throat inner workings of this industry really adds distortion to my pleasure of music… like pineapple pizza would put a bad taste in my mouth.:facepalm:
I went on a road trip to Crater Lake last weekend to ride bicycles around the rim. On the way I smelled something in the car I was struggling to identify and finally decided it was pineapple upside down cake! Turns out it was my friend's pineapple pizza.
 

gfx_1

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I wonder how expensive are premium components relative to final price. Seems like speaker motors with neodimium magnets (such as Kef Blades) or berillium tweeters are not cheap, but the final price for the whole speaker is, often time, outrageous.
Scanspeak sells drivers in different price classes, the do have neodymium magnet woofers and Beryllium tweeters the do differ in retail price.
Shipping cost per container are up, some vendors are complaining.
 

Operandi

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Not great examples of the audio industry.

The whole point is that the alternatives ARE performing similar or even the same.
Or within practical context, all those things don't have many advantages anymore.
Interesting I didn't know that RAAL has been wasting their time making their ribbons in house in their native Serbia for no reason when they could just build them in Asia like everyone else. Or that the founder of Orchard Audio made a huge mistake quitting a lucrative and prestigious EE job to found his own amplifier company cuase his amps are no different than anyone elses. You should probably let them know.
 

OWC

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Interesting I didn't know that RAAL has been wasting their time making their ribbons in house in their native Serbia for no reason when they could just build them in Asia like everyone else. Or that the founder of Orchard Audio made a huge mistake quitting a lucrative and prestigious EE job to found his own amplifier company cuase his amps are no different than anyone elses. You should probably let them know.
You should probably read those marketing books I posted a couple of posts before ;)
Companies don't waste any time as long as people keep believing in certain stories and buy their stuff.

Second is to dive in more into the technical aspects of these subjects and know how to put certain things in context.
It has been my main profession for the last 15 years, for speakers as well as developing amplifiers for such companies.

There are more ways to skin a cat.
Doing that with a fancy looking knife doesn't make the skinning processes better.

You just only tell them the pros of that knife, not the fact that other knives perform equally well.
 

OWC

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Scanspeak sells drivers in different price classes, the do have neodymium magnet woofers and Beryllium tweeters the do differ in retail price.
Shipping cost per container are up, some vendors are complaining.
The price of neodymium went up because China banned export of raw rare earth materials a couple of years ago.
If I am not mistaken, that was 2011.

Ever since, many manufactures went back to ferrite, just because prices were getting out of hand.
With adequate magnet and motor optimization one get plenty of good and linear BL out of a magnet.

So neodymium is basically only interesting for when things need to be very light weight.

Apparently even in the top high end market of drivers, ferrite seems to perform more than good enough.
 

Axo1989

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Yep. The sweet and savory is a classic pairing. Unless you are some total pizza snob where only traditional Neapolitan pizza is "real pizza" ...

Haha, I am one of those. Ok, hyperbole (Napoli is really the best pizza, also basil and prosciutto is completely delightful) but my list of "no, not on pizza" is even longer than my ASR ignore list. ;)

Edit: I'll just add this to help keep things non-tropical.
 
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Axo1989

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I’d like to correct this statement as it is not how capitalism is actually working. What we see is that as the capitalist system has developed, we have less and less competition (and also less and less drive for innovation) because industrial sectors become dominated by fewer and fewer corporations. The large corporations buy up the smaller companies. This stifles competition with the few large corporations generally working, if not directly, to not undermine each other when it comes to pricing their products. It has become far from an idea of a free market but instead a heavily manipulated market.

Here is an article which describes why large corporations are bad for innovation. We can also see that R&D budgets get smaller in relation to turnover and profit the larger a market leader becomes in any field. It’s more important to reward shareholders than spend money on researching something that might fail (or be the next massive success). We as consumers just get the same product tinkered with or repackaged.

Actual free markets are essentially a microeconomic wet dream (or a first-order modelling fantasy). Marx described the inevitable tendency of capitalism toward monopoly a long time ago. If you are an optimist, functional capitalism can be maintained in a mixed economy with social contract and strong government regulation. If you are a pessimist, well ...
 

KellenVancouver

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In the end to make a great product you need great engineering, you need great quality control, and yes you need measurements and performance metrics.
I would say that statement appears true, but...
In a capitalist system the barometer used to determine employee value is how a person is paid. More valuable employees get paid more.
Yet even for high-tech, engineers, presumably those with whom future success is most dependent, are not the highest-paid employees. I recall the example of Carly Fiorina when she led Hewlett-Packard and her base pay was more than ten times that of HP's top engineer. Carly Fiorina got her degree in philosophy and medieval history, yet for that high-tech company her measurable value was more than ten times that of their top engineer.
Was Carly Fiorina a strange and unique anomaly? Doubtful. Seems to lay open the comparative value of engineering.
 

xnor

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In a capitalist system the barometer used to determine employee value is how a person is paid. More valuable employees get paid more.
That makes no sense. The value of an employee is determined by their salary?
Even the reverse, which makes more sense, is not true. In a lot of societies, salaries are kept secret, and a capitalist company will therefore pay you as little as possible.
 

OWC

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That makes no sense. The value of an employee is determined by their salary?
Even the reverse, which makes more sense, is not true. In a lot of societies, salaries are kept secret, and a capitalist company will therefore pay you as little as possible.
No, how valuable a worker is, depends on how much direct/indirect profit he/she gains vs how much he/she costs.
So the very hard truth is that people in like administration or so, are very expensive.
Obviously they are very much needed and valued as a person for what they do, but they don't gain any direct or indirect profits.

People with a high salary assembling simple cables is also very expensive for this reason.

I don't know why you say that salaries are secrets?
It's quite well known what most people earn on average.
The only reason to pay as little as possible, is to gain maximum profits.

However, I do not agree with that "the most valuable employees" are paid more @KellenVancouver
That would be very nice in a good and ethical world, but in practice this goes very very differently.
 

OWC

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Define “valuable”.

I‘m afraid the unwritten rule is: you are not what you are, you are what you seem to be. A volatile metric that precludes anything but a subjective local (in time) metric.
As valuable you are to the investors.

It's a personal experience/opinion, but I have seen so many engineers first fixing an entire companies *ss and being laid off 3 months later.
Actually I have seen that more often than not.
 

syn08

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As valuable you are to the investors.

It's a personal experience/opinion, but I have seen so many engineers first fixing an entire companies *ss and being laid off 3 months later.
Actually I have seen that more often than not.
You must be joking, investors caring about the value of a bottom of the food chain lab rat?

For the rest, you just confirmed what I said. Barring pathological cases, an individual contribution is usually measured with metrics that defy any economic or professional criteria. It’s the perception that matter, everything else is fluff. To your example, obviously the poor engineer that fixed the company *ss was not necessary popular across his management and peers ranks, so his *ss being fired was a logical step. The guy was likely perceived as a threat to the statu quo, rather than his efforts being appreciated.

BTW, it is much more difficult to make the ranks accept changes, than to design and implement them.
 

firedog

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I remember the former owner/manager/designer for Musical Fidelity talking about how in hi-end audio the cosmetics of the components can account for as much as 70% of the retail price. That's after COG, manufacturer's price, middleman and retail markups.

Those small production runs of classy cases and knobs cost LOTS of money.

And - the cosmetics are often necessary to sell high end stuff. If it doesn't look expensive the buyers in that market don't want it.
 
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