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

[Newman]

Shhh!

 

[Jimster480]

I’m just not a fan of conspiracy theories in general. I also try to look at issues from a global perspective, not limited to home-nation provincial commentary.

Let’s bring it back to audio gear, as per Adam’s wishes. Are the audio media going to tell us negative info about audio companies or gear? Well, I agree with the notion that the business model doesn’t incentivise negatives. I don’t think I have ever read an audio magazine article about the use of prison labour and child labour in the manufacture and supply chain of audio gear from any particular country. Nor a factory tour report that critically discusses anything seen, such as sampling ratio of end products for quality testing, or use of hand assembly where robotics might be more consistent. There will always be a provincial celebration of the existence of home-nation manufacturers, which doesn’t serve either one’s audio or humanitarian interest. Commercial media rely on revenue from the very companies who make or sell the gear they report on, so the business model is strongly incentivised against negative information.

The consumer’s only realistic hope of balanced information is non-commercial media. Hello ASR.

I agree and it is why this is the most important site in the audio world IMHO. The audio magazines and revewers sound the same as the tech magazines and reviewers. Everything that comes out is "pretty great" and mostly "works well". We reached a point in time where almost everything that is on the market is "good enough" for a quick subjective review. I have tested tons of no name audio products through my program that actually sound "just fine" and some of which I have compared against my audio stack and found no or minimal differences that I had to look for despite it being a small cheap device...

 

[kemmler3D]

Great write up. Would love your thoughts on the following:

The Susvara is $6000 and made in China. The Focal Utopia is $5000 and made in France.

If you have to guess the COGS for them what would it be?

My uneducated guess is that the Utopia probably costs 2 to 3 times more to manufacture but I’m not sure….

Thanks!

Because the Susvara uses a PM design and the Utopia is a dynamic design, I'm going to say the Susvara probably has higher parts cost, probably lower labor cost due to China vs. France. My guess is the parts would be in the $100s for each, the labor is hard to guess but say it's another half of the cost. So my wild guess as to COGS (product only, no packaging, at the factory) is something like $250 for the Susvara and about the same for the Utopia. Could be as much as double, I don't really know what high end drivers or housings like this cost in those quantities.

 

[Rthomas]

Because the Susvara uses a PM design and the Utopia is a dynamic design, I'm going to say the Susvara probably has higher parts cost, probably lower labor cost due to China vs. France. My guess is the parts would be in the $100s for each, the labor is hard to guess but say it's another half of the cost. So my wild guess as to COGS (product only, no packaging, at the factory) is something like $250 for the Susvara and about the same for the Utopia. Could be as much as double, I don't really know what high end drivers or housings like this cost in those quantities.

Thanks for the reply!

Hmmm I was sure the Utopia would be more with its beryllium drivers, carbon fibre yokes and fancy pittards leather.

The Hifiman driver seems to be protected by mosquito net material and the wood veneer looks incredibly cheap.

 

[kemmler3D]

Thanks for the reply!

Hmmm I was sure the Utopia would be more with its beryllium drivers, carbon fibre yokes and fancy pittards leather.

The Hifiman driver seems to be protected by mosquito net material and the wood veneer looks incredibly cheap.

I think the yokes are probably pretty expensive. The leather isn't going to be that much at scale, it's like a few square inches worth. Hifiman probably has smaller quantities and I'm still betting their drivers are more expensive... but it's hard to say. Even when I was still working in audio, I was often surprised (both on the high and low end) by what specific parts cost. So it's pretty hard for me to say, not having built a headphone from scratch before.

 

[kemmler3D]

I absolutely enjoy reading anything that reveals how an industry works, or what it's like to work for some company, or which products have a higher incidence of failure, or where the food we eat was grown, or how a factory manufactures a particular product, in short, any insights into how anything works or is done, which can then be adapted and applied to a range of situations. Too often such information is released only in a form that may be entertaining but carries little practical use. The secrets and the wisdom are revealed only by the most generous companies and broadcasters.

This post maybe indirectly encourages people to consider building their own electronics from scratch, and also to obtain things second-hand, thereby avoiding the overpricing, marketing, outsourcing, 'BIG, CHEAP and LOUD' domination, QC issues, niche high cost, shriveled potato critical listening skills, shipping and packaging, none of which strongly support consumerism. And maybe more consumers are considering environmental impact too.

I randomly got a ping on this thread and re-read this comment.

My take: Second-hand is absolutely the way to go if you can find something you want on the local market. I have bought a lot of second-hand audio gear (from floorstanders to my MOTU M2) and I only had a problem with the gear once, and luckily the seller took it back. I definitely encourage everyone to check the local resale pages as often as you care to.

However, in the long run, repairing broken gear destined for the landfill is the only way to truly eliminate waste. If you know how to do this, do it. But buying secondhand at least slows down the environmental and social impact of buying new.

I would say despite the flaws with commercially sold gear, however, it's hard to overestimate the impact of mass production. Once you are dealing in quantities of thousands, efficiencies go way up because optimizing every step becomes worthwhile. For example, the home builder might build floor-standers and have 1KG of waste MDF at the end, which will go in the trash. The Chinese factory will have plenty of scrap MDF, but no waste because they will probably find a local shop that will buy it and recycle / repurpose it.

This also applies to the cost of the gear. Generally every dollar is squeezed out when there is serious competition. So something like an ELAC or a WiiM is close to as cheap as it can be already, with real profits afforded to the makers only when the sell a lot of units.

 

[Head_Unit]

I think the yokes are probably pretty expensive. The leather isn't going to be that much at scale, it's like a few square inches worth.

Yes, it's like a Yugo versus a Bugatti [bzzzzt transmission interrupted]

 

[Steve81]

Interesting topic…

I worked as an accountant (in addition to being a network engineer) for ~15 years for a civil engineering and architecture firm. Part of that job was prepping financial statements for the CEO on a monthly basis.

Direct labor was certainly a significant expense; architects and engineers are funny about expecting a decent wage in exchange for their labor. OTOH, indirect and overhead costs were always far greater. Payroll taxes, 401k’s, PTO, and unassigned time are just a start. We needed a marketing team preparing proposals. We needed the admin team (accounting, HR, office mgmt, C-suite, and yours truly). We needed an office to rent, insurance, printers, workstations, software, printers, plotters, and soooooo much misc stuff.

As it relates to COGS, I’m not sure why consumers would give a flying fig about that in the first place. It’s end performance, and how a product compares with its competitors that matters at the end of the day. For that, we’re lucky to have Amir, Erin, et al.

 

[Descartes]

Interesting topic…

I worked as an accountant (in addition to being a network engineer) for ~15 years for a civil engineering and architecture firm. Part of that job was prepping financial statements for the CEO on a monthly basis.

Direct labor was certainly a significant expense; architects and engineers are funny about expecting a decent wage in exchange for their labor. OTOH, indirect and overhead costs were always far greater. Payroll taxes, 401k’s, PTO, and unassigned time are just a start. We needed a marketing team preparing proposals. We needed the admin team (accounting, HR, office mgmt, C-suite, and yours truly). We needed an office to rent, insurance, printers, workstations, software, printers, plotters, and soooooo much misc stuff.

As it relates to COGS, I’m not sure why consumers would give a flying fig about that in the first place. It’s end performance, and how a product compares with its competitors that matters at the end of the day. For that, we’re lucky to have Amir, Erin, et al.

Agreed manufacturers need to make a profit, but dealers who are just middle men moving boxes and making 40 to 60% margin are the reasons why younger generation prefer listening through are iPods!

 

[tw 2022]

Agreed manufacturers need to make a profit, but dealers who are just middle men moving boxes and making 40 to 60% margin are the reasons why younger generation prefer listening through are iPods!

dealers are an "outdated" need these days... at least in my opinion... go straight to the source, good return policies fix a lot of consumer issues...costco didn't do it by accident...

 

[Purité Audio]

dealers are an "outdated" need these days... at least in my opinion... go straight to the source, good return policies fix a lot of consumer issues...costco didn't do it by accident...

I agree, unless the dealer can significant value then why bother with them, even acoustic measuring/implementation of filters can be accomplished remotely.
Can you think of anything that can’t be achieved remotely with the help of screen share and decent customer support.
Keith

 

[tw 2022]

I agree, unless the dealer can significant value then why bother with them, even acoustic measuring/implementation of filters can be accomplished remotely.
Can you think of anything that can’t be achieved remotely with the help of screen share and decent customer support.
Keith

not if the seller has a good return policy ...that's the secret in my book...svs has it figured out...their subs might not be "#1" in regards to quality , but they are close , the CS and ease of returns puts them over the top..

 

[anmpr1]

I agree, unless the dealer can significant value then why bother with them, even acoustic measuring/implementation of filters can be accomplished remotely.
Can you think of anything that can’t be achieved remotely with the help of screen share and decent customer support.
Keith

Yeah... but you know what? Going to your local dealer(s) and looking over the latest gear, slumming with audiofool friends, is something you can't get in a remote 'virtual' meet up.

Those days are probably gone for good. But it doesn't make our collective lives better, I don't think. But it's what we have to work with, so what can anyone say or do?

I don't know how it is now, but most areas had local 'clubs' that met once a month or so. Enthusiasts that would share gear and stories. We had an audio group, and a Linux group. I think the Boston Audio Society from the old days is still active. Not sure about other areas. In a way, ASR fills that void, albeit virtual.