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Sennheiser consumer sellout?

chris719

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If they sold one HD600 or whatever for every 500 other units I’d be surprised. The consumer group had revenues in the hundreds of millions of euros in 2019. High-end headphones are probably a rounding error. You guys have a very inflated view of the importance of the audiophile fringe. There is a small market for expensive open headphones. They didn’t innovate because as the measuments show, HD6xx is still one of the best headphones in the world despite being ancient.

Sennheiser is looking to exit because everyone in the real world owns Apple AirPods, Beats, Sony WH-1000MX3, or Bose QCs. They failed to make inroads against Jabra and Plantronics in the headset and speakerphone market. They were late or just never gained popularity in Bluetooth and noise cancellation.

To think they are looking at divesting a huge business unit because a few models of open wired headphones lost sales or margins is naive.

Again, the HD6XX must be incredibly cheap to produce at this point. It’s made of nothing exotic and it’s a really old design. From a revenue standpoint, if they are cheap to produce it probably helped to move product that wouldn’t have otherwise been sold.
 
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RickSanchez

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I tend to agree. Are there any brands who have asscociated with that mob who have enhanced their position/brand/reputation/profit?

Maybe Grace Design?

I think the lesson for brands may be in how they approach product development with Drop. Some companies (e.g., Sennheiser or HiFiMan) have partnered with Drop by developing products that are almost exactly the same as some of their existing products, cannibalizing revenue that those brands would normally get either direct (online sales) or via other retailers. And given Drop's business model I'm guessing the margins aren't great for these Drop-specific products.

Whereas Grace took a different approach with product development for Drop with the M9XX, the SDAC and the SDAC Balanced. They designed three Drop-specific products well outside their existing product assortment: two extremely low-priced no-frills consumer DACs, one low-priced consumer DAC/amp (eventually replaced by the M900). Really distinct products from their mostly (completely?) pro audio products.

I don't pretend to know if the Drop partnership has been super successful for Grace Design, but they're still pushing product through that channel after ~3 years. I can't imagine it's enhanced their brand/reputation at all but I'm guessing it's helped grow their revenue. And overall I think it gives them a specific avenue through which they can tap into a very different market / customer that is distinct from who they sell to for the rest of their products.
 

Gurkerl

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So Sennheiser as a brand will live on, Sonova acquired their Consumer brains & workforce? We'll wait and see where the new management will take them.
Has Sennheiser ever worked as the earbud manufacturer for some flagship phone brand? That seems like an obvious step: "The Superphone XYZ comes with premium quality earbuds engineered and tuned by SennheiserTM exclusively for SmartphoneBrandXYZ"
 

RickSanchez

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From the article you linked to ...

The Sennheiser Consumer Division, with currently around 600 employees contributing to this business area worldwide, generates sales of around EUR 250 million annually through a broad online and in-store distribution network.

The purchase price for the Sennheiser Consumer Division amounts to EUR 200 million ...

Ooof, getting purchased for less than your annual revenue? That division must have been in bad shape financially.
 

solderdude

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The question is how much of the 250M in sales is profit.
Sales is not profit.

Seen in that light Sonova may break even in a few years and Sennheiser has 200M to invest in prosumer audio and other things.
 

Zensō

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To me, this signals the end of an era (you have to wonder how long the new owners will continue on with the apparently not-very-profitable HD series).

As much as I hate to say it, the future is most likely wireless, even in the high end. The idea of onboard DSP though, is enticing.
 

JoetheLion

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High end hifi is not a market where you can make a lot of money. How many HD800 do you have to sell to make the same profit as Sony or Bose did with their ANC models? And how are the development costs in comparison? HD800 ist not HD650. In general, in aging societies there are many more people who have poor hearing than those who want to hear in high resolution. If they let the brand live on, I think it will be a win-win situation. Reduction of development costs, exchange of technology know how.
 

andymok

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Yes. The 'brothers' are essentially admitting they don't know how to manage the business - and don't want to. Rather than refocus and reinvent, they wish to 'move on'.. Might as well announce: "Here's a soon to be corpse..Come carve off a piece"

Seems almost criminal..An organization that some say makes the best headphone in the world:
https://crinacle.com/2020/11/19/sennheiser-he-1-review-59000-summit/

With Management that can't figure out how to run it..

Reminds my of AKG
 

ta240

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I understand why it appears that way, but do we really think Sennheiser is dumb enough to sign on if they didn’t think it was going to improve their bottom line? Sales must have been poor enough they determined it was worth it.

Sometimes companies will kill their long term success looking for short term gains.
 

mSpot

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Sometimes companies will kill their long term success looking for short term gains.
It was a long term success until it wasn't. Here's how the The Verge reported it:

Sennheiser announced it was looking for a buyer for its consumer business in mid-February “amid strong competitive pressure.” Although the company’s consumer products hit record sales in 2019, the firm still lost money with profit margins “under pressure” from global rivals. It cut 650 jobs and said “all options are open” to help the division.
 

ta240

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.... hit record sales in 2019, the firm still lost money with profit margins “.....

I didn't follow companies back years ago, is this a newer thing where so many want to race to the bottom; sacrificing profits for market share?

I see it with businesses trying to grow on shark tank: "we had $$$ in sales", "How much profit", "we lost $$".
And I've encountered it with companies I've worked for.
You see customer acquisition costs exceeding the average order profit and no regard for repeat business.
It can only work if you can sustain the loss longer than your competitors so that you are the only one left; but it seems like a risky business model if you aren't China or Amazon.

I guess if Sennheiser wasn't making money with the old model then they didn't have a lot to lose by trying something different.
 

sergeauckland

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I struggle to understand how a brand can successfully cover both the fashion-driven consumer side and the more 'sober' Pro side as the brand values needed in each case are not only different, but in some respects, mutually antagonistic. My reading of this is that Sennheiser either don't have the skills or desire to play in the consumer snake pit and prefer the quieter life in Pro.

But the maybe I'm showing my prejudices here.

S
 

JoachimStrobel

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I struggle to understand how a brand can successfully cover both the fashion-driven consumer side and the more 'sober' Pro side as the brand values needed in each case are not only different, but in some respects, mutually antagonistic. My reading of this is that Sennheiser either don't have the skills or desire to play in the consumer snake pit and prefer the quieter life in Pro.

But the maybe I'm showing my prejudices here.

S
Whatever „skills“ means.
 
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