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The Hub: A new year brings changes....

For the past few years, the primary topic of discussion in the world of high-end audio has been survival. As the economy slowly began to normalize after the second quarter of last year, there was still a widely-held belief that a lot of changes and consolidations were yet to come to the audio industry. Indeed, the last quarter of 2010 and the beginning of 2011 brought a number of changes in all sectors of the audio biz: retail, distribution and manufacturing.

For over twenty years, Vienna Acoustics has been a well-known loudspeaker brand in the high end, and has always been known for offering unique designs. After having been distributed in the U.S. for many years by Sumiko, VA opened a new U.S. distribution office on September 1st, 2010. At the same time, it was announced that Vienna Acoustics speakers would no longer be sold through Best Buy's Magnolia stores.

Associated with the new endeavor are International Sales Manager Kevin Wolff, North American Sales Diector Patrick Butler, and Western U.S. Sales Manager Barnaby Fry. All came to VA from Sumiko, and all have deep roots in the audio biz: Wolff with Magnolia, Butler with Goodwin's High End and Tweeter, and Fry with Linn.

We previously reported that B&K Components had been taken over by a bank in mid-September of last year. In mid-October, B&K was acquired by Morris Kessler's ATI (Amplifier Technologies Inc.). ATI manufactures multi-channel amps under its own brand, and also manufactures BGW pro amps, AudioAccess distributed systems, and Theta Digital amps and processors. We're happy to learn that B&K will be returning to the market soon.

Mid-December brought news that assets of Danish electronics and loudspeaker manufacturer Gamut were purchased out of bankruptcy by Kvist Industries, a large Danish furniture manufacturer which has produced cabinets for Gamut, B&W, and others. Sales manager Torben Sondergaard and designer Lars Goller will stay with the revitalized (and recapitalized) company.

Our old friends and Michigan neighbors Wadia Digital ended 2010 as part of Fine Sounds, the holding group owned by Italian equity fund Quadrivio. In recent years, Fine Sounds has acquired Sonus Faber and Audio Research, and both companies appear to be thriving. Wadia President/CEO John Schaffer and the rest of his crew will stay with the company. We look forward to future growth and expansion for Wadia.

Gossip at CES 2011 included the rumor that Klipsch, one of audio's oldest and best-known companies, was the target of an acquisition bid. Shortly thereafter, press-releases announced the sale of Klipsch to electronics conglomerate Audiovox.

Since founder Paul Klipsch sold his company to cousin Fred Klipsch in 1989, Klipsch-the-company has become a mini-conglomerate itself. In recent years the group has acquired speaker brands Energy, Jamo and Mirage. Audiovox's acquisition of Klipsch adds to a sizeable portfolio of once-powerful brands, including Acoustic Research, Advent and Jensen. Given its size and market presence, it seems unlikely that Klipsch will be reduced to the diminished stature of those brands. We hope for the best for all parties concerned.

All the industry changes mentioned to this point have been, we think, positive ones. We hate to end on a negative note, but Denver-based chain Ultimate Electronics has recently been forced to undergo a succession of changes including store closings and consolidations, and in rapid succession this January, Chapter 11 and Chapter 7 bankruptcy filings.

Ultimate Electronics has already begun close-out sales at all 46 of its stores, and all are to be closed no later than April 15th. The chain's majority owner was Mark Wattles, a serial entrepreneur who had previously owned and sold the Hollywood Video chain, which closed last year. About 1,500 Ultimate employees will lose their jobs, and a number of well-known manufacturers will likely lose millions of dollars as a result of the liquidation.

The world of audio continues to evolve and reconfigure to survive in a changing marketplace. Our next entry of The Hub will discuss the return of some familiar names to the industry, and a number of other exciting developments.
audiogon_bill
ferrari
617 posts
 
Oh - I remember that chain well in Denver, another case of lost identity, similiar to that of Sound Advice here in Florida, when Tweeter bought them out. Instead of continuing with the same business model that made them a success, Tweeter managed to chase away the customers that put Sound Advice on the map. Same thing with Ultimate Electronics. That move should probably save Listen Up in Denver from collapsing, but most likely not for long though. Just my opinion though. Its kinda like Ferrari changing their business model to build econo cars, fortunately that will never happen as long as Fiat owns it stake in Ferrari and that of the Ferrari family.

I am not against change by any means, no change can lead to stagnation. However with that being said, you do not abandon your customer foundation in pursuit of lofty goals that may or not have merit. I feel for those employees there as I know a few of them. Very bad time to loose a job based on someone else blind ambition.

My opinion is that when the smoke finally clears in the Denver area, you will only have John Barnes at Audio Unlimited and Cherry Creek Audio and maybe thats all that is needed in that area. At least for now.
audiogon_bill OP
155 posts
 
Hi, Ferrari-- Not going to pick on the Denver-area folk, certainly one of the most active areas in the US for audio, both in retail and in manufacturing.

I wish them all well, and look forward to a stronger market in months to come.

Regarding Sound Advice: I will agree that the Tweeterization of the chain contributed to their demise, but the major element seemed to have been too-heavy reliance on home theater. When prices for flat-screens plummeted and the ability to fold custom jobs into new construction disappeared...so did they.

Thanks for taking the time to comment.
ferrari
617 posts
 
Trust me - not picking on the Denver area folks. My son still lives there. I lived there for 4 years and got to know a lot of great people there in Audio. It is a hot bed of audio activity then went under appreciated till the RMAF shows.

It justs irrates the crap out of me when I see consumer based companies that have narrow vision. It is allright and I applaud moving forward with new ideas. However should that fail, most do not have a fall back position. I guess I spent to long in the corporate world, without a fall back plan, the result is what we are seeing now, layoffs and bankruptcy of companies with that tunnel vision.

They seem to have forgotton what got then there in the first place, and their obligation to the employess, who put their trust and lives in that business.

The companies I worked for over the years, we were always trying new ideas to move forward, but if the business model did not work as planned, we always had that fall back position in order to regroup and save jobs.

I just don't know any longer why companies have abandon that basic business principle. Way to many futures are at risk with poor planning and we are seeing it now on a very large scale, that we are all paying for now.

I can only hope this is not what the colleges are now teaching. These folks are learning these poor business practices from someone. I guess the old school of five year business models is now passe.
buconero117
2,311 posts
 
The trend is unmistakable, fewer brands, high prices, lower volume for the remaining players. While the economic downturn accelerated this trend, at least in high end audio it also showed that the business model of stand alone brick and mortar was really in trouble. A shrinking customer base spells trouble for all the remaining players, sad. I think that 'audio' shows may be the next avenue of distribution. I would not be surprised to see the RMAF start that trend.
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