The mistake armchair speaker snobs make too often


Recently read the comments, briefly, on the Stereophile review of a very interesting speaker. I say it’s interesting because the designers put together two brands I really like together: Mundorf and Scanspeak. I use the same brands in my living room and love the results.

Unfortunately, using off-the-shelf drivers, no matter how well performing, immediately gets arm chair speaker critics, who can’t actually build speakers themselves, and wouldn’t like it if they could, trying to evaluate the speaker based on parts.

First, these critics are 100% never actually going to make a pair of speakers. They only buy name brands. Next, they don’t get how expensive it is to run a retail business.

A speaker maker has to sell a pair of speakers for at least 10x what the drivers cost. I’m sorry but the math of getting a speaker out the door, and getting a retailer to make space for it, plus service overhead, yada yada, means you simply cannot sell a speaker for parts cost. Same for everything on earth.

The last mistake, and this is a doozy, is that the same critics who insist on only custom, in-house drivers, are paying for even cheaper drivers!

I hope you are all sitting down, but big speaker brand names who make their drivers 100% in house sell the speakers for 20x or more of the actual driver cost.

Why do these same speaker snobs keep their mouth shut about name brands but try to take apart small time, efficient builders? Because they can.  The biggest advantage that in-house drivers gives you is that the riff raft ( this is a joke on an old A'gon post which misspelled riff raff) stays silent.  If you are sitting there pricing speakers out on parts cost, shut up and build something, then go sell it.

erik_squires

@kota1 wrote:

Bryston has a line of active speakers, an outboard crossover that you can BYOA (bring your own amp). I know Bryston makes great amps but I would prefer a Sunfire 7400 or 7401. You can choose their outboard BAX-1 crossover OR (my preference) use their SP4 HT processor  for the crossovers and DSP.

https://bryston.com/active-loudspeakers/

Oh, I know their line of products as some of the few to currently offer an outboard active solution. More brands should follow their example instead of obstinately and dogmatically sticking to passive, and to stop thinking 'active' can only be a bundled approach. 

I often thought the same thing, it must have been a decision of the marketing dept.

If it even is it wouldn't have been without a clear signalling from engineering. 

I am going to disagree with Erik on this one.

Manufacturers may use a wide array of strategies to find/develop something that will sell. OEM is attractive because building drivers is expensive and slow. It also requires a significant investment in labor and infrastructure to maintain over time. Building your own (in house drivers) enables you to design something different and special and you can build it exactly as you like. This is rarely a motivator for a small manufacturer to make more money because the infrastructure and tooling costs far outweigh the additional profit of the in house drivers. In house drivers are almost always used to design/build something that is beyond what is available OEM.

OEM tends to focus on very large runs of the same driver to make the tooling cost less per driver. This is why a speaker maker attempting to build a system and does not have in house driver capability has two advantages using OEM: a large assortment to pick from (lots of companies offer drivers) and a low cost per unit to buy (especially if you can buy in any kind of quantity). They also have two negatives: 1)to get something special made for you you have to commit to large investment and/or large quantity orders that require massive money and 2) you can only buy what is offered, not what you might ideally might want otherwise you are paying for tooling and design etc (just like in house). So there are limits to OEM in what is available and limits to what you can have custom made for you based on your product development budget.

OEM solves a huge headache in manufacturing and enables a manufacture to focus on other things that might be more impactful to their product (sales). Maybe it’s a feature like Sonos with their wi fi audio where the feature is more important than the absolute ultimate driver performance. ( I do have to add that Sonos ERA 300 is absolutely state of the art speaker designed by one of the best transducer designers on the planet). Or maybe its price or size like JBL’s little flip speakers- extraordinary value there- a pair of those and bluetooth turntable and you have a $300 home system that sounds amazing! Way beyond what we could buy in the 60s and 70s. But its worth noting that the cost of design and prototyping a driver is insane- its takes years to develop and then once you have the design the cost of tooling is beyond what 99% of smaller volume manufacturers can afford. An audiophile speaker company would likely NEVER recoup that investment unless they are at the absolute top of the market. Witness companies like Magico, KEF, ATC and several others do exactly that.

Today, OEM is really the only way unless you happen to have these driver manufacturing capabilities already in hand. It’s no mistake that several OEM driver makers (JBL, Focal, ATC) now build speakers as they have the unique ability to make their own. Many OEM driver makers/speaker builders have moved to a location like India and China where making drivers is much cheaper and can actually make sense as the labor is so low and their aren’t environmental restrictions like in the west. So that leaves us with the truth that the only people left doing in house drivers have a clear and compelling reason for it, usually performance or some specific feature they need for differentiation. Additionally, most manufacturers that build their own do not add a profit to the driver separately like OEM does; its just one cost like all the others that get added together into "cost of goods" and then margin is added based on their overhead (cost of operations, facilities, inventory of parts, labor, marketing etc) . 

So in house is no magic formula to money, it’s just one strategy of many to be different.

Brad

 

@lonemountain 

I checked out your system in your profile and is that your actual system? Can you post some pics? Thanks

This is rarely a motivator for a small manufacturer to make more money because the infrastructure and tooling costs far outweigh the additional profit of the in house drivers. In house drivers are almost always used to design/build something that is beyond what is available OEM.

I think there’s a difference between unique and excellent. Having drivers no one else has makes them unique and impossible to evaluate the same way we can evaluate small shops with OTS parts. They may also take steps to give the "impression of modernity" (from a Focal marketing slide). For instance, adding a graphite coating, which may do NOTHING to the sound quality. Boom, instant markup, zero value.

Forgive me if I’m too cynical, but of course if I was running a big-brand I’d constantly be looking at ways of cutting costs while at the same time claiming my cost cutting methods were actually purely for the consumer’s benefit. I think both are possible but if I’m not increasing profit margins by vertically integrating I’m failing.

There’s also, of course, the dozens of far east driver makers who actually make decent, bespoke drivers for cheap. Having the time and experience to cultivate those relationships is another way in which big brands increase profit margin.

Regardless of your approach though, if you are a big brand you have to pay for that factory, warehouse, repair, packaging, product development, etc. and that takes money and the only way to get to afford that and actually make a profit is to decrease your cost per driver/increase your profit margin. The other way to say that is to decrease the percentage of cash you have to pay to put those drivers in those cabinets.

Regardless of the motivation, whether purely cost-cutting or purely to deliver drivers with audibly better performance, you can’t get to success if you pay 10% of your retail to driver costs. You have to drive that number down. And that’s fine, that’s business. My message to people who can barely plug a lamp into a wall but want to complain about small businesses using OTS driver because the drivers are "only" 30% of the speaker retail is that they have no idea what they are talking about.