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The C.E.S. reports worldwide retail sales of all consumer electronics at $964 billion, of which AUDIO only equipment accounts for less than $19 billion. The greatest portion of that $19 billion is taken up by the top 10 electronics manufacturers such as; Sony, Toshiba, Panasonic, Bose, etc.; the remaining portion of sales left to the High-End audio industry is less than $2 billion worldwide. Now, if one follows the 80/20 rule or Pareto principle, that states that 80% of sales are done by only 20% which does seem to hold true across many economic models much like Benford's law and then we consider the top High-End audio companies such as Mark Levinson, Audio Research, Magnepan, Manley, McIntosh and others who each do at least a few million dollars a year in sales; well then that leaves only around $400 million a year left to the remaining High-End Audio equipment companies to divide. And yet, one can easily list more than 400 boutique audio companies worldwide. The last year Audio had its equipment directory the number of audio companies was close to that; one might assume that there would be less now but still... This would seem to indicate that the average boutique High-End Audio company is doing less than $1 million a year in sales with many only doing a few hundred thousand a year or even less. Considering that a typical price for audio equipment is between $1,000 to $10,000 then the average company may be manufacturing less than 100 units a year with some only producing one to five units a month or less, especially with statement products at the $25,000 and up level. For example; the late Richard Brown of BEL, Brown Electronics Labs, once said to me he only made a run of one hundred of his amps a year (the BEL 1001) and that was a more reasonably priced mainstream product at least by High-End standards. Furthermore, in another example Goldmund, a large company in the High-End landscape, only sold around 200 of their Reference turntables and it took them about ten years to do so. Of course, they were selling hundreds of their amps to each turntable, but again they were and are a large affair. Meanwhile, other smaller boutique “Statement” products must sell in even lower numbers. There must be some that are only selling one or two Statement models a year or maybe ever and likely just a few dozen of their entry level products. A company now long defunct, but some may remember, Wingate Audio in its first year did not sell even one of its mosfet amps and this despite heavy advertising at the time. Also, the AHL Tolteque company made only eight of their much talked about plasma/electrostatic speakers before folding the company. Now, one might assume that is not so unusual for a small start-up company but the A.H.L., was actually backed by a large French corporation Acieries du Haut Languedoc involved in the steel, mining and nuclear power industries. Makes one wonder just how many “vanity” firms there might be out there that one may hear and read about but are in fact not moving any product at all? While perhaps there are a few who may be selling in small numbers but are left out of the aggregation of data that comprises market reports from the likes of CES or Plimsoll Publishing or Research and Markets in Ireland.
If you strongly disagree with this or you have an alternative take on the High-End audio market please go into detail. Thank you.
search around this site for the 'code' for each industry. Here in the US every industry fits in somewhere and all the data is HERE.
Best of luck, it's pretty thick going at times.
Too much is never enough
As was stated before the numbers are largely conjecture since there are so many variables like small one owner companies that don't have to report anything to anyone except the bank that gave them any loans and the IRS. However, I strongly believe the brick and mortar stores will always be around, albeit in smaller numbers. The reason I believe this is because of lunatics like us who want to hear, see, feel the things we buy that are near and dear to our hearts.
To a large extent the people who buy their equpment online seem to be the sort of people who want to buy "cool" things. I say let them. If a high gee whiz factor is important to them let them fool themselves into thinking they have bought something worth buying. Those people have always been and will always be around.
I don't really care what the actual numbers are as long as high quality equipment manufacturers ARE atill around. We, the people who seek our and actually buy high quality will always be here. Occassionaly we might even convert someone else so they become an enthusiast.
In this economy, NO transaction which goes thru a bank, credit card OR check goes unreported.
The Please check the link I provided, above, to see the extent of the categorization of all forms of commerce.
I doubt you can get away with 'all cash', either. At some point the money has to enter the record again, even if you bring a gym bag of 20s down to the car dealer for that 'Vette you always wanted.
OK, 3 gym bags of 20s.
Too much is never enough
Would explain you num. My sales are not inc in the above. Sure most if not all small audio manufacturing is at just to small a scale to factor in or even draw attention from C.E.S.
Numbers are dicey at best. These companies are making profit, otherwise, the would not remain in business.
Reading this past April Stereophile article by John Atkinson, The Upward Price Spiral, made me think of a couple of things. One, the fact that high end prices keep going, well, up, and two, how do the normal people, the new middle class and the others who are not of the upper end clientle, provide service and support to the elite clientle? Instead of trying to keep up with the "Jone's" or "Warren Buffet's", we should think of things that can be offered that will sell and is attractive to all across the price spectrum. Granted, money is a determinant in many buying decisions, except for the elite, but, when a product that is viable for all, then it will sell. The question is, when will people feel comfortable spending money again? I believe the key here is to be innovative and let genuine and creative thinking be the determinant. Hey, if someone can get rich selling coupons, then I believe we can think of something that would generate enough interest to sell. Then again, their is always the chance that the price will steadily increase until only the elite clientle can afford it, then the whole process will have to happen all over again. Just some ramblings, from a wannabe optimist.
The figures quoted are guesstimates.
Everything thereafter is a guess.
How do you reconcile retail sales to wholesale turnover?
How, and at what rate, is currency conversion calculated?
I think you will find the CES figure is nothing more than a guess.
IMHO I think there is more great sounding audio gear available to consumers than ever before.
Research and Markets states the US market for audio and video is 7 Billion and the top 50 companies have 90% of the total revenue.
...Do you really believe there are accurate figures coming out of China & South-East Asia?
Nothing you linked encouraged me to believe anything in the US is anything but a guess also.
You initially stated the numbers didn’t appear to add up. Maybe because they don’t! :o)
I wouldn’t place much faith in statistics irrespective of how much they sell for.
Remember the GFC?
In the heavily regulated sector of banking & insurance the ratings agencies were charging thousands of dollars for analysis of companies, to the point of giving them ‘AAA’ ratings on the same day they collapsed, and getting it wrong by a magnitude of 1000%.
Accountants & auditors have enough trouble reconciling a single large company let alone a world-wide market segment.
For global numbers? Who knows? Different countries will collect data in various ways. I'd suspect that since most of this stuff is from 1st world countries, the numbers are there somewhere and available if you know who to ask and where to look.
In the US? Everybusiness falls into certain categories and numbers are taken from tax data and compiled.
It takes a real 'pro' to wade thru the data to find just what you want, but it CAN be done.
I'd start with the link I provided and start wading thru that morass..
Too much is never enough
The problem is that you only have to be off by a half a billion or so on your initial numbers to invalidate any conclusion you might make. Some high end companies are privately held, so don't have to report anything about their sales, and that doesn't help either. In my 56 years on the planet I've only met a couple people that were into high end, and that was decades ago. And I know a lot of people from all walks of life. I can't even put myself in that category, as I DIY just about everything. Thus, I'm very skeptical about sales numbers. Nobody wants to admit that their business is closer to a lemonade stand, than an IBM.
I'm adding this sentence so I can say I have two paragraphs, though this is admittedly a short one with limited content.
Wingate Audio was the first company to my knowledge that made a zero-feedback solid state power amp and preamp. I remember their ads on the inside back cover of TAS, and also remember a very positive review.
I didn't think much of it when I started Ayre (also making zero feedback solid state products) but about ten years later I found out that Steve Wingate patented his power amp and the schematic is available for free. The patent is expired now and it is quite a nice design with many original ideas.
I tried to contact him to find out more about his products in order to compile a more complete history of zero-feedback solid-state designs. He is apparently still alive but has problems with alcohol and possibly ended up in trouble due to obscene broadcasts on the ham radio bands.
I had no idea that he didn't sell a single unit in his first year! However, I have never seen a successful manufacturer of high-end audio that sold direct. (I'm not talking about one-man basement operations, nor companies with mid-fi leanings like Outlaw Audio.) But if you know more about the company, the man, or the design, I would love to hear from you. Thanks!
what about monarchy audio? they sell direct and have been doing so successfully for a long time.
many years ago. I don't recall where. I think it may have been the magazine Sounds Like; it just stuck with me is all.
Thanks. I'd love to see that. I have a complete set of Sounds Like, but I sure don't remember that. Maybe it was from Fi, as I don't think I have a full set of those.
I think it would be fascinating to find out how he arrived at that approach and that circuit. It would also be interesting to hear his take on why his company failed and what he might have done differently.
In any event, probably one of the under-appreciated designers of solid state equipment of all time.
into items being sold from his estate.
As regards the print interview of Mr. Wingate, all I can say is I must have read his interview in one of the magazines I subscribed to back in the early 1990s, perhaps someone else will recall which periodical it was that published the interview. It must have been in one of these, Stereophile, The Absolute Sound, HI Fi News, Sounds Like, Audio Amateur or Glass Audio. I also bought the occasional issue of Audio but I don't recall it being in that.
As to the fall of Wingate Audio it may have had to do with passing fads in the marketplace. As I recall at that time, mosfet amps were falling out of favor with audiophiles; being perceived, rightly or wrongly, as misty and grainy. The S.E.T. resurgence was just about to begin in the US having started a few years earlier in the Asian markets. Maybe it was just offering the right product at the wrong time?
I did a big internet search for him. He has a website (with the call letters of him ham radio license) that has not been updated in a while. There were usenet groups with many complaints against his on-the-air (apparently drunken) rants. There is a YouTube video where he strung his antenna through a neighbors yard including a foul-mouthed verbal confrontation. He has a Linked-In page that details his employment history with Wingate Audio. And there is a Facebook page (linked below). I sent several messages on the Facebook message system with no reply. I figured he was in jail or something. If he is now dead, that is truly a shame.
He clearly made a small, but important contribution to high-end audio and it would have been fascinating to speak with the man about it. Do you have a link to the obituary?
selling some items on ebay that he acquired from the Wingate estate.
Very helpful but also very sad. I was hoping that it was the wrong Steve Wingate who died. But that listing was very explicit.
His Facebook page only had 11 friends. I think he was tormented by alcohol for many years.
I would love to find somebody that knew the details of his work at Wingate Audio, but I'm afraid that has all died with him...
"However, I have never seen a successful manufacturer of high-end audio that sold direct."
Please define what you think is successful.
I don't want to get in argument here. I just am stating my observations, based on observing the high end audio industry for over thirty years.
Wingate Audio was a perfect example. They had one or two power amps and one or two preamps. They were well built, had a rave review in TAS when a rave review there could make a company's fortunes, nice looking, nice full-page color ads. Yet in a year they didn't sell a single amp (according to a source that may not be 100% reliable).
So why do you think they failed so miserably?
Or if you don't want to answer that question, why don't you give me some examples of successful companies (your definition, I won't argue with you unless you name one-man shows working from basements or garages). Perhaps there are a few I have overlooked, but the strong pattern I have seen is that they don't last more than a year or two.
When I was starting Avalon up, Conrad-Johnson started distributing a fine line of reasonably priced loudspeakers designed by Dave Fokos called Synthesis. Nice looking, great reviews, good sound, no problems that I know of. After a year or so they parted ways (I have no idea what happened nor why). Dave regrouped and started selling the speakers direct with a 30-day money back guarantee. Within a year he was out of business. I've seen the same pattern over and over and over.
Maybe I'm just looking for a certain pattern and missing a different one. Feel free to enlighten me.
I agree that, in the past, there were few successful direct sales only high end companies. However, there were at least a couple - Legacy Audio was direct sales only for many years.
I suspect that the direct model may be more viable on a going forward basis, due to the internet. Brick and mortar stores are dying off, so more and more gear is being sold by on line companies like Audio Advisor and Music Direct. It also helps that consumers can get so much information about pretty much any piece of gear from online forums such as this one. If those companies can sell on an on line only basis, there's no reason manufacturer direct can't.
The system I'm listening to right now was purchased entirely on line, except for some cables. Some of it was used or kits, but the amp, preamp, tonearm, cartridge, headphones, and CD recorder were all bought new online, from several different merchants.
All of your arguments *sound* reasonable. But then you present Legacy Audio. There have been many that started off as direct sales only but then switched to dealers -- PS Audio is perhaps the most prominent example but there have been several others in the past decade. On the other hand Zu is the only company that went the other way. It is too soon to tell if they will survive.
I hope you got what you wanted through buying online. Even with a money-back guarantee it is something of a hassle to return it. Same for used. You can usually sell for close to what you paid (less the listing fees) but again the hassle factor raises its head. I don't think brick and mortar shops are going away anytime soon.
Think of it this way -- you could brew a nice cup of coffee at home for not very much money. Yet people line up to pay 20x or 30x as much to purchase it at their favorite local coffee shop. Why? Lots of reasons. Similar reasons exist around any luxury purchase.
And if I want to buy unless NAD or Paradigm it would be ordered online by the shop. And starbucks has closed 200 shops in the US alone doesn't sound like growth to me.
Been around over 12 years. No basement or garage work. Not just one man. To me the future is factory direct or internet marketing. Brick and mortar shops are dropping like flies. Ones left play it safe with name brands and little stock. When you purchase they order it online for you. Not trying to devalue the service a real store can offer but the ones I frequent are moving to HT or big name brands like B&W. Though I did convince my local shop to offer Ayre [your welcome]if I wanted to buy I would have to order it. So where are start ups or small manufacturing to go to sell product? Online is where. Demos will take place at audio shows or in home. Every year more people change to online shopping this is only going to grow. Why limit ones sales to fixed stores that's such dated thinking.
You seem to forget the companies outside USA. Linn do USD 27 million, Cambridge with Morduant-Short, Gale and Opus do similar, and there are bigger companies like IAG and B&W.
One comes to two possible scenarios. Either the small concerns worldwide are making an abysmally smaller revenue than I had originally projected or there must be vastly more revenue generated than is generally accounted for in the market reports pertaining to High-End audio?
Both of your scenarios can co-exist due to a third reason.
Many new companies survive for 3-10 years due to owners/investors funding.
They never make a profit. They invested assuming a larger demand than the market can sustain.
In some cases High End Audio is a tax deduction hobby for the owner of a rich company, doing other business.
Another case is Harman, who accepted a loss on their store sold products, because 2/3 of turnover was car audio. They got more profits from car audio parts, due to the fame of the brands, like JBL.
"Lock up when you're done and don't touch the piano."
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