Media Reports

Audio Slowdown?
By Barry Fox
Multimedia Manufacturer, Sept/Oct 2005

Marantz fears the audio industry is in terminal decline, unless manufacturers adapt to survive by creatively rethinking their design, production, and marketing strategy.

Marantz now has its own factory in China and at the company's annual seminar for European press and trade, Terrie O'Connell, MD Marantz Europe, confirmed that although Denon and Marantz will remain separate under the D&M parent, they will "move towards sharing manufacture."

"Brand Ambassador" Ken Ishiwata gave his annual "state of the industry" address based on world electronics trade figures from JEIDA. Constrained by copyright, Ishiwata only flashes figures on screen for quick hands to note.

Home audio sales are slowing from 63.7M worldwide to 63M and 62.3M, of which 34.7, 34.8, and 34.6 are mini/micro systems. Amplifier/receiver sales are stagnant at 5.3, 5.2, and 5.2M.

Home theatre in-a-box sales are now rising only very slowly, at around 1M worldwide. As happened with quadraphonic in the 1970s, people are turned off by too many speakers.

Marantz is now concentrating on two-channel stereo for the hifi market (with two stereo SACD players), with multichannel SACD only for AV (two DVD players have SACD surround playback).

Suggests Ken Ishiwata: "The best lesson is from what happened in the 1970s, when the Japanese watch industry killed the Swiss manufacturers' business. The Swiss came back by offering sexy, attractive products that created desire. It was about emotion. Music is about emotion, too. You can't buy Swiss watches on the Internet either. It's time for the specialist audio manufacturers to do something like the Swiss watch industry. To make people say "I want that." There has to be a different approach, which people feel something is different. Apple did it with the iPod. They took away Sony's market. I really hope we can see something similar in hi-fi.

"Bose have done a wonderful job from a business point of view. They knew exactly where they were going. They communicated and created brand awareness. They bypassed the distribution and were consistent. They are the most consistent company in audio."

Marantz will not even consider direct sales. "Our dealers are our partners" says Ishiwata. "We have a contract with our European dealers, which was carefully checked with lawyers. B&O have a similar control system. If any dealer sells by mail order, or on the Internet, their contract is terminated."

"But there is nothing we can do if a mail order company buys from an authorized dealer and then sells over the Internet" admits Ishiwata. "They do that so that they can use our name in their lists. They lose money by buying from an authorized dealer and then selling on at below cost, but they make money in the long run by being able to promise all brands."

The hi-fi industry has already tried to adapt by offering higher quality surround sound, from SACD and DVD-Audio. DVD-A is now virtually dead, sunk by the easier availability of surround from DVD-Video Dolby Digital and DTS.

SACD is still alive, thanks mainly to the sale of SACDs as stereo CDs. The fact that Marantz now crafts only stereo CD/SACD players, and markets SACD surround players as a DVD AV product, speaks volumes about the feeling most music lovers have about surround. It's a re-run of the quadraphonic boom and bust of the 1970s-too much hassle for too little benefit. Some will say no benefit.

Bert Kiggen, Marketing Manager, dismisses rumors that Sony and Philips have pulled all support for SACD. "They have always said that when you have 2000 software titles you have a format. There are now more than 3000-with the 3000th Brothers in Arms, the title that was the breakthrough for CD. Sony has now withdrawn central support for SACD, just as Philips did two years ago. Because it's now a format you don't need central support. They haven't withdrawn support, just central support."

Dual Disc was touted as the way to make DVD-Audio go mainstream, by offering a disc that plays from one side on a CD player and from the other on a DVD Audio or Video player. The European launch was a complete damp squib and concerns over disc thickness and optical playability persist.

"We don't expect a lot from Dual Disc," says Bert Kiggen. "We have a warning on our website, just as Sony has one. One Sony division presses the discs and another warns about playing them."

One survival option has been simply to integrate MP3 playback with home audio. But quite apart from the insidious move towards lower sound quality, this sucks hi-fi into the awful computer world of downloading software updates. The software that drives these systems is always being improved or patched to fix problems. This is tolerated by PC users, even seen as a games-like challenge, but it is not what home entertainment is all about.

Ken Ishiwata hints at how Marantz is planning to do something different. "Putting an iPod dock is one option but Apple charge a lot in royalties. We are thinking of something similar-but special to us."

Better sound from fewer speakers sounds like good news, in theory at least. Opsodis, a commercial company spinoff from Southampton University in the UK, has been promising good surround from only front speakers. The Opsodis system builds on the well-known crosstalk cancellation principle. Sound from the left channel is reversed in phase and added to the right channel so that it cancels out and the right ear hears only the right channel to give a binaural effect.

Marantz gave Opsodis the opportunity to talk to the press and demonstrate the technology. The aim was to get feedback but the Opsodis team, including Chief Technical Officer Takashi Takeuchi, clearly surprised Marantz by announcing that Marantz would "launch during next year," that "many AV manufacturers will join this sound revolution," and "Marantz will lead the move." During a hard-to-understand description of the complex theory behind the system, Opsodis claimed "natural sound quality anywhere in a room . . . with minimal manipulation" and even quoted a price—2500 Euros for a "lifestyle" system including a Marantz amplifier with built-in Opsodis processor and front speaker units.

Demonstrations were given to groups of only five journalists at a time sitting in the room center, in front of a plasma screen and three bookshelf speakers laying on their sides like small coffins. The center speaker has two tweeters (left and right) and two mid-range units (left and right); there are two bass drivers in each of two outer cabinets. The walls of the room were damped to show that the system did not rely on wall reflections, like some Bose systems.

He also explained that the use of eight drivers at a spread of different horizontal positions was necessary because different frequencies should come from different directions. "I would prefer more driver units-ideally an infinite number," said Takeuchi.

A demonstration recording of frogs at the front and thunder at the rear was very effective, and excerpts from martial arts fantasy movie "House of Flying Daggers" sent fight and drum effects wafting round the room. But a recording of a car driving away gave an image which was hard to locate. Most worrying, my request to hear music through the system was refused. "We have not prepared any music" said Takeuchi.

No music at a Marantz audio event?! No wonder Marantz said afterwards that they would only be interested in selling Opsodis as a way to produce pseudo surround from a lifestyle-style AV package, with a single small and stylish speaker unit at the front-not three large front boxes that users may well find more intrusive than a quartet of small satellite speakers round the round.

Barry Fox reports on the audio industry as columnist for the British publication Hi-Fi News. His commentary also appears in every issue of Multi Media Manufacturer.

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