Rappin' Up in a Down Year

At the end of every CES, we struggle to find the underlying themes that bind the show to the industry and the world at large. The overwhelming theme this year was the economy. Attendance was down—the official estimate was 10% off of last year's, but everyone I spoke with snorted in derision at that figure.

How down was it? Halls were navigable, even on Saturday, the busiest day. Taxis queues were less than 10 minutes, down from up to an hour last year. And, while restaurants were crowded, I saw one manufacturer book at table for six at the wildly popular Bouchon for Saturday night on Friday night. No, it wasn't a "normal" year.

So who didn't come to CES this year? Many dealers, especially dealers who weren't shopping for anchor lines. Buying one to show and one to go is an expensive proposition and any dealer who felt comfortable with his product mix either stayed home or flew in for one day. The attendance at the LVCC was down too—the collapse of the big box A/V retail chains meant that most of that sector wasn't so much looking for more stuff but rather for ways to offload the inventory on hand.

Even the big Japanese A/V companies were low-key this year. Kalman Rubinson, who attended the Wednesday press conferences, said that each presentation basically consisted of "Here's a TV, here's another TV, here’s another....

There was very little "affordable" high-end gear this year. There will always be some, of course, but the ratio of bang-for-the-buck products to ultra-high-end gear was skewed this year. The reason? Ordinary people aren't buying audio because they are concerned about other things right now—how much less the value of their house is than their mortgage, their existing credit card debt, or even if they are going to have a house to keep all their stuff in.

This is not a trend that began in September 2008, it has been going for at least two years and the manufacturers are hewing to a tried and true principle: If they ain't buying it, don't make it.

I spoke to one manufacturer who specializes exclusively in gear under $2k and he said he had no Christmas bump this year—that not only were his YTD sales down 30% in 2008, but the buying season resembled mid-summer, a traditional slow sales period.

On the other hand, I spoke to a loudspeaker manufacturer who was marveling that sales of his $80,000/pair flagships went up by 40% in the months since September. Asked why he thought that was, he reflected for a minute and said, "The people who can afford $100,000 for a pair of loudspeakers aren't effected by the economy the way you and I are—they have money enough to be comfortable. But all of the things they traditionally acquire are money-losing propositions right now. Buy property and you'll take a loss. Buy stocks, ditto. Invest in the market and you'll probably eventually make money, but it's a nerve-wracking proposition. So the answer is to buy stuff that makes you happy."

He reflected a minute and added, "Heck, in this market, if you hang onto the cash, you lose money."

I spoke to several DC economists (one at the World Bank, one retired) about that reasoning and one responded, "Given the interest rates on Treasuries, there is really no opportunity cost for cash-rich rich-folks to buy luxury consumer goods."

You can't blame manufacturers for focusing on where the sales are. Keeping their employees working is good for all of us.

That doesn't mean we're happy about the status quo, but railing against it is futile. We just report on what we see—and we hope to see a resurgence of affordable high-end soon.

On a happier note, this was the year that the high-end really embraced the computer as a source. Ayre, Music Hall, Chord, Esoteric, Wadia, and High Resolution Technologies. Bel Canto offered a USB to 24/96 D to D link, while Weiss went its own way with a FireWire DAC. Peachtree Audio offered a DAC input on it Nova integrated amplifier, as did Simaudio (as an optional module) on its Moon i3.3.

High-end music servers are a growing category. Sooloos's merger with Meridian has already borne fruit and Qsonix and Soneteer continue to refine this category. Blue Smoke brought us the Black Box, an all out attack on the computer's weaknesses as an audio source.

If that's not what the High End is all about, I don't know what is. Jon Iverson likes to say that the mass market creates the demand and then the High End perfects the paradigm. That's precisely what these companies are doing—and it shows that there's health in high-fidelity despite all odds.

And that's why I am smiling in the photo (right), with Home Theater editor Shane Buettner (left) and Jon Iverson (center), webmaster for Stereophile, Home Theater, and UltimateAV.com.

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COMMENTS
suits_me's picture

"If there are enough people willing and able to spend say $100K on a pair of speakers then why not cater to that demand." There are not enough people to support such an over supplied, over heated market over time, as the housing bubble just got through showing. It's a distortion. And besides, the bulk of the objections have focused on absurdly priced interconnects, hilariously costing more than some houses at this point.

suits_me's picture

"To criticise an audio product without having heard it is clearly nonsensical and does raise the prospect of an agenda against PSC...." I never commented on the sound of the oft mocked 60k interconnects. I said the pricing amounts to a con, that there aren't enough recordings of sufficient quality in the universe to justify such absurdities and that I'd have no interest in hearing such a product in any evaluative sense, (I mean, as opposed to wandering into a show room to see what's going on.) There's no agenda against whatever company of geniuses thought to soak audiophiles to the tune of 60k for interconnects, merely open mockery. Hope this helps.

Mark PSC AUDIO's picture

"Open mockery" doesn't amount to as many posts as whoever is hiding behind those messages had already posted , I'm afraid. But that's all right, just want to present the manufacturer's point of view : if there's a client with specific demands and means, ordering a custom made gold/silver interconnect , why not meet those demands? 25 gold ribbons per pin(x3 for balanced cable) multiplied by 1.5m would cost a lot just for the raw material, not to mention labor costs, margins etc...It's ridiculous to think that you can stop anyone who can afford such luxury (like the $1.5m watch or a $1m gold Stratocaster you'd find in Las Vegas shops) by writing endless rants about how unfair it is to afford or produce expensive cables in a current economical climate. Incidentally, our audio-communist "suits_me" seems to complain only about the prices of cables, nothing else. It's most intriguing that he managed to complain about DH Labs $11K speaker cables. Do we sense a

Mark PSC AUDIO's picture

Do we sense a cheap cable brand rep hiding behind those posts?

tom collins's picture

mark: thanks for your take. i had planned to just let this thread die because it has become such a waste of time, but had to say that i am glad you got in on the conversation. why not produce such a product - how about if you didn't do it, someone else would. i think these guys (you know who you are) should sell all their gear and worldly possessions and join a monastary where they can pray for human nature to change. these guys are pretty much carrying on the political right v. left battle we just weathered. no one is going to change their mind by anything that is said here, but just like rush limbaugh, by God, they are going to keep saying it whether it is logical or not.

Jason Victor Serinus's picture

Yes, Tom, much of this thread is tiresome. Every argument has been addressed, both by John and Mark of PSC (whose cables I hope to hear, btw). Yet the assaults continue from the same posters, multiple times, again and again. It's as though they want blood, or at least JA and myself on our knees, Speaking just for myself, I see no reason to go there. As someone who takes responsibility for his actions and believes in criticism / self-criticism, I respond to criticism by examining my actions to see if there is cause for complaint. I also ask what I might do differently next time. I see no fault with my coverage. I walked into a room that of a company I'd never heard of before, and spent quite awhile exploring their product line. Then I wrote the report. Someday I hope to hear PSC cables, but that had no influence on my report. Since my coverage is accurate, I can only conclude that the thought police are again at work. No thank you. I wish they'd go after all the US corporations with offshore shelte

Jason Victor Serinus's picture

let's try that again...I wish they'd go after all the US corporations with offshore tax shelters and plants in China instead. (BTW, did you notice that I intentionally say manufactured in the USA in a number of my blog entries)? How about taking it up with the people in Washington who have put us into this mess. Take it up with the people who control the media, and have made the American people among the most mis-informed First World populace on the planet. Instead, Stereophile has become the target. As someone who lives in a Oakland, CA, one of the most crime-ridden cities in the USA, where innocent people are frequently the target, I'm accustomed to the terminator mentality that sees life as a cross between a football game and shooting range. That's not where I want to go. Hence, folks can complain 'til the cows come home. I know that my coverage is fair and accurate, and that our blog is extraordinary. Hence, without a trace of guilt, I continue to enjoy the music. -END-

Dave's picture

Suits_me.."If there are enough people willing and able to spend say $100K on a pair of speakers then why not cater to that demand." There are not enough people to support such an over supplied, over heated market over time, as the housing bubble just got through showing.AND YOU KNOW THIS HOW?

JIMV's picture

"Wow! JIMV, I'm certainly not an economist but I don't follow your argument at all. Even if I did borrow money to buy my made in America gear, and even if my local credit union was getting the money from China, doesn't my buying decision help support local workers?" - Anytime you buy anything you help local workers. The question is, does the purchase of a reasonably priced foreign made item have a worse effect on the economy than buying product one cannot afford on credit recognizing the money goes out of the country anyway. I believe the personal result of debt cancels out the advantage of buying local.

JIMV's picture

"25 gold ribbons per pin(x3 for balanced cable) multiplied by 1.5m would cost a lot just for the raw material, not to mention labor costs, margins etc..."Some basics...no one as far as I know makes solid gold anything. Gold plated, even on pure silver, uses VERY little gold. A $100K 'Gold' filled Amp might have all of a half troy ounce of gold in it but more likely 1/10 or less. 1/2 oz of pure gold is worth about $420 today. Vermeil (gold on silver) as in interconnect might use a few ounces of silver and a tiny amount of gold with a metal value of well under $100.Folk who speak of gold connectors and silver cables all rely on folk not knowing just how little metal is in the thing and how much the metal is worth. Oh, and gold and silver are very easy to work, unlike say, platinum, so the labor costs are minimal.

Jerry's picture

To quote a sales manager of mine, “Take a pound of crap and package it fancy enough and spin the right song (sales tale) to go with it and you can put a $1,0,000 price tag on it and sell it”. The people who buy you equipment are those for the most part have been raping and pillaging the economy and could really care less who they step on. Apparently the lesson learned here is that the instant orgasm of self indulgence rules. But in this day and age when the dust settles, if US government ever starts IT forensics on what has been occurred in the last year, we will find a whole lot of unsavory characters foreign and domestic. The list will most likely include many of the foreign companies and governments that have absorbed (or purchased) our trade surplus and killed Wall Street all the while enriching them selves and play stock options bingo. Competitively produced and MADE IN THE USA. We have over 11,0,000 unemployed. I have got to find out if audiophiles were the model for the Frazier show.

Mark PSC AUDIO's picture

I strongly advise that JIMV checks the battery in his calculator before writing his next comment. 25 ribbons x3 = 75 ribbons. For a pair of 1.5m you'll need 150 ribbons in total.If you already found the way to make a pair of gold /silver cables as cheap as you mentioned, perhaps you could attempt making one yourself. We could then compare "A to B". If the cost of labor in the US is much lower than in Australia - perhaps you may be able to lower the price from 60K to something like $9.95. Skilled labor in Australia is very expensive: eg: a concreter makes 2K a day in Western Australia where the economy is booming thanks to very high commodity prices and huge demand for metals. For your information: platinum happens to have a much lower conductivity than silver/gold. The parts are playing smaller role when calculating a recommended retail price, while the R&D which could take years, is much more expensive.Nice try JIMV...

JIMV's picture

Pure 24 Carat Gold costs under $850 and ounce. Do you have any idea how many connectors that much gold could cover? Hundreds. Silver is around $11 a troy ounce. For a 50lb amp to be worth $100K in gold content, it would have to consist of over 10 pounds of pure gold. If silver it would have to weigh over 800 troy pounds. The price of the product simply is not the result of the cost of any precious metals within. No audio product contains gold measured by the ounce much less the troy pound.You confuse the cost of manufacture with the cost of materials. I do not. Weigh that interconnect...How much does it weigh? half a pound, a pound max. Is it 100% gold....nope, 100% silver?....nope. They may have a few ounces or so of silver in them and perhaps 1/10 of an ounce of gold plating MAX....that makes a value in metal of under $200....the remaining $59,800 is manufacturing and markup....LOTS of markup.

suits_me's picture

"There are not enough people to support such an over supplied, over heated market over time, as the housing bubble just got through showing. AND YOU KNOW THIS HOW?" Simply because economic history shows how distortions always wind up, be it tulip bulb or real estate or internet stock option manias. It is "never different this time." This is not a complex idea. In fact, all the show reports say that all but the ultra high end of the audio market is reeling, and I'm unaware of any consumer segment (or society) which can withstand the loss of the low and middle end. At a certain point it has to cascade. 60k interconnects are a marker of these unsustainable imbalances. Lastly, while I am not a "cheap cable rep," I do wonder with glee what would constitute cheap cables in the mind of someone grossing 60k for each pair sold. Whoever is selling these unspecified "cheap cables" certainly is not competing for marks, I mean, customers, with the 60k interconnect folks.

FleecyEars's picture

What's price got to do with it? I can provide many examples of many cables, whose price does not necessarily reflect the cost of the raw material cost. Eg. Stealth Indra, Audio Note, etc... One should really take into consideration the R&D, labour and actual net cost of the wire as manufactured and prepared from the basic raw material, whether it be copper, silver or gold.I myself have been using a wide range of PSC cables for around 6 years and the current collection includes power cables, interconnects and speaker cables. I have a limited budget, but have managed to acquire few of his pure silver range of cables and find the performance to be exemplary. With the wide section that's available today, I don't have to use the PSC cables, but I do because I love the personalised service and their cables complete anything else I've tried over the years.The Stereophile reports are informative and excellent, but the personal attacks in the comments do nothing to promote or highlight your y

FleecyEars's picture

Sorry, the last line was supposed have read as follows:The Stereophile reports are informative and excellent, but the personal attacks in the comments do nothing to promote or highlight your cause. Get over it and let this forum provide a window to express sensible views and comments.Thanks

Dave's picture

Suits_me, Apparently at the present time there are enough consumers creating a demand for these high priced products ( remember that high price is a relative term)and that manufacturers are able to make a profit by catering to that demand.I see nothing wrong in that. However,I would certainly agree that these products could never be called a sound financial investment likely to produce any kind of financial return.I think you maybe getting confused between financial/monetary markets and retail markets.

Jerry's picture

Amazing, someone on the inside or a talented hacker has removed the last 3 entries from the blog page; there were 51, 2 of which were mine. Was there some truth in what was said? Psychological consoling anyone?

John Atkinson's picture

Jerry wrote: "someone on the inside or a talented hacker has removed the last 3 entries from the blog page; there were 51, 2 of which were mine." We are deleting some of your posts, Jerry, because this is not the appropriate place for you to vent your spleen at a specific audio company or to attack other Stereophile readers. If you (or anyone alse) does wish to air your views on matters that are not connected with this CES wrap-up report, please do so at http://forum.stereophile.com/forum/ubbthreads.php . We will continue to delete posts from this CES report from readers who, in our judgment are abusing our hospitality.

Antonio San's picture

As far as I am concerned, professional sound is the reference. Last year one reporter was raving about JBL everest latest incarnation... That's no non sense professional sound: dynamic and true. Do celebrated violinists record their art on a Strad with 60k interconnects from the microphone to the console? Of course not. End of Matter.

Mark PSC AUDIO's picture

Antonio, "of course not"? AND HOW DO YOU KNOW? Incidentally, there is 72 feet PSC special microphone cable in one of LA's true high end private studio. The original invoice for that job it's showing 82K. (ref to p.4) When your violinist friend will be good enough to record with the top musicians in a professional studio, he will have a chance to spot the cable.

Frank's picture

I would love to hear a recording made in a truly high-end studio, by a truly talented ensemble, and a genuinely gifted recording engineer (regardless of cable type used, as long as it's quality stuff). That's really the next frontier. And it wouldn't matter how expensive your system is/isn't - any decent system would show the benefit! (And yes, CD would be fine and dandy with me!). There are already some fine recordings out there, but they are all too rare. I would prefer small chamber ensemble/orchestra w/woodwinds, but almost anything would do.

Mark PSC AUDIO's picture

I have this funny feeling that our company is being targeted in some strange rubbishing campaign while the writer under disguise of JIMV has no interest in commenting on $139K/pair LAMMs for example & is totaly ignoring info on pa ge 4 of this report which reads: “Siltech’s “crown” is the Siltech Emperor, Containing 8Ns single-crystal silver , a 2m pair of interconnects costs$37.000(BTW: 1kg of 8N silver costs$45.000). JIMV has the audacity to claim that PSC 150 gold/silver ribbons only cost $11!!!, What a pile of rubbish!! Have a look at Zero Gold interconnect from Tara Labs ($18K) or pair of Ypsilon monoblocks from Greece ($70K)? While comments about the price of those monoblocks have nearly started a war against foreign Hi End product in US, shouldn’t the $139K price tag for LAMMs be the cause for a civil war? How about declaring an outright war on all Hi End components priced above $5999? Or better still – a total ban on all luxury items.

Antonio San's picture

Some of the best ever recordings -analyzed in Stereophile like Sonny Rollins West album- were made in the 1950s. In the classical field Mercury Living Presence 45RPMs were never made on such precious cables. I have been recording as a producer in professional studios, listening to professional studio monitors demonstrations for 25 years, so your one job by one overhyped studio is merely an rarity. I recall the owner of Cello, a defunct brand of praised high end, recorded the Terrasson trio in the 90s with his electronic... it sounded average at best. It's like the guy that can afford a Rolls and has to put a golden "spirit of ecstasy" on the hood, in case we did not get he was well off...

Jason Victor Serinus's picture

Today, Barack Hussein Obama was inaugurated as President of the United States. Today, Aretha Franklin, the Queen of Soul, stood up at age 67 and sang magnificently, with great spirit. Today, one of the founders of the Southern Christian Leadership Conference had the chance to stand where Presidents have stood, and not have to return home in the back of the bus. It's time to lay off the bitch fights for one day. Nothing anyone says will change the fact that Mark has the inalienable right to make cables and charge what he will, and those who want to buy them will. Nothing will change the fact that at least one high-end studio values his cables. How many times can we go around in circles about this? Come on. Take a break from it all. Enjoy the music. Smell the flowers. Give it up to Jesus. Let it go already. No one can possibly win here.

JIMV's picture

"By Mark PSC AUDIO"...Son, if you have read anything I have posted on the regular Stereophile forums, you will find I define the problem not in terms of individual companies or products in the $100K and up range but in the concept of 'value' for these niche products and the reality that very, very, very few folk in the hobby will ever hear such gear much less own it. The heart of the hobby is not the sale of a few hundred megabuck items from a score of companies but the thousands and thousands of items that folk in the hobby will see, hear and own. My comments on citing precious metal content, tank like construction or high end parts is to simply state a reality, that the cost of these things are only a tiny part of the sale price so blaming the megabuck price on gold this and silver that is nonsense. Speaking of 'value' in a $100K product is simply affectation. I aim not at the manufacturers but at the writers who pretend 'budget'. modest, and value apply to 5 or 6 digit pri

Mark PSC AUDIO's picture

This is my final comment as I'm getting very busy with the production. Busy studio producer would never ever pick on 60K interconnect simply because that is not the studio staff they may be interested in. They read totally different sides and magazines and they have "special name" for audiophiles. So my Antonio you are Suits_Me under new name pretending to be Quincy Jones. Well you can always prove me wrong by sending email with the picture or address of your not so famous studio, than my US rep can bring PSC Pristine silver plated $350 (not 60K ) microphone cable with him . It will definitely win against your heavily oxidize nearly not conductive old copper cables. For you information Antonio ( Suits _ Me better) silver is the best conductor and does not oxidize. Would your already red neck go purple if I tell you that there is more than one PSC mic cable in the pro studios there?JIMV you went too far accusing PSC of ripping of their customers and son ..you are BORING

JIMV's picture

mark AT psc...I do not want to crush your fragile ego but I have never heard of PSC Audio and have never seen much less heard any $100K item. If folk want to build them, great. If folk want to buy them, better, but when folk begin to pretend $100K audio gear is good value...sorry BS. Only the folk who have paid $100K can say if they were ripped off, not me. If folk tell me that some item with $5K worth of parts is worth $100K because of those parts, Again I say BS.

Dave's picture

Surely if PSC Audio is able to sell $60K interconnects to enough people then I guess we can say that a market for this product exists. If PSC Audio makes an absolute killing in regards to the profit of these same items and if(BIG IF) the consumer of these products feels that their money has been well spent to purchase the product, is there anything wrong with that picture?I suspect that the ipod has a very high profit margin built in but nobody seems to be complaining about Apple. Is it because their product is at a perceived low price or ?

Bobvin's picture

WOW! What a blog? I am intrigued and amuzed at the contempt shown by some of the contributors. So you think someone's comments on affordability are off the mark--Big f'n deal! If you get spun up on someone's reporting or comments you must have a lot of time on your hands or you're not too happy with your life. Don't earn enough to afford a 60K interconnect? Then it isn't in your scope of value/return. No problem. If you have the $$, like what you hear, and believe there is enough value then by purchase the wires and enjoy life. If you feel the 60K wire is what you want but can't afford it, then find a way to AFFORD it (not go in debt for gods sake) by improving yourself to provide more value to your fellow man in a way you will earn more $$. Don't knock the guy who found a way to afford it, or the guy who makes it. Pricing in capitolizm is often what the market will bear (unscrupulous advertizing aside.)

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