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.

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.)

Antonio San's picture

Editing? woaw what a sorry rag. ciao

Mitchell Erblich's picture

Wes.. Show Report ... I missed the show this year, but here are my two cents anyway.. Your report seemed to show that you are surprised with this trend of the super hi-end and this bad economy. How many a/v manufactures are about to leave the market because of this economy? Should we wait or are we waiting to see who leaves or should we wait for new advances or have we already bought what we wanted? Did you see that the "low end" has been buying IPods in mass?My two existing favorite US hi-end companies have yet to even announce any support for Blu-ray. One of them used to show three lines of products on their website and now only shows one line. Is it due to trickle down or have they gone to one line of only 5 figure products? Time will tell. Will high end save some companies in 09? We know that the middle has fallen due to the loss of Tweeter, Circuit City, Good Guys, etc..And we are just in the first month of '09...

TypELasyfopay's picture

If you are a real estate professional, be really careful in dealing with KoRes Corp. in Weston Florida. Tulio Rodriguez & Monica Cataluna-Shand are shysters and look for anyway to steal ones customers. They attempt to steal your client by requesting their contact information and later contact them behind your back to get them to deal with them directly.

tjones9911's picture

I figure that since 2010 is over now, it's safe to say we can all see the longevity and power of high-end music servers. Can't wait to see what 2011 brings.


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