Hovland Calls It Quits
Alex Crespi, vice-president of sales and marketing and one of Hovland's four original owners, confirmed by phone that Hovland Company was done in by a combination of low cash reserves and the extremely high cost of manufacturing its hand-built products.
"Our original business model called for about 40% of our business to be domestic and 60% international," he said. "Over the last few years, sales were weighted further and further toward the international arena, until they became almost 90% international. This lowered our profit margin greatly, because while US distributors get their product at 40% off retail, international distributors receive a 5256% discount.
"Sales in the last quarter of last year and beginning of this year were dismal worldwide. In the second quarter of this year, they absolutely died. We had a staff of 12, including ourselves, and our monthly break-even was $90,000 a month. Every time we fell short, we three company officers as well as our vendors couldn't get paid. We hung on for more than a year, but this summer it became completely untenable."
While Hovland's website will be up for a little while longer, their service and support facilities and warranty coverage no longer exist. Crespi, who will do his best to respond to e-mail sent to firstname.lastname@example.org, recommends that owners of Hovland gear in need of repairs turn to qualified service centers, among them Ben Jacoby's High End Audio repair in New York City, Brooks-Berdan Ltd. in Southern California, and Sounds of Music in the UK. Schematics are available to service centers domestically and internationally, and most component parts are still commercially available.
"It is really with a heavy heart that we leave this," Crespi said. "We feel terrible that a lot of people have invested in our components and will be left high and dry without support."
All is not bleak, however. A few of Hovland's prized products are slated to continue. Design and manufacturing rights to the Music Groove 2 phono cable, which Michael Fremer re-reviewed in the July 2009 installment of his Stereophile column, "Analog Corner," have been purchased by Bob Graham of Graham Engineering. Presumably, Graham will continue to offer the same wire under its own name, possibly with a new choice of connectors; the Music Groove 2 should be back in stock within a few months. While the fate of Hovland MusiCaps, which have found their way into hundreds of OEM speakers and electronic component`s, including Barbra Streisand's mikes and Santana's guitars, is as yet unknown, they, too, will possibly resurface under different names.
Hovland first made a splash with the HP-100 preamp, whose blue-lit front panel, with its three big knobs, was visually stunning. It also sounded quite good. Both Michael Fremer in Stereophile and Harry Pearson in The Abso!ute Sound waxed enthusiastic about the HP-100, which launched Hovland as a hardware manufacturer.
Hovland's next product, the Sapphire power amp, ended up on the cover of Stereophile (March 2002). In its nine years of manufacturing electronics, the company built a distribution network in 35 countries, and was the subject of 14 cover stories in major audio magazines around the world.
"Our products came out at a time when design aesthetic was an afterthought for most companies," said Crespi. "Part of what made our success was the aesthetics. People thanked us for making products look as good as they sounded. Pretty much everybody followed us with [the] aesthetic angle. We did over $10 million in wholesale business in nine years. While we wouldn't put out anything that didn't sound good, our sales figures were an acknowledgment that people who are affluent want something that is good-looking in their homes. And while the names of our products remained the same over time, with the exception of the HP-200i remote-control preamp, our sound continued to improve."
Hovland had a number of new products in pre-production when they decided to throw in the towel. These included a preamp to match their much-coveted powerhouses, the Stratos solid-state monoblocks, as well as an integrated amp. Never seen was an Ethernet and USB CD player/DAC that was three years in the making and intended to be a "state-of-the-art assault on computer and CD playback." All Hovland company design rights remain in the hands of a secured creditor on whose promissory note Hovland defaulted.
Crespi believes that whoever wished to restart Hovland Company would first have to buy the rights back from that creditor for perhaps $200,000, then approach Hovland's Jeffrey Tonkin and chief engineer Peter Russell and sign them to a contract. The next task would be to establish a location and hire and train staff. Crespi estimates that, after spending a cool million, someone with enough reserves to make it through the current financial slump could have Hovland back in business.
"To have Hovland come crashing down and dissolve has been gut-wrenching," Crespi said. "For all of us, this was a lifelong passion and dream. Jeffrey Tonkin, our chief industrial designer and president, gave up an architecture career. I've been doing this since I was 14, and gave up other dreams. I really love the high-end community. It's a cottage industry, with some of the nicest people I know and a shared passion for music. Walking away from all this is really one of the emptiest feelings I can have."