Jim Thiel: A Coherent Source Page 7

Thiel: Not only have you reduced costs because of the reduction in cabinet and woofer size, you very likely have been able to decrease the speaker from a three-way to a two-way, or a four-way to a three-way, because of the reduced requirements in moving air that you need for deep-bass reproduction. And the fewer number of drivers and the consequent reduction in the complexity of the crossover network all contribute to greatly reducing the costs. Beyond that point, I'm willing to make a product for a lower price that doesn't achieve quite the degree of sonic qualities that the more expensive products do. But I think you can usually achieve 90% of the performance for 50% of the cost.

Still, at some point we're not willing to make a product that doesn't provide a level of sonic performance that we consider very good. This is the reason that we do not make products under the Thiel name that sell for $500 per pair. We have no plans ever to produce a product in that price range. Not because products in that price range are necessarily not worth having, but because it's not the type of quality of performance that we're interested in producing.

Atkinson: With the SCS2, you're now producing a speaker that is intended for use in home-theater systems. Are there different requirements for a speaker that will be used mainly to reproduce movie soundtracks?

Thiel: There are differences. Number one, it has to be magnetically shielded so that it can be used near a television without distorting the picture. Also, the physical proportions have to be such that the speaker is suitable for mounting on its side for center-channel applications. Also, we have to pay a little more attention to ensure that the speaker is capable of playing at the output levels that some people demand when they're listening to movies. But other than those factors, which are pretty much external to the sonic performance, we did not treat the project any differently than we would have had we been designing a music-only product.

Atkinson: One of the things that worries me about retailers selling home theater is they might tell a customer who has a really good pair of music loudspeakers that they have to replace them with five "home-theater" speakers. Whereas it seems to me a much more sensible strategy to take the existing high-quality stereo speakers and build a home-theater system around them.

Thiel: Absolutely. A speaker is a speaker. A speaker reproduces its input signal. And if it's a great speaker, it'll reproduce its input signal very accurately. It does not care if the input signal comes from a music CD or a laserdisc. Now it may be true that some of the subtler points of imaging are not as important when you're reproducing a movie as they are in reproducing music. But that doesn't mean that the speaker cannot work very, very well.

Music speakers and home-theater speakers should not be thought of as being different types of products any more than the old argument that there were "rock" loudspeakers and "classical" loudspeakers. What they used to mean was that a good rock speaker was a speaker that had good dynamics and maybe good bass. And people didn't really care if its tonal response was accurate or if its imaging characteristics were good. Whereas in reproducing classical music, the imaging and tonal characteristics are much more important and maybe the dynamic characteristics are not as important. But a good speaker that has good tonal characteristics and good dynamic characteristics will reproduce both types of music very well. The same thing is true of this music versus home-theater situation. If you have a speaker that's truly good in all respects, it'll reproduce any input signal very well and work in any application very well.

Atkinson: Thiel is an American company manufacturing in the United States, increasing your vertical integration to the point where you build everything in-house, including your cabinets, your drive-units, and your complete systems. Yet the conventional wisdom would be that that's not feasible. How do you swim against the stream of popular opinion? How do you make your products in America and stay competitive in price and performance?

Thiel: The answer's complicated. One thing we always do is take a very long-term approach to the decisions we make. We do not necessarily expect any investments that we make to pay off in the short term. So we're willing to invest in machinery, equipment, methods, and training that will achieve economies in the long run, even though they may not be particularly cheap in the short run. Also, the focus of our company has always involved a very high value placed on the cost/performance of our product in the marketplace.

You mentioned in passing that we manufacture our own cabinets. Well, this is a good example, because it would certainly have been easier for us to set up a manufacturing operation that did not include cabinet manufacturing. But in investigating it in our early years, we discovered that if we were to out-source the cabinets, the cost would be much higher in the long run. There was a lot of investment required, but the end result is that, in the long run, provided that our quantities are fairly high, we can achieve much lower costs than we could by out-sourcing cabinets. That would not be true if we made very standard, common, square, small vinyl-wrapped boxes. We could undoubtedly buy them much cheaper than we can make them ourselves. But considering the fact that our cabinets are quite complicated and unusual, we can make them much cheaper than anyone else can make them.