[walkern]

I think one other thing may be important to consider.  As a general rule, nobody starts off 'big'.  Klipsch claims to be the largest (volume) speaker manufacturer in the world, and Paul began in the 1940s in a garage with one product.  I heard the original Wilson Watt (there were no Puppies at the time) at the Chicago CES, and Dave was a one man show (known for his excellent recordings... but not as a speaker manufacturer).  Vandersteen.  Theil.  Snell. Etc.  The bottom line... almost everybody (Revel is one exception that comes to mind at the moment) starts small.

[wywires]

Many manufacturers started out as a garage operation as one guy with a great idea including Dave Wilson and Niel Patel (Avalon) and of course Hewlett Packard as two guys with a great idea.

There is no guarantee of product quality or innovation when buying from a large company and often times the value for the money spent is questionable. The landscape in the high end audio industry is 95% very small companies and a few large conglomerates such as JBL, Harman, etc. Innovation usually happens in organizations with agility and freedom from over anxious investors nervous about the numbers for the quarter.

[art]

While this may be an unpopular view, the reason I'm just not crazy about the small guys is the reason Gary mentioned, they are all undercapitalized.  And unfortunately, one or two guys working in a garage just don't have the money for R&D like one of the big companies do.  Yes, you pay more money for a set of Wilson's, Focal's or (insert your favorite large speaker company here) but you get more quality control, an engineering department, customer service and support and resale value when you decide to make a change. 

I think when you plunk down $15k for a set of Wilson Sophia's your odds of getting 7-10k when you sell them used is pretty good and should anything ever go wrong with them, you'll be able to get them fixed immediately.

Whether that's worth the extra money to anyone is their call, but I've seen too many of these guys go under and now you have a product with ZERO resale value. 

Again, if you aren't talking big bucks, taking a chance on a small speaker mfr isn't a bad way to get a little extra bang for the buck, but I've yet to see any of the smaller mfrs. make a product at the quality level of someone like Wilson, Focal, Avalon, etc etc.

There really aren't any corners to be cut.  While the small guy doesn't have the overhead that the big guys do, they don't purchase in bulk, so the money you think you are saving buying from one of these guys just goes out the other window, because they have to pay 5-10 times as much for the same teflon capacitor that B&W uses.  So it's really kind of a wash in the end.

OK, I am going to take offense, at a lot of this.

First off, find any industry where the vast majority of smaller companies are not under-capitalized.

Second, you apparently know nothing of how Avalon got started, so don't even attempt to place them above the fray. (I am talking about the days before Neil took over. He wasn't there, so don't run to him for details.) And Wilson..............? He started out as a recording company. He only built his monitors for his use, during the recording process. It wasn't until after folks heard them, and said "Gee, Dave, these are awful good. You ought to think about selling some."

Third, mega-corporations, like Hewlett-Packard, were started in a garage. By 2 guys. (Guess what their names are.)

Fourth, I know what passes for R&D, at some of those big companies. Yes, they have more money to spend than I do. Doesn't mean it is well spent, or yields anything of merit. A lot of what is claimed to be R&D is just the hogwash the marketing department makes up.

Fifth, yes, we make up our inability to purchase in large quantities by substituting our labor. Yes, causes a lot to go belly-up. And your point is?

Sixth, do not even attempt to imply that smaller companies can not provide the same level of QC, that the big boys can. Or customer service. When is the last time you called your favorite under-capitalized high-end vendor, for product support, and you heard "Press 1, to continue in English"? And got someone in Mumbai?

Going back to doing the 3 jobs I am stuck doing this week, by myself. Over and out.

Pat

[wywires]

OK, I am going to take offense, at a lot of this.

First off, find any industry where the vast majority of smaller companies are not under-capitalized.

Second, you apparently know nothing of how Avalon got started, so don't even attempt to place them above the fray. (I am talking about the days before Neil took over. He wasn't there, so don't run to him for details.) And Wilson..............? He started out as a recording company. He only built his monitors for his use, during the recording process. It wasn't until after folks heard them, and said "Gee, Dave, these are awful good. You ought to think about selling some."

Third, mega-corporations, like Hewlett-Packard, were started in a garage. By 2 guys. (Guess what their names are.)

Fourth, I know what passes for R&D, at some of those big companies. Yes, they have more money to spend than I do. Doesn't mean it is well spent, or yields anything of merit. A lot of what is claimed to be R&D is just the hogwash the marketing department makes up.

Fifth, yes, we make up our inability to purchase in large quantities by substituting our labor. Yes, causes a lot to go belly-up. And your point is?

Sixth, do not even attempt to imply that smaller companies can not provide the same level of QC, that the big boys can. Or customer service. When is the last time you called your favorite under-capitalized high-end vendor, for product support, and you heard "Press 1, to continue in English"? And got someone in Mumbai?

Going back to doing the 3 jobs I am stuck doing this week, by myself. Over and out.

Pat

+1! In some magazines there is no wall between editorial and ad sales so the comment Pat is referring to is totally preductable. Happily this is not always the case.

[pslate]

Thinking for oneself vs. thinking with the herd

That's how I sum it up 

p.s. Sometimes going with the herd can work out just as well

[ted_b]

When I make a purchase decision the resale value is a part of it, but not a dominant buying criteria. 

I made the SP tech decision many years ago, after much discussion with AC folks and some reading on my own.  I hadn't heard one musical note come out of them. (this was true of the previous few speakers I'd owned too, like Sassons from Ridge Audio, and several from VMPS...all small mfger's).  I purchased 5 very hi-end SP Tech speaker/crossover sets (the best Bob manufactured at he time) and have come to respect Bob more over the years.  He has become a truly good and trusted friend.  Was he late on some promised delivery dates?  Yes.  Was I aware of the risks in buying from a mfger who could be out of business in the next few years?  Yes.  So why did I buy?  Because the product was innovative, special and high value...and also because this ownership experience means knowing the manufacturer and creating a relationship where i could ask for special mods or product tweaks, get personalized customer service, and possibly even gain insight into the design process of a very smart speaker designer.  ALL of those things came true.  I made sure i was informed all the way, was treated professionally, and eventually was welcomed into the customer base as if I was family.  Hell, Bob and Jason came to my house and helped install the speaker sets, twice!  (once for mains, once for the others).

I would never get this kind of insight, support and flexibility from a large hi-end manufacturer, and likely would pay a lot more for whatever I got (which I suspect is largely the aforementioned marketing budgets that eat into margins).  In fact, this same story can be told with now-friends Dan Wright (Modwright), Ethan Winer (Realtraps) and others.  This personal feedback loop that occurs between a small manufacturer and his/her customer is the backbone of early commerce, and is missing, out of necessity, from 99% of what we buy/sell/trade today.  There are pitfalls, yes, but the plusses outweigh significantly over time.  MY $.02

[Big Red Machine]

Thinking for oneself vs. thinking with the herd

That's how I sum it up 

p.s. Sometimes going with the herd can work out just as well

You sound like Manny of Ice Age, or was that Sid?

[Aether Audio]

GBB,

While I can appreciate the craft and love put into a product by a small manufacturer, I still think that many of them (not all) are marginal businesses and that makes buying products from them risky.  For some people the chance to get a deal makes this an acceptable risk;  for others it doesn't make sense.

It's not fair lumping the majority of small businesses into the same category as there can be very significant differences from one to the next.  Having had more than my fair share of negative experiences operating under SP Technology, I think I'm fairly qualified to help folks identify companies that are truly "marginal" and risky.

Other than the fact that a small "sole proprietor" type business always runs the risk of it's head "guru/genius/owner" popping a vein and taking a permanent "dirt nap," the single other biggest factor is his overhead.  If a small company has relatively low overhead, then the risk is minimal.  If the owner either operates his business "on the side" wherein his personal income is derived elsewhere (as in my case), or his personal needs are minimal in the first place (say his home is paid for) then the only real risk one takes is that of waiting for his order to be filled.

As in my case, seeing I have a day job now (NuForce) my time at the Aether Audio workbench is limited.  We may be a bit slow on delivery (especially seeing I always manage to get involved in engineering some new design on a semi-regular basis), but since my payroll (the biggest factor) is not funded by Aether Audio sales, managing what overhead that remains is not too big of a deal.  On the other hand, when working full-time at SP Technology the risk was not only delays, but whether or not it would fold altogether before a customer got his order filled.  Now days under Aether Audio, you may still wait a while... but barring my taking that "dirt nap," you'll definitely get your order filled and shipped... and supported at a later date should the need arise.

So, my advise to most folks is to not judge a company so much by how long they take to build a product, but rather how much internal risk they are leveraging.  Most times its not the "garage" guys you have to worry about, but rather the "used to be garage guy" that just took the next step to a big new facility and is running the business full-time now, and where he derives his personal income from the business.  Even then, if his dad or uncle owns the building he's working out of and most of his equipment is already paid for, then that's not even really an issue.  It's really hard to know looking in from the outside, but if you "dig around" as bit, it is often possible to get a good idea.

In some ways I suppose it's a lot like doing research on a given company that you're interested in buying stock in - except the "stock" happens t be a product you use in your home instead of a piece of paper.  In fact, I see all of my past and present customers as being stockholders in my business on a certain level... because if it weren't for them taking the chance they did... I never would have had a chance myself.  Thanks guys.

-Bob

[thunderbrick]

I go out of my way to deal with small businesses that provide good service, whether a hardware store, camera store or a car dealer.  Owning an item  is as much about the relationship with the firm than anything else.  I have lived all over the U.S., and I still call firms that treated me great when I was a penniless teenager, and do my best to spend my money with those folks.

I like companies that give their employees the authority to do the right thing without having to "check with the boss".  I called a large high-end machine products company recently to order a switch, and they told me the minimum order was $100.  When they found out needed a $5 switch they said, "ahh, hell, give me your address and we'll send you one for free"  Same thing happened when I moved to a new town and needed a plumbing part.  The guy at the hardware store said "That's under warranty.  Take this one and bring the defective part in when you can"  He didn't so much as ask for my name.  I'll be loyal to those kinds of firms forever, and I try to do the same for my customers when I can.  Your good name is far more important than a small sale.

I do like it when a small firm does so well that they grow and become more stable, but if they lose the customer service I'll move on.

Incidentally, the guys (and few gals) on AC embody this philosophy very well.  You put out a call for help and strangers (even NY Yankees fans) step up to help.  I was looking for an LP to replace a trashed one, and some guy (whose message I've lost) sent me a CD copy of it.  He refused payment and just said "pass the favor on."   

[thunderbrick]

Thinking for oneself vs. thinking with the herd

That's how I sum it up 

p.s. Sometimes going with the herd can work out just as well

A herd of zebras is one thing, a herd of lemmings is another.  The former rallies around to protect all; the latter buy Bose.

[turkey]

I haven't actually _ever_ considered resale value when buying a component. I buy them for me, not to sell to some other bloke in 6 months.

There are things that big companies do well and things that small companies do well. Perhaps one generalization we can make is that a product made in large quantities by a big company will cost less than the same product made in small quantities by a small company.

[Daedalus Audio]

While this may be an unpopular view, the reason I'm just not crazy about the small guys is the reason Gary mentioned, they are all undercapitalized.  And unfortunately, one or two guys working in a garage just don't have the money for R&D like one of the big companies do.  Yes, you pay more money for a set of Wilson's, Focal's or (insert your favorite large speaker company here) but you get more quality control, an engineering department, customer service and support and resale value when you decide to make a change. 

I think when you plunk down $15k for a set of Wilson Sophia's your odds of getting 7-10k when you sell them used is pretty good and should anything ever go wrong with them, you'll be able to get them fixed immediately.

Whether that's worth the extra money to anyone is their call, but I've seen too many of these guys go under and now you have a product with ZERO resale value. 

Again, if you aren't talking big bucks, taking a chance on a small speaker mfr isn't a bad way to get a little extra bang for the buck, but I've yet to see any of the smaller mfrs. make a product at the quality level of someone like Wilson, Focal, Avalon, etc etc.

There really aren't any corners to be cut.  While the small guy doesn't have the overhead that the big guys do, they don't purchase in bulk, so the money you think you are saving buying from one of these guys just goes out the other window, because they have to pay 5-10 times as much for the same teflon capacitor that B&W uses.  So it's really kind of a wash in the end.

having survived in the audio business (both pro & home) as a 'small manufacturer' for almost twenty years I have a couple of opinions about this.
 it's perfectly valid reasoning to look at the potential resale value of a high end audio product, and a new start up large or small is a risk that is up to the end user to decide if they can accept. btw, rule of thumb has always been five years big or small to see if they can stick.

 I have seen a lot of companies big and small go under (a lot of magazines fail too!). a for instance is one of the big guys, Hafler. I sold a lot of their amps to pro users over the years, they were bought up by a bigger company then closed doors, their value is pretty low now.  also my products rarely come up used but two of them this year got almost 80% of retail, at the same time similar speakers from some very big names were looking for 30%.  my point is there are a lot of factors in long term value other than how well capitalized a brand is.

 btw, the odds of getting 7-10k for a 15k set of Wilson's are pretty low when the wholesale is closer to 6k.  yes for export they offer as much as 65% off list.  in todays market more small companies are going to direct sale. this is a very fair way, since they can then price their product based on the product cost/value without adding in dealer margins, importer margins, large advertising budgets etc., all this is typically 70% or more of the price of the revered big name products.  so if that dealer network, nice showroom, glossy manual and full page ads are important then stay clear of the small companies.

as for the savings of buying in bulk washing out the savings from overhead etc., that is just not true. a popular misconception but at least in audio beyond the level of Best Buy , not true.  typically the bulk savings is in the realm of 10%-20%  of parts cost, occasionally  more, but on the whole it averages out in that range. this is nowheres near the margins and overhead of a full on sale & marketing staff etc...  btw my percentages are not based on individual off the shelf pricing vs moderate quantity, that is the realm of DIY and very small outfits. I'm basing this on my experience and communications over many years  with having parts made OEM and dealing direct with primary suppliers, some of them among the worlds largest.  another point on this is that in high end audio even the 'big' guys are not buying in 100,000 or 1,000,000 lots but generally MUCH smaller quantities. comparing the percentage of savings in parts cost between a $100 Best Buy speaker and a $10,000 high end audio speaker is not realistic.

again I want to reiterate it is up to the consumer as to what is most important in their individual purchasing decision. I've spent years in the pro music world and know that for many people the same arguments as here push them to buy a Martin guitar instead of a handbuilt instrument, but for others they would never consider anything but the 'small' builder. I know that I'm pretty excited about  my newest guitar that will arrive friday. a Froggy Bottom 12 string custom made in a small shop in Vermont. I guess the resale would always be good since these are very established as one the very best guitars in the world but I would never sell it and I don't believe the 'big' guitar companies have ever made many guitars that could touch this at any price. for me the quality and individual attention are much more important than the big company name. just a personal choice, which is what this all boils down to. rationalizations like 'quantities of scale etc are really not what these decisions are about.

I could go on but anyone with REAL manufacturing experience knows all this.

[bhobba]

I haven't actually _ever_ considered resale value when buying a component. I buy them for me, not to sell to some other bloke in 6 months.

Same here.  I recently became aware of this in purchasing a DAC from a small guy.  I had heard a prototype of the DAC and was assured the production version would be better.  Now I trust this guy and order the model with all the upgrades.  I hear the first dac from the initial production run - fantastic.  My fully tricked out version then comes along and me and a few other guys I trust go and hear it.  Everyone who head it said it was the best DAC they had ever heard, with maybe one exception, - you can close your eyes and almost and reach out and touch the sound.  I had a chat to the designer of the DAC who also came along for a while.  He explained the changes he had made such as fast recovery diodes for the valve rectification and a new special USB to I2S stage. 

I thought people would be chuffed at having such a good sounding DAC.  But you know what the reaction was?  If the guy changes the design so much its resale value will drop.  In fact at least one guy I know actually tells people not to get the DAC because of that, but really wants to hear it because of all the reports he is getting about how good it sounds.  I was flabbergasted.  To me I want the best sound - I don't want manufactures to hold off releasing new versions because of fear the resale value of previous units will drop.  The psychology of some audiophiles really leaves me scratching my head sometimes.

Thanks
Bill

[Jim N.]

Thank goodness for the small audio manufacturer! Sure, the big companies can be more stable and have a support network for the products but that cost is rather substantial for the buyer. I could never have afforded the quality of sound I get from my system had I gone through dealers selling gear from the big boys. I may lose re-sale value if the small company goes belly up but writing the gear off as a total loss may still cost me less money then the drop-off in resale value from new to used of the higher priced stuff from the big boys.

While the little guys may not have the R&D budget or economy of scale of the big boys they also do not have the advertising costs nor does the buyer have to pay the dealer markup.

Not all of us have the desire to drop 15K on a set of speakers or lose 8K when we sell them to move to something else.

Plus it's nice getting gear customized to your preferences and not buying one size fits all gear.

[bhobba]

While the little guys may not have the R&D budget or economy of scale of the big boys they also do not have the advertising costs nor does the buyer have to pay the dealer markup.  Not all of us have the desire to drop 15K on a set of speakers or lose 8K when we sell them to move to something else. Plus it's nice getting gear customized to your preferences and not buying one size fits all gear.

Yea - and the proof of the pudding is in the eating.  Bob's speakers regularly best the big guys speakers costing many times the amount.  The B&W 800 I mentioned previously at $37K was heard by a guy in the market for some speakers and was almost going to buy them.  I don't know why, probably because someone said he should check them out, but he went and heard the speakers of the guy that lives down the road from me.  He heard his $6.5K model and was flabbergasted - they easily bested the B&W's.  He was almost going to a buy a pair there and then, but the manufacturer mentioned he is working on a more upscale version with stuff like very expensive Duelund capacitors for $14K.  He decided to wait to hear that model and I will be going down with him in hopefully a couple of weeks to hear it with him.  Like Bob found when he investigated Mundorfs in his crossover this guy found similar things with Duelund capacitors and has high hopes for this speaker.  We will find out in a couple of weeks - but my gut feeling here is the $14K job will blow away the B&W's and save the guy $23K.

Thanks
Bill

[konut]

Good to hear that Bob has been getting a regular paycheck. Good to see a little traffic in the Aether Audio circle, bhobba good on ya! When it comes to small, independent audio manufacturers, one has to do their due diligence and research the principal owner and designer/s. Each one must be evaluated on a case by case basis.  The fact that Bobs' engineering chops are some of the best around makes the choice a little easier. There is always the intangibles, however. In the end.....well, sometimes its just best to quote Dirty Harry....  "you've got to ask yourself one question: Do I feel lucky? Well, do ya, punk?" 

[figcon]

I'm not a manufacturer now, but have in the past and think I that Tone is dead wrong.

The best audio products I've ever owned come from small manufacturers, especially the speakers I now own. Just because a company is large, does not mean that they won't go out of business. It can happen to anybody and any business, especially ones that rely on high end audio. In a world of MP3, where there are fewer people paying attention to audio quality, the smaller companies, with the correct way of selling their products, have every bit as good a chance of staying in business as the "big" guys.

As for R&D, it is a matter of who is designing specific products. In a small company is usually the owner. In a large company it is usually a guy who works for the company. Still, just a guy.

The bigger they are, the harder they fall certainly has been seen in this recession, so size alone does not guarantee a companies survival and an exceptionally good product will always retain most of its value, whether it was produced by a big guy, or a small guy.



 

[Zero]

The most significant pitfall that small manufacturers face is that the brand could be made extinct should the main owner/designer accidentally step in front of a bus. Otherwise, the playing field between the two is quite linear. 

[pslate]

Timely topic http://www.audiocircle.com/index.php?topic=88605.0

[Guy 13]

I'm not a manufacturer now, but have in the past and think I that Tone is dead wrong.

The best audio products I've ever owned come from small manufacturers, especially the speakers I now own. Just because a company is large, does not mean that they won't go out of business. It can happen to anybody and any business, especially ones that rely on high end audio. In a world of MP3, where there are fewer people paying attention to audio quality, the smaller companies, with the correct way of selling their products, have every bit as good a chance of staying in business as the "big" guys.

As for R&D, it is a matter of who is designing specific products. In a small company is usually the owner. In a large company it is usually a guy who works for the company. Still, just a guy.

The bigger they are, the harder they fall certainly has been seen in this recession, so size alone does not guarantee a companies survival and an exceptionally good product will always retain most of its value, whether it was produced by a big guy, or a small guy.

Hi Figcon and all Audio Circle members.
I agree 200% with what you wrote.
I prefer to do business with small companies or even with a one man company, because you can speak directly with the owner which is also the designer, the sales man and even the shipping person, therefore when you talk to him, he knows who you are and he knows where your order stand, no need to give him each time all the details.
That's why I do business with Blair Lamphear of Niteshade Audio and Danny Ritchie of GR Research.
Guy 13