Thursday, December 04, 2008

The end of an era?

It’s always surprising that customers expect the price of speakers and electronics to defy inflation and continually drop in price. They may have been willing to spend $500 for a Sansui in the mid 1970’s but now they want a unit that has three times the wattage, five additional channels of amplification, video swithiching (or even scaling), and surround decoding for the same money. That’s particularly interesting when one considers that the cost of that $500 Sansui would be approximately $2,500 in today’s dollars. Unfortunately, the audio video industry is thought of in the same way as the computer industry. The costs associated with building audio products don’t follow the same rules as computer processors and hard drives that is set forth in Moore’s law. Moore’s law, which was developed to predict the advancement of computer technology states that the number of transistors on a chip doubles every 24 months. This increase in productivity leads to a decrease in cost for computers, but not audio. So what’s a manufacturer to do when customers are looking for prices to drop as their costs rise? For many manufacturers the answer was simple? Go to China.

Is the cheap Hi-Fi equipment coming from China a good or a bad thing for customers, companies, and the industry in general? That kind of question is impossible to answer in one word for anyone who is informed on the subject. David Wilson of Wilson Audio had some interesting things to say on the subject in a video that has been previously posted here. Compared to Wilson Audio’s approach of cost-no-object speaker building NHT has always been know as a company that wants to give it’s customers outrageous value for the money. Not surprisingly Chris Byrne (one of NHT’s founders) views on the subject have more nuance in them than Mr Wilson. Mr. Byrne, who isn’t against the manufacturer of goods in China does however see this trend of unbelievably cheap Chinese labor coming to an end. While he feels this means an increase in the cost for goods he also sees the potential to create local jobs and industry as well as reduce planned obsolescence. Another positive outcome would be a reduction in electronic waste. Please read his essay here.

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