Already a Bloomberg.com user?
Sign in with the same account.
THIS SONIC BOOM IS MADE IN AMERICA
Remember the glory days of American hi-fi, when names such as Marantz and Scott were synonymous with good sound and top quality? Along with the rest of this nation's consumer electronics, most of the once-great brands in U.S. stereo have long since been bought up or driven out of business by the Japanese and Europeans. But in one segment of consumer electronics--high-end stereo gear, where state-of-the-art systems fetch up to $100,000--U.S. companies increasingly dominate the $400 million world market.
In the past five years, in fact, small, mainly private U.S. companies such as Madrigal Audio, Krell, Wadia, Thiel, and Audio Research have been selling their gear like gangbusters to overseas markets. Their products are even in demand in Asia, where inefficient distribution drives prices to twice U.S. levels. "I doubt most Americans have ever heard of" these companies, says Makoto Fujioka, a leading Tokyo audio journalist. "But Japanese know them."
SWISS PRECISION. One case in point is Madrigal Audio Laboratories Inc. in Middletown, Conn., the 1991 winner of the prestigious Golden Sound award from Japan's Stereo Sound magazine, which called Madrigal's $13,950 Mark Levinson No. 30 digital processor the finest in the world. Such devices convert digital data from a compact-disk player into an analog signal that can be amplified to produce lifelike sound. Fueled by such glowing reviews, Madrigal's annual sales have skyrocketed to $15 million from $1 million in 1985, with 70% of the total now coming from 40 overseas markets. Dozens of even smaller companies are seeing similar gains.
Why pay so much for a stereo? It's the same urge that leads a concert pianist to shell out $100,000 for the finest Bosendorfer concert grand, says Mark Levinson, whose first company was taken over by Madrigal and who now designs equipment under the Cello name.
As with fine musical instruments, there are few economies of scale in making top-notch stereos. Production runs are short and usually done by hand with Swiss watch precision. Some companies still even use old-fashioned vacuum tubes, which many audiophiles believe produce a richer sound than transistors. Leads and connections are often made of gold to reduce distortion. "This is American workmanship at its best," says Jeffrey Luk, managing director of Hong Kong dealer Excel Hi-Fi Co.
In most components, there's also a major dose of the latest technology. For instance, Jeff Rowland Design Group's Model 9 amplifier puts out a staggering 350 watts per channel, 10 times that of a midpriced unit. Achieving such power without distortion requires separate amplifiers for the left and right channels and separate power supplies for each amp. The setup weighs a brutish 560 pounds and costs $22,000. Wadia Digital Corp. hooks its $8,400 model 2000 digital processor to a compact-disk player with a fiber-optic link usually found in advanced telecommunications gear.
CHEAPER SPEAKERS. A prime reason U.S. companies are so good at making such equipment is the talent they've lured away from other high-tech concerns. Among Madrigal's 195 employees are former IBM engineers and sonar experts from Connecticut's Naval Undersea Warfare Center. Wadia, based in Hudson, Wis., was founded by former 3M Co. telecommunications engineers.
Lately, some high-end stereo companies have been trying to expand their market by appealing to nonaudiophiles with lower-priced products. Apogee Acoustics, which recently introduced a $60,000 speaker system, also has a $995 model that incorporates some of its big brother's technology and styling. Richard Vandersteen, a former truck driver who 15 years ago founded loudspeaker maker Vandersteen Audio in Hanford, Calif., has a hot-selling $1,295 model. There are even new digital processors out this year at under $1,000, about half what the cheapest models used to cost.
Such products probably will never dent the sales of Sony, Matsushita, Samsung, or the other Asian companies that now dominate consumer electronics. But the U.S. companies have proven one thing. In the stratosphere of stereodom, buying American is still the best way to get the sweetest sound of all.Tim Smart in Washington, with Neil Gross in Tokyo and Laurence Zuckerman in Hong Kong