HOVLAND CLOSES DOWN

Very sad.

Another one bites the dust. Maybe a lesson here ?

Manek

"They really need to go to China or India!! 12 people gulping down 45 lac rupees every month in making what???? A couple of handfull amplifiers!!!!"

Its not sad.... this is just insane... No wonder they lead such cushy lives. In india, even if we pay all the 12 an average, handsome salary of 50K, it will still be 6 Lacs and the monthly cost of over-heads not more than 2 lacs.

It is not as easy as using currency conversion Switch-It-On and its not cushy lives really..cost of living is just as high as the salary.

And let's not go to the manufacture in China equation.

I would like to fuel this debate ....

A few audiophiles have been exchanging private E-Mails today, on this topic.

I will share ( Names have been withheld )

One Commercial Audiophile wrote :

Well I got to know this two months ago. High end is always about companies emerging and folding, nothing new. Some jack will buy the brand and take it from thereon. It is not about what we admire as high end but what most people perceive as music playback is far removed from that what we admire. It should be more of a wake up call to all users who do not want to pay for dealers, manufacturers and distributors for their knowledge and efforts, that this has to happen, financial opportunities elsewhere will end up being better. Finally high end as we know it will die and mediocre audio will be the rule of the day. The final loss is that endured by the high end enthusiast himself and rightly so, because there is no discount meal for good food and they need to really wake up to that. Regards

In response I wrote :

Here is another para from the Stereophile article on Hovland closing down: "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 52–56% discount." I believe an industry malaise is the HUGE 50% RETAIL markup.... which is more than the manufacturer's selling price ! The manufacturer not only pays premise rent and manpower costs ( just like the retailer ) but also the development & Manufacturing cost, material cost and advertising. IMHO its not the buyer that is to blame but retailers that do not leave a decent margin for the manufacturer who risks it all, puts in his Intellectual property, etc. Therefore to me it seems that the retailers are forcing this industry to go belly up, NOT the buying public.... I have almost NEVER heard customers refusing to buy product at 50% off MRP ( ie the price without the retailer's ransom ! )

I know my thought will provoke the many commercial members on this forum.

ALL opinions welcome

Do post

I think the comment from manufacturer are words of anger because of failure. I'm myself a 'techie'...and do not have what it takes to make a good deal with a retail customer...like a retailer can do.

Retailing is an art. They also have a lot at stake...and they also have running expense (probably thier real-estate expense is a lot more than manufactuer). It is not correct to say one (retailer) is not as important as the other (manufactuer). They both have equal risks and stakes.

I did not mean to be polically correct...but these are really my thoughts.

Going ti china or india was definately an option. So was going direct.

But they chose to go belly up than change.

Wonder why ?

Manek

Maybe their volumes were too low ?

Amp_Nut schrieb:

Maybe their volumes were too low ?

The other thing here is that, IMHO, Hovland never had any stand-out products. Almost all of them (I'm not familiar w/ each & every product they made hence the hestitation) were me-too products.
For every Hovland product & Hovland capacitor you could an equivalent brand/option. Thus, there was no compelling reason to buy Hovland over any other brand.

It's easy for me to say this as I have not been in Hovland's shoes but I believe that I'm not totally off-base in writing this either - it is my belief that they could have made all their products w/ much fewer people & even (if push came to shove) outsourced manufacturing partly or fully.
Like Manek, I believe that some options still existed for Hovland to operated at a (much) reduced level - don't know if they explored all of them or not. Maybe the options were too painful (they generally are) & they did not want to endure the pain & it was better to close shop & do something else? Need to read that S'phile article if it has any such details.

As a commercial member let me chime in as well I agree with Siva.
Having seen the business in the US a bit and here as well the truth is dealers have a far higer margin in the US than in India. Real estate in both places can be considerably high. Salary for a reasonably knowleddgable salesman will run into the $60K or more. Thats per person. If one has a average to slightly big size store you are looking at at least 2 to 3 salesman. There is cost of inventory as well. The big difference - customers in the west are "largely" willing to pay for service whereas the mindset here is quite different...yes, there are exceptions.

At ARN, the retail side of the business is partially funded by the corporate business that we have, otherwise I can tell you that its not sustainable. The market is simply not that big for high end and reducing costs by 30% is still not going to generate a huge market no matter what people like to think. I dont see this manufacturers' failure as to do with the 50% margins but more along the lines of what Bombaywalla posted. Going direct is a completely different ballgame and you need to be marketing savvy and run a tight ship internally -while its easy to comment without knowing about their internal structure, 12 people seems too big for this type of thing. The few successful companies that I am aware of are more family based and have small setup costs.

cheers

The other thing here is that, IMHO, Hovland never had any stand-out products. Almost all of them (I'm not familiar w/ each & every product they made hence the hestitation) were me-too products.

I disagree.

The HP-100 Stereo Preamplifier

&

The STRATOS Solid State Mono Power Amplifier

were pretty iconic, in styling, performance & price point


Hovland Products

Redwine said:

Salary for a reasonably knowleddgable salesman will run into the $60K or more. Thats per person. If one has a average to slightly big size store you are looking at at least 2 to 3 salesman. There is cost of inventory as well.

I dont see this being ANY lower for a manufacturer, who pays for all this* and still is made to operate at HALF the margin / Ransom (?) of the retailer.

* The cost of Real estate for the manufacturer is atleast as high, since the factory demands a larger work space than a typical HiFi outlet.

the truth is dealers have a far higer margin in the US than in India.

I am with you here. Most Indian dealers pay for all or most of the absurdly high customs duty, from their Retail margins..

The market is simply not that big for high end and reducing costs by 30% is still not going to generate a huge market no matter what people like to think. I dont see this manufacturers' failure as to do with the 50% margins

Sorry, I dont agree.

Take a look / track at this site :

J B AUDIO PIMP


Every WEEK they move more than US $ 100 K worth of Ultra High End products at Hugely discounted prices!