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CES 06


kkantor

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Here's a quick peek at the latest "AR" home theater system at CES. Audiovox is also showing "AR" speakers in the form of antique clocks and potted plants. While it is a testament to the tenacity and longevity of the brandname that the original AR built, I still suspect I might have hung myself in the lab had I envisioned this future back in idealistic 1977... Either that, or had a stiff drink and a good laugh!

Eventually, I'll post some short MPG's from the show.

post-100178-1136793450.jpg

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>Either that, or had a stiff drink and a good laugh!<

Or several of each. They'd probably have dragged me off wearing one of those coats you put on backwards, to somewhere nice and quiet. For a long time.

Knowing what we know now, I wonder if AR would have ever have been sold to Jensen.

Fisher, Carver, Advent, AR, . . .Studebaker. If AR *had* remained independent, it could have life again today (albeit a less abundant life).

But I guess somebody made a buck. That's the way capital gets used efficiently and while I hate it, I suppose I understand it. Can't say I'd want to own a buggy whip factory, no matter how high-quality the whips are.

Bret

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I don't get why the sale of AR to Jensen would have been affected, either way, by prescience. I'm interested in understanding your logic.

At any rate, the company wasn't "independent," it was owned by Teledyne prior to its acquisition by International Jensen. I can assure you, had it not been purchased by Jensen, Teledyne would have shut it down without blinking an eye, and that would have been the end of that.

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>I don't get why the sale of AR to Jensen would have been affected, either way, by prescience. <

Uh oh. I sincerely hope you aren't reading a whole different book between the lines of the one I wrote.

Let me share with you the words of a very smart man whom I respect greatly:

"While it is a testament to the tenacity and longevity of the brandname that the original AR built, I still suspect I might have hung myself in the lab had I envisioned this future back in idealistic 1977..."

I wasn't saying that the transaction was a bad one. Your point about Teledyne saying, "This flea has itched for the last time," and closing the doors is well-taken. It's not like that would be particularly out-of-character for them. I was just thinking that those who would have been hung in the lab, or needed a drink and cared, might have figured-out something different to do if they had seen, back in '77, where it would all end. One does the best one can and hopes for the future.

I'm agreeing with your sentiment. I think I just got too close to implying something else. Sorry about that, Chief. But I did "miss it by 'that' much." ;-) No offense, man. No offense.

Bret

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Zero offense taken! I was just not groking your point. But, now I get it. I think what made it opaque to me was that, to my understanding, the engineering (etc) people were completely distant from the motives and decisions behind that sale. The people actually seeking and negotiating the transaction would not have given a moment's thought about where the brand would be 15 years later. Or 5 years later.

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I wonder Ken, do you think that companies such as AR have a "personality" that can get in the way of keeping the company alive?

I would say yes, while AR started with one of the most significant advances in the history of loudspeaker design, they did not in my opinion stay ahead of the competition. Perhaps they did not know their market by the late 70s and on, or they were directed by "marketing experts" who were not on the ball. The personality perspective applies much more when a company is young and often reflects the ideals of the founder - not always a good thing. Later, when/if ownership moves to a large corporation, having to report to a board of directors they become bottom line driven as I see it.

My point is that this didn't have to happen to AR IMO since we can see that companies such as KEF and B&W are still around.

"antique clocks and potted plants" Hey potted plant speakers, I had that idea, I should have patented it - one of my requirements would be that they sound good.

Pete B.

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>Hey potted plant speakers, I had that idea<

Stalking a new marketing approach? When did that idea take root? Has it grown on you over the years? It might have soiled your reputation for having an extremely fertile mind. When plowing through technical issues and threshing out the design, did you think to replace the fiberglass with chloro-fill? Which drivers would you combine? A nice color would have been an a-tractor.

Or were you just going to patent it and farm-out the final design?

Sorry

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Interesting question. I suspect that everyone who has taken a moment to analyze the evolution of brands and businesses has observed the phenomenon you cite, where companies get too caught up in their own hype. I suggest that rather the opposite problem impacted AR as it grew: the company sometimes lost sight of the core principles that it was founded on.

But none of this, in my opinion, is the real, honest issue. That is, investors are generally NOT interested in the longevity or technical integrity of a company. They are interested in maximizing their return on investment. (I offer this seperate from any value judgement.) AR was extremely successful as a company, and various ownership transactions made many people a great deal of money. I suspect that if similar financial opportunities were available to KEF and B&W's owners, their lifelines would look very different.

(Incidentally, KEF is now owned by Gold Peak of Hong Kong.)

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Build a better mousetrap and the world will beat a path to your door? Maybe not quite. Having worked in about 2 dozen companies and having had a chance to watch their different styles, I've given this problem some thought. It has occurred to me that the only significant difference between one company and another is the people who work there, what they bring with them, and what they allow each other to do. Everything else from buildings, to laboratories, to equipment, to manufacturing plants that one company has can be duplicated by another. Technology can be bought through licensing agreements. Practically any novel idea will eventually find money somewhere to test it in the market. In my first job as a management trainee, a VP of a very large steel company told our group, "we are not in business to make steel, we are in business to make money. If we knew a better way to do it than making steel, we'd be doing that instead." I think this is what AR lost sight of. It's interesting to compare the contrast between the overwhelming commercial success of Bose Corporation and the ultimate failure and demise of AR. Build unique products, out advertise teh competition with the ones you have, build cheaper than the competition. Which of these and other strategies did Bose use to win? I know if I had to commute on mass transit to work or fly on planes, one of my must have products would be a pair of noise cancelling Bose headphones, even at $300. I tried a pair and they are remarkable. What happened to AR's string of gee whiz products and why did it become a me too company. Clearly it was a management failure the details of which insiders can debate endlessly and outsiders can only speculate about.

The success of the innovative spirit Edgar Vilchur brought to AR originally seems to have somehow gotten lost along the way. And as Bill Gates will tell you, when that happens and you become smug in your position as a market leader, you are ripe to become as extinct as a dinosaur even if the process takes decades. American automobile companies are finding that out right now.

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>Interesting question. I suspect that everyone who has taken

>a moment to analyze the evolution of brands and businesses has

>observed the phenomenon you cite, where companies get too

>caught up in their own hype. I suggest that rather the

>opposite problem impacted AR as it grew: the company sometimes

>lost sight of the core principles that it was founded on.

Yes, I'm sure many do notice it and I always find it interesting to hear the thoughts of some of the founders of these companies.

>But none of this, in my opinion, is the real, honest issue.

>That is, investors are generally NOT interested in the

>longevity or technical integrity of a company. They are

>interested in maximizing their return on investment. (I offer

>this seperate from any value judgement.) AR was extremely

>successful as a company, and various ownership transactions

>made many people a great deal of money. I suspect that if

>similar financial opportunities were available to KEF and

>B&W's owners, their lifelines would look very different.

Yes of course ROI is the goal of all for profit companies, I called it bottom line driven.

>(Incidentally, KEF is now owned by Gold Peak of Hong Kong.)

Didn't know that, sad to hear.

Pete B.

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I think we are getting caught up in the AR name when we should be asking where are the designers working today. I do not know the answer to this but maybe some other folks on the web site do. I do know a couple remain at NHT and the speakers they introduced at CEDIA and showed in finished form at CES show the influence of AR http://www.nhthifi.com/manuals/Brochures/N...sicBrochure.pdf. For example the midrange - tweeter array shows influence of the AR 9LSi. Acoustic suspension woofers are used. I cannot recall seeing many other acoustic suspension speakers at CES 2006 although it is impossible to cover even a small percentage of the show now. I am sure that number of speaker manufactures in Las Vegas in early January numbered in the 100s and the number of different brands may have approached 1000 (not all are located at a CES site and half of the manufactures have no US distribution)

David Rich

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Tut...tut... I'm sure Pete was referring to his first post...

Part of what I was talking about was "bottom line," which implies a profitable going concern. But, in the bigger picture, professional investors rarely make their money off the bottom line. They make it off of valuation, and that implies either a public stock offering, or the sale of the company. This is, perhaps, a tenuous aspect of modern capitalism, but such is life...

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Excellent point, David! The very last time I visited the AR facility in Canton, there was a very detailed "family tree" begin contructed. It took up the entire wall of the conference room. Amazing. Somebody, somewhere must have that. Besides the relatively well-known branches like Boston, NAD, Advent, etc, etc, there are dozens of smaller companies, factories, distributers and designers around the world who got their start at AR. You can find them at Bose, Polk, Italy and China.

Speaking of which, I'm outta here for a few weeks. I'll check in as connections permit. Good seeing you at the show, BTW.

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