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Posted by Loudspeaker Industry Sourcebook on 04/01/2016

The State of the Industry

The State of the Industry

As Seen by the Board of Directors of ALMA International

In an industry where the term “new” lasts for mere moments, loudspeakers have been a relative constant. Much of the innovation in the loudspeaker category stems from advanced materials and aggressive designs coupled with advanced enclosure design and digital sound processing. Indeed, it seems as though much of the excitement being generated in loudspeaker design is coupled with DSP, wireless technology and continuing improvements in microspeaker technology and performance.

That said, the loudspeaker and acoustics industry remains dynamic and an integral component in the sound chain. Until someone develops a viable digital solution to excite air to create quality sound, the analog world will continue to influence the digital world and vice versa.

The Association of Loudspeaker Manufacturing and Acoustics (ALMA) International is a not-for-profit trade association dedicated to improving the design and manufacture of loudspeakers. ALMA is the source of standards, news, networking, and education for technical and business professionals in the acoustics, audio, and loudspeaker industry.

Recently, ALMA International’s Board of Directors were asked to provide their opinions with regard to the loudspeaker and acoustic industry’s current state and its future. Here are their responses.

Spiro Iraclianos, President of ALMA International

The loudspeaker industry is a very mature segment of consumer electronics. Whereas innovation and technology have driven consumer electronics advances including DSP, wireless technologies, and others, loudspeakers have remained fundamentally unchanged for decades. While there have been some innovations, they have proven too costly to warrant wide acceptance. This has led to a commoditization of the category driving down prices and profits and the proliferation of “me too” products. Some of questionable value.

The future belongs to those who continue to innovate and seek new solutions to old problems. New materials and methods to move air as well as methods to further improve efficiency and performance will keep the category relevant and moving forward.

Mark Beach, Vice President of ALMA International
In a mature industry such as the loudspeaker industry, we see even inexpensive low-margin loudspeakers that are good enough for the majority of consumers. This tends to push up the cost of audiophile and high-end systems to recoup needed profit. It also creates a conundrum in that some consumers who might step up to a higher quality product are effectively priced out of it. 

Loudspeaker engineers have actively increased training and skills enhancement and are applying those skills to loudspeaker design at all levels, which enables more inexpensive loudspeakers to perform better. The active involvement of so many engineers at ALMA’s Winter Symposium who gave and attended seminars and presented papers is a testament to the ongoing education.

In the future, the challenges focus more on consumer education than most other issues. There is vastly improved interest in sound quality, and studies prove consumers are willing to pay for it. So far, however, the industry is failing to educate the consumer as to what sound quality is. In that environment, low-grade MP3 and earbuds win. The future belongs to loudspeaker manufacturers that do a better job of teaching consumers what “great sound” really is. Without this type of consumer education, we will continue to see a commoditization of the category and continuing decline in profit margins.

Alan Babb, Board of Directors of ALMA International
To adapt some of the words of the POTUS, the state of our industry is strong. The advances in measurement systems and computer modeling packages have provided new avenues for engineers to optimize transducers and systems. That is both a blessing and a curse. For some, it means they can quickly make large strides forward in quality. For others, it means the quality gap between them and their competition narrows, closes, or even reverses itself. For the end user the benefits are clear, the average quality level increases. This does not necessarily mean that the peak quality level proportionately increases. For that, we may need to achieve that “next big thing.”

What does this mean for the future of our industry? We are all just going to have to wait and see together. Competition and the need to create or increase a competitive advantage is a great way to stimulate companies to invest in R&D. The decreasing cost of technology and computer horsepower has made these new tools available to a much larger cast of characters. I am excited to see that “next big thing,” wherever it may come from. Of course, I am working every day to be on that winning team!

Reggie Alphin, Board of Directors ALMA International
I’m seeing the industry starting to pick up in terms of growth and quality. We gauge the pulse of the industry through our Winter Symposium & Expo ,and we are seeing double-digit growth. In addition, we are seeing more educators and scholastics joining the association, which will help the industry’s future growth.

The loudspeaker industry will be using innovative materials and processes to improve the quality of the products and to provide value to the end user. This innovation pushes the competition to get better, therefore, growing the industry.

Rob Baum, Board of Directors ALMA International
The loudspeaker industry, traditionally defined by two large home speakers for stereo audio only, is not doing so well. That legacy market has faded away. However, if you look at it more broadly, the industry is rapidly evolving. There is growth in audio for home theater and rapid growth in personal audio with headphones and mobile phones, wireless portable speakers, and even OEM car audio, which has tremendously improved in the last two decades. Inexpensive and powerful digital signal processing and amplifier ICs enables very good performance at relatively low price points. 

On the Pro side, we have seen a massive shift over the last 20 years to smaller home studios fueled by computer-based digital audio workstations (DAWs). That means a significant growth in the small powered studio monitor business as well as headphones. Headphones themselves are enabled by smartphones that store or stream music whenever and wherever consumers want to listen in the same way that wireless speakers have achieved remarkable success.

As Yogi Berra said, “It’s tough to make predictions, especially about the future.” The future should hold increasing growth and segmentation of the personal audio market, such as all sorts of headphones for use outdoors, as fashion accessories, as devices which monitor health. Health is a mega-trend for consumer electronics in general as many Americans start to take responsibility for their own health and confidence in the conventional US health care system continues to erode 

We are seeing the continued proliferation of additional speakers in commercial theaters, and this may come to home theater as well (e.g., Dolby Atmos, which can accommodate up to 128 audio tracks and 64 unique speaker channels). 

We will also see further integration of formerly separate pieces of audio systems as powered speakers begin to displace the traditionally passive (non-powered) speaker attached to an amplifier. Speakers in the future will be wired via CAT5 or power lines and wireless nodes on a home AV network, with built-in amplifiers, signal processing, and microphones to monitor their acoustical environment and assist in setup/diagnostics.
Such change implies that most audio brands will not survive the transition to fully digital and networked audio and video. We have already seen substantial consolidation. 

I also believe that we will see a combination of factors: rising labor costs in China driven by rising wages and the appreciation of Chinese currency vs. the US dollar, the growth of a revolutionary technology, 3-D printers, and the desire for mass customization. This will cause a resurgence of domestic manufacturing in the US across many industries in those US states with favorable business policies.

Since the US supply chain for consumer electronics and other industries has been greatly reduced by an exodus to Chinese industrial clusters (e.g., those north of Hong Kong and west of Shanghai), key parts will have to be brought in from China for the foreseeable future. As robots and automation exponentially improve in computational power and flexibility, more and more production can come back to the US, eliminating many hidden costs of offshore production. The counter strategy is for Chinese manufacturers to automate and move up market, which we are already seeing. So the end state may be a mix of both domestic and offshore production, with many high-quality components imported from China for assembly into product builds or domestically printed 3-D. The cost will be the disappearance of many low-skill manufacturing jobs around the world.


A company called Akemake, with the help of a new 3D printing material from Fillamentum, used a 100% natural wood filament called Timberfill to print out a working desktop speaker. (Photo courtesy Fillamentum.com)


Final Thoughts

ALMA International’s volunteer Board of Directors encompasses engineering, marketing, consulting, and executive perspectives. While there are some similarities in the observations, there are also some notable differences which may reflect the board members’ varying areas of expertise. What is universal is that while there may be challenges to the loudspeaker industry, there is also a great deal of opportunity.

Education, innovation, collaboration, and communication will continue to make the loudspeaker industry a vibrant participant in the consumer and professional electronics industries. ALMA International is pleased to be a vital forum for communication and collaboration among loudspeaker industry professionals. For more information, visit www.almainternational.org. LIS