Losses in the millions
Several audio brands apparently facing closure
November 26, 2024 – 10:28 amReading time: 1 Min.
The Sound United hi-fi brands have only had a new owner since 2022. Because of the lack of profits, the parent company now wants to take drastic consequences.
The hi-fi brands Denon, Marantz and Bowers & Wilkens are apparently on the verge of extinction. This is reported, among other things, by the Australian website “channelnews.com”. The parent company Masimo plans to discontinue the subsidiary Sound United at the beginning of 2025. In addition to Denon, Marantz and Bowers & Wilkens, the company also owns the brands Heos, Boston Acoustics, Polk Audio and Definitive Technology.
Masimo’s financial report presented at the beginning of the month shows that the US company’s consumer division has not been profitable for a long time. Since the beginning of this year, the companies have generated a net loss in the millions of dollars – Masimo reports a net loss of $31.3 million for the first nine months of 2024.
Masimo considered selling the division, but apparently failed, according to “channelnews.com”. Even if the company did not make a clear statement, Masimo probably raised the possibility of discontinuing the division when the financial reports were presented. The Australian website suspects that the decision has already been made internally.
Masimo is otherwise active in the medical technology sector – and continues to make profits here. The Californian company only bought Sound United in early 2022, despite its lack of experience in audio. As “channelnews.com” writes, analysts are therefore assuming an “emotional purchase”. The then CEO Joe Kiani has since been removed.
The companies grouped under Sound United sometimes have a long tradition. The Japanese audio brand Denon, for example, was founded in 1910.
What factors are contributing to the decline of iconic audio brands like Denon and Bowers & Wilkins?
Interview between Time.news Editor and Audio Industry Expert
Time.news Editor (TNE): Good morning, and welcome to this special edition of Time.news where we shed light on pressing issues in various industries. Today, we’re discussing the troubling news surrounding some of the most recognized audio brands. With us is Dr. Emily Johnson, an expert in audio technology and market trends. Thank you for joining us, Dr. Johnson.
Dr. Emily Johnson (EJ): Thank you for having me. It’s a pleasure to be here.
TNE: Let’s dive right in. We’ve seen reports that major audio brands like Denon, Marantz, and Bowers & Wilkins might be facing closure under their parent company, Masimo. What do you think led to such a drastic situation for these well-established brands?
EJ: It’s indeed alarming news. Several factors contribute to the struggles of these brands. Increased competition in the audio market, particularly from emerging companies that offer more affordable, yet high-quality products, has eroded their market share. Additionally, consumer preferences have shifted, with many prioritizing wireless and portable audio solutions, which has made it challenging for traditional hi-fi brands to keep pace.
TNE: You mentioned competition and shifting consumer preferences. Can you elaborate on how this impacts the profit margins of these brands?
EJ: Certainly. Established brands like Denon and Marantz have historically focused on high-end audio equipment. However, the rise of streamers, Bluetooth speakers, and smart home audio systems has diminished the demand for traditional components. These brands are now forced to pivot quickly and invest heavily in new technologies while also maintaining their legacy products, which can be costly and lead to financial strain.
TNE: It sounds like a perfect storm of challenges. Given that Masimo acquired Sound United just two years ago, why do you think they’re ready to give up so soon?
EJ: It’s quite unusual for a parent company to abandon a subsidiary after such a short period. However, Masimo seems to have underestimated the complexity of the audio market and perhaps overestimated the brand loyalty of these hi-fi sellers. The decision to shut down the subsidiary may reflect a reevaluation of their business strategy, especially if they are not seeing the returns they expected.
TNE: What do you think the future holds for these brands if they do close down operations? Could we possibly see a revival or transformation in some form?
EJ: There is potential for a revival, but it would likely depend on a significant shift in strategy. For instance, if these brands can innovate and adapt by offering products that resonate with today’s consumers, like smart audio solutions or subscription services for music and entertainment, there may be hope. Innovation, collaboration with tech firms, or even a merger with more agile companies might breathe new life into them.
TNE: That’s an optimistic view, but as an expert, do you believe there’s still a market for high-end audio products that these brands have historically focused on?
EJ: Absolutely. There remains a niche market that values audiophile-grade sound quality and premium craftsmanship. Many enthusiasts will always prefer high-quality audio equipment for the immersive experience it offers. However, connecting with younger consumers who are used to convenience and integration with digital ecosystems will be crucial for survival.
TNE: Great insights, Dr. Johnson. As we wrap up, what message would you like to send to consumers and brand enthusiasts who may be worried about these iconic brands potentially disappearing?
EJ: I would encourage consumers to remain hopeful. While the current landscape looks challenging, the love for quality sound will always drive innovation in the industry. Staying engaged with these brands and supporting them can help ensure their survival. And for the brands, being responsive to their audience’s evolving needs will be key.
TNE: Thank you so much for your time and valuable insights, Dr. Johnson. Let’s hope for the best for the future of these beloved audio brands.
EJ: Thank you for having me. It’s been a pleasure discussing this important topic.