Industry

Outlaw just announced a new pre/pro (the surround sound processing portion of a receiver without the amplifier section), the model 990, and its a doozy: a high end version of the company’s 950 for only $1099. More surprising than the product itself is Outlaw’s secrecy about it – while some analysts (including yours truly) were briefed on this last year, this is the first public indication the company has made that they were even working on a new pre/pro, and it should be shipping within the next month or two. The change in strategy was due to the flack the company took during the oft-delayed development of the 950. Not surprisingly, there has been some grumbling on the forums that not enough notice was given on the 990… damned if you do, damned if you don’t. This was the right decision though – publicly slipping announced shipping dates damaged the company’s reputation and angered the customer base, while surprising the market only means a few lost sales for customers who bought something else in the meantime.

The standout feature most will notice are fully balanced outputs, to go with a future Outlaw amplifier with balanced inputs. Most people assume that balanced outputs – found on professional and some audiophile gear – are superior to regular RCA jacks. Thus, from a marketing perspective, the 990 has something to crow about.  However, the reason why balanced inputs/outputs appear on professional gear is not because it adds a magical element to the sound, but because it allows for very long cable runs without signal degredation.  In most home environments, this is irrelevant, and balanced signals at the very least add cost (the cables are more expensive) and may actually have a slight negative impact on the sound.

Even discounting the balanced outputs, the 990 looks like a bargain compared to most pre/pros, which start in the $1500 range and quickly climb from there. Component quality is higher than the 950, though this may be overkill: I was given a chance to review a 950, and found its noise floor to be extremely low and its sound quality to be transparent. The 990 offers tremendous flexibility for bass management for all sources, and has stereo subwoofer outputs. All the usual surround modes are included, along with Dolby Headphone (and a headphone jack). All analog video can be converted to component, and DVI switching is included. The 990’s software is upgradeable, and, as an Internet-only retailer, this is something Outlaw is likely to take advantage of down the road. However, there are a few open questions:

• There’s no word on automatic room callibration, though some sort of setup routine is included. [Update: the 990 provides automatic setup of speaker levels and delay times using an included microphone.  Automatic room callibration is not available, but could be provided as a software upgrade in the future.]
• The 950 has an audio delay and click problem when switching inputs; hopefully that issue has been resolved in the 990.
• Presumably, the 990 is not hardware upgradable, which means that HDMI switching can’t be added down the road. This is not so much a technical problem – for most setups, DVI switching is practically the same thing – but a marketing issue. HDMI switching would eliminate the additional cable clutter and expense of carrying digital audio signals to and from certain components. [Update: The 990 is not hardware upgradable. The company’s explanation why HDMI switching was not included is not terribly convincing.]

We will likely get a 990 in for a full review. My review of Outlaw’s LFM-1 subwoofers can be found here (links to JupiterReasearch’s Home Theater Watch) and my review of Outlaw’s 7700 amplifier is here (links to Secrets of Home Theater).

-avi

BusinessWeek has an article in this week’s issue titled, "The Crisp, Clear Sound of Rising Profits" [registration req’d] on B&O’s recent uptick in business. After years of stagnation, the company is rolling out dozens of new initiatives in high end audio systems for exclusive automobiles, yachts, and penthouse suites at the MGM Grand in Las Vegas.

That’s all well and good, but those are relatively small markets with high investment required to enter.  In other words, they’re brand-building activities, not core products. Bose and Harman are exceptions: they make real money in their auto divisions because they’ve built the business over the past decade(s) across multiple auto product lines.  High end brands like McIntosh and Linn who are offering systems in cars as expensive options (or for cars with limited production runs) is at best a break-even marketing expense. Linn has even admitted as much.

Product innovation is given some ink: a $1,600 PVR is on the way, and the company’s BeoLab 5 speakers have been critically well received (I haven’t auditioned them) – no word on sales figures, though. The problem here is simple: B&O products have tended to be high priced art pieces.  There’s nothing wrong with selling art, except when they’re supposed to make music, too. The expensive B&O products I’ve heard have sounded terrible. The new CEO admits as much, calling it "a gap between our image and our performance… the ‘pretty-face syndrome.’"

It will take more than a new product or two to change my impression (and the company’s home theater loudspeakers appear to be based on older B&O designs).  What’s worse is that the high end of audio is moving away from spending tens of thousands of dollars on top flight design to spending hundreds of dollars on top flight design …from Apple. Bose had the right idea when it put together a $300 iPod speaker dock — as long as they understand that it obviates the need for any of their standalone products. Home theater systems are safe, for now, because their purpose is video, not music. While B&O offers speakers that can be sold for home theater use, it doesn’t sell packaged home theater systems in the $2,000 – $3,000 range like Bose does.  Custom installers selling higher priced gear are looking for audiophile performance or invisible in-wall options — not B&O style art pieces. 

So where are the profits coming from?  Clues come later in the article: lower expenses. Roughly a third of the company’s employees were laid off, and dozens of stores were closed. The company is planning to moved some production out of Denmark and over to Eastern Europe.

That’s good operations management, but not a strategy.  I seriously question B&O’s product development priorities.  I would expect them to capitalize on what’s left of the brand and attack Bose in mid-priced packaged systems, move into custom installation in a big way, or both. Why why why an overpriced PVR?  It had better absolutely set the world on fire because it’s competing amongst a sea of struggling PVR vendors, not to mention Microsoft and cable operators. In the meantime, the iPod is melting away the design-oriented audio business.

-avi