John DeVore on the Grey Market and OCD Mikey

[tima]

I have done both military and aerospace, for NASA, design development and manufacturing of limited & small batch run electronics and can assure you that the retail cost of high-end products is not inline with their development and production costs.

I think I agree with that much. I'm not a manufacturer or developer of audio products however I can imagine there are many other expenditures involved with running an audio business that are outside development and production costs. Those need to be covered somehow, don't they? Just speculating: inventory overhead, warranty repair, customer support, advertising, shipping, audio show expenses, profit to get kids teeth fixed, etc. Others actually doing this will know better.

Granted that doesn't speak to "greed and corruption." But I think that is a different issue than contained in the above. Making products for money is not greedy or corrupt. [Gawd help me us all if that gets flagged as political.]

 

[Carlos269]

I think I agree with that much. I'm not a manufacturer or developer of audio products however I can imagine there are many other expenditures involved with running an audio business that are outside development and production costs. Those need to be covered somehow, don't they? Just speculating: inventory overhead, warranty repair, customer support, advertising, shipping, audio show expenses, profit to get kids teeth fixed, etc. Others actually doing this will know better.

Granted that doesn't speak to "greed and corruption." But I think that is a different issue than contained in the above. Making products for money is not greedy or corrupt. [Gawd help me if that gets flagged as political.]

If you are of the mind that high-end audio equipment is more expensive to develop, manufacture, and market than military grade weapons system electronics, intergalactic radiation harden space electronics, and capital subsurface equipment electronics then you have said it all.

 

[tima]

If you are of the mind that audio equipment is more expensive to develop, manufacture, and market than military grade weapons system electronics, intergalactic radiation harden space electronics, and capital subsurface equipment electronics then you have said it all.

Yeah, that's outside my knowledge. My Lockheed Martin stock is doing very well.

 

[Carlos269]

Yeah, that's outside my knowledge. My Lockheed Martin stock is doing very well.

Perhaps the greatest company on earth. It has done great for me also. Lockheed was great. Lockheed Martin as a company is even better.

 

[Carlos269]

Isnt that the company which needs continous wars all over the world to make profit.
And overcharges the pentagon/taxpayer

PS Carlos I dont think the american defense contractor ndustry Is a good example of how a business should work

An even them work to a lesser profit margin in the cost of electronics than the high-end audio industry. Think about that for a minute.

 

[andromedaaudio]

No offesnse but it keeps your dutch ass safe.

I travel all over the world for work and i have developed a different opinion ,to say it politely.

 

[adrianywu]

Since you are such an analog guy, look into the development and production costs of cartridges for example and compare them to the cost of development and production of magnetometers for precision guided electronics, including in weapons systems, with exotic magnetic cores and materials. I would joke with my engineers that building cartridges for the audiophile industry would have been a lot more lucrative. Should we discuss the development and production cost of audiophile cables?.

Even the Pentagon looks frugal when buying weapons compared to audiophiles !

 

[hopkins]

What do profit margins have to do with this?
Assuming De Vore's story is correct, OCD's behavior is shocking. Had he simply apologized and paid the restocking fee after being caught it would have probably been the end of it, but to request a Paypal refund was really cheap and dishonest.

 

[the sound of Tao]

Even the Pentagon looks frugal when buying weapons compared to audiophiles !

They’re also unlikely to buy a missile system just because it has the word quantum on the box.

 

[adyc]

I don’t think this is isolated incident. I am sure it happens a lot of times. Most of times are the requests from VIPs. They try to do these VIPs favors and hopefully get more business from them themselves.

 

[Robh3606]

Well the question I have is how deep are the discounts given to products sold at an "accommodation" rate? Is it at cost?? Does it hurt the bottom line?? Is a manufacturer of speakers doing multiple pairs??

I have done both military and aerospace, for NASA, design development and manufacturing of limited & small batch run electronics and can assure you that the retail cost of high-end products is not inline with their development and production costs.

Hello

My profession as well. I find it more difficult to compare the them as I see them as entirely different. It's true with fixed price contracts your profit is negotiated and fixed. You are building X parts for X money and profit is negotiated before you start the build or even order the parts for it.

Not so with commercial products where you build an inventory and hope to sell it with no set buyers.

You also have cost plus for R+D projects where you can go over budget and still make a profit. A commercial business can't do that until they start some kind of dependable income stream or have a limited R+D budget as a start up.

Rob

 

[andromedaaudio]

I have worked for NASA ( i codesigned the moon lander).
I ve been in active combat ( 2 worldwars .)
In the summer holidays i worked with Bill gates on the first computer .
Then i did my intern at CERN .
I still have the fastest lap in the Particle accelerator .
I have 3 Phds:
Mechanical engineering .
Politics .
Psychology.
I own 3 companies , real estate and marketing
I bench press 250 pounds.
I have a garage with 15 cars all above 350 K
My Golf handicap is 80 .
I own apartments in all major cities in the world .
etc etc

Ps this is only half of what i do/ own at the moment , i m taking it easy lately

 

[Carlos269]

Well the question I have is how deep are the discounts given to products sold at an "accommodation" rate? Is it at cost?? Does it hurt the bottom line?? Is a manufacturer of speakers doing multiple pairs??

Hello

My profession as well. I find it more difficult to compare the them as I see them as entirely different. It's true with fixed price contracts your profit is negotiated and fixed. You are building X parts for X money and profit is negotiated before you start the build or even order the parts for it.

Not so with commercial products where you build an inventory and hope to sell it with no set buyers.

You also have cost plus for R+D projects where you can go over budget and still make a profit. A commercial business can't do that until they start some kind of dependable income stream or have a limited R+D budget as a start up.

Rob

How many high-end audio designs go through HALT-HASS testing? How many high-end products have been through HALT-HASS chambers? Have any idea what that is? High-end audio designs are not rigorously designed or developed. Not even close. I don’t think audiophiles understand what is involved in the design and development of ultra high reliability and ruggedized products. The building and stuffing of PCB boards in China and installation in fancy aluminum shiny boxes is a walk in the park. Wouldn’t be surprised if the software and firmware are outsourced to India in many of these products. Many of them run of core designs Tom Eastern Europe and then are customized.

 

[andromedaaudio]

How many high-end audio designs go through HALT-HASS testing? How many high-end products have been through HALT-HASS chambers? Have any idea what that is? High-end audio designs are not rigorously designed or developed. Not even close. I don’t think audiophiles understand what is involved in the design and development of ultra high reliability and rugged used products. The building and stuffing of PCB boards in China and installation in fancy aluminum shiny boxes is a walk in the park. Wouldn’t be surprised if the software and firmware are outsourced to India in many of these products. Many of them run of core designs Tom Eastern Europe and then are customized.

Why would you do that ?
Its not in outer space that your gonna listen to your SET amplifier and speakers , totally different requirements
Besides that all the additional testing would make the component unnecessarily expensive .
Nobody would buy it and you would be out of business in no time

 

[Robh3606]

How many high-end audio designs go through HALT-HASS testing? How many high-end products have been through a HALT-HASS chambers? Have any idea what that is? The high-end audio design are not rigorously designed or developed. Not even close.

None, I know full well what that is. The issue I have is they are completely different business models that you can't directly compare.

All that testing is required and negotiated up front and does not impact the end profit margins.

What you are talking about is reliability testing. Commercial you by capacitors in quantity for pennies. To purchased a fully tested mil spec capacitor can cost over $60 a part.

It doesn't have to be tested that way. It's playing in a living room not cold starting in the arctic, being used in a rain forest or a dessert in Iraq

If the audio stops working people don't die.

No comparison as far as end use and the reliability required.

Rob

 

[Republicoftexas69]

I have worked for NASA ( i codesigned the moon lander).
I ve been in active combat ( 2 worldwars .)
In the summer holidays i worked with Bill gates on the first computer .
Then i did my intern at CERN .
I still have the fastest lap in the Particle accelerator .
I have 3 Phds:
Mechanical engineering .
Politics .
Psychology.
I own 3 companies , real estate and marketing
I bench press 250 pounds.
I have a garage with 15 cars all above 350 K
My Golf handicap is 80 .
I own apartments in all major cities in the world .
etc etc

Ps this only half of what i do/ own at the moment , i m taking it easy lately

That is all? Yawn…….

 

[Carlos269]

Why would you do that ?
Its not in outer space that your gonna listen to your SET amplifier and speakers .
Besides that it would make the component unnecessarily expensive .
Nobody would buy it and you d be out of business in no time

As always you missed the point. The point was that even more technically challenging and demanding electronics designs don’t have the profit margins that high-end audio products artificially try to justify.

Your post about your experience and background is obviously a joke. But it is no joke for me. One of my designs on the International Space Station Alpha is implemented with rad-hard semiconductors and hermetically sealed switches and controls and was tested to failure and destruction. I know what it takes to push the limits in the development and production of electronics on active cool plates, shock mounted, tested and certified on acoustics and EMI/RFI equipment and chambers to stringent limits. Those were and are state of the art electronics. High-End Audio electronics are kids play by comparison.

 

[Carlos269]

None, I know full well what that is. The issue I have is they are completely different business models that you can't directly compare.

All that testing is required and negotiated up front and does not impact the end profit margins.

What you are talking about is reliability testing. Commercial you by capacitors in quantity for pennies. To purchased a fully tested mil spec capacitor can cost over $60 a part.

It doesn't have to be tested that way. It's playing in a living room not cold starting in the arctic, being used in a rain forest or a dessert in Iraq

If the audio stops working people don't die.

No comparison as far as end use and the reliability required.

Rob

That was my point. High-End Audio electronics are easy and manufactured with garden variety components. You speak of Mil-Spec like that is something special. Ever looked into Rad-Hard parts? Ever work on hybrid semiconductor designs?

Come on man these two designs cannot be compared yet the costs of high-end audio imbed higher profit margins? Justify that?

 

[facten]

I don’t understand why you are angry about this. We talk about controversies in the forum all the time. What is your real concern here?

I would like to hear Mike’s side of the story. He needs to tell us what happened.

Let me preface this by stating for the record that I have no personal or customer affiliation with OCD Mickey. I gather from some prior threads that he may not be particuarly popular on WBF so I wondered what you thought would be gained by posting this aside from likely generating personal attacks on the guy. I'm not sure that this has the potential for achieving your desired "Towards a Better WBF". Anyway, I'll sit back and wait to see how this unfolds beyond the 2 direct reactions to the video already posted.

 

[andromedaaudio]

As al as you missed the point. The point was that even more technically challenging and demanding electronics designs don’t have the profit margins that high-end audio products artificially try to justify.

Your post about your experience and background is obviously a joke. But it is no joke for me. One of my designs on the International Space Station Alpha is implemented with rad-hard semiconductors and hermetically sealed switches and controls and was tested to failure and destruction. I know what it takes to push the limits in the development and production of electronics on active cool plates, shock mounted, tested and certified for acoustics and EMI/RFI equipment o stringent limits.those were and are state of the art electronics. High-End Audio electronics are kids play by comparison.

I dont agree with you .
As i only have expirience in manufacturing LS , i take that as example

Lets not talk about SQ , but just loudspeaker manufacturing / fit n finish / packaging / design development / marketing / dealer distributor margins

Companies like Magico Rockport Kharma Wilson all have excellent fit n finish and such products are costly to manufacture
I m sure all their lower line models have very normal margins .
The top line products might be different but they dont sell many .

Ps Why did Andy payor sell Rockport , because it was such a goldmine , i dont think so .
He makes excellent products , but its a tough market



I d say start a Loudspeaker company and we will talk back in a year or 2