A lot of good thoughts here. A few stand out.
1) This is a global economy. No matter how bad it gets for some, there are others (perhaps in other parts of the world) that will do fine (maintain the status quo) or do better because they are first to the next great thing. We've seen this in many specialty markets like wine, old cars, art and so on.
The question now is how the experience of this global unwinding will reshape peoples priorities. Manufacturers whose product has broad global appeal, solid distribution and brand recognition stand the best chance of riding this out.
They probably will not need to lower their MSRP especially if they can control their input costs - yes, more will go offshore
Those who are big enough and are very brand savvy may develop a lower price offering - imagine Lexus establishing Toyota...
2) Distribution channel - here in the US the hifi store has been under tremendous pressure for a long time. (I have not travelled abroad enough to know what it's like elsewhere)
It seems very likely that a good many more will fail. Those that stick around will get increasingly picky about what they carry. Net result to the manufacturer is fewer outlets - which means that they can't afford to spend as much on advertising. Service will no doubt suffer as the retailers and mfgrs fight over service costs, as will the availability of in-home demos. Nor will anyone want to carry much inventory (see below)
No doubt there will be opportunities to pickup excess inventory and demos at attractive prices as individual stores and companies fail - you already see quite a bit of that here.
Newer companies - look at NuForce, Oppo and the Taiwanese DACs on ebay for example - will bypass the dealer and go straight to the consumer via the Internet. Most of them will probably offer versions they can sell worldwide thus effectively enlarging their prospect pool at very little additional cost to them in either engineering or manufacturing.
I will leave it to you to decide if these are in fact high end companies and if the model would work for a $3,000 preamp - my guess is that some will make it work and others will go bust trying
The best ones will be able to realize some modest economies of scale which might give them negotiating power with their suppliers. But all that is likely to do to prices is allow them to hold the line. Especially if as many people expect we are getting ready for a dizzying inflationary spiral.
2) Company size:
A lot of the premium players are very small shops - thinking Merlin, Wavelength,DeHaviland and the like. They can probably "survive" selling fewer units - no big staff, no big overhead. But don't expect them to invest much in R&D. And where dealers are involved, service and support will become ever more problematic as there are fewer dollars.
As Kirkus points implies, a lot of these folks are enthusiasts more then they are business people - this is especially true of the very little companies who can't afford the expertise to optimize their supply chain - nor build enough of any one thing on an ongoing basis to make it worth such an investment. Without such a change it will be difficult to lower prices and stay healthy.
3) Breadth of product lines. Johnk pretty well nailed it. Expect fewer choices. Neither the manufacturer or the dealer is going to want to (be able to) inventory multiple models and finishes. We are likely to see a return to "any color so long as it's black". Variants will be built to order on a schedule similar to furniture - say 12-16 weeks from order to delivery.
4) Consumer behavior. One would expect someone buying new to take more time, do more research and buy established standards or classics (ie blue blazers and little black dresses). These are choices of unquestioned excellence (Stereophile A) backed with service and support and a record of maintaining their resale value.
To the extent that is true; the people who buy new - the ones who are essential to the health of the industry - will be less inclined to swap in and out chasing the flavor du jour.
Net to us here is there may well be less variety of recent product; and prices may be more tightly clustered on the desirable stuff.
At the end of the day, those who have cash in hand, are oppotunistic and don't hesitate to pull the trigger will probably end up with some great deals - just as is true today.
Beyond a certain point, this remains a luxury hobby. Just because times are tough doesn't mean that there is any reason for it to change.
1) This is a global economy. No matter how bad it gets for some, there are others (perhaps in other parts of the world) that will do fine (maintain the status quo) or do better because they are first to the next great thing. We've seen this in many specialty markets like wine, old cars, art and so on.
The question now is how the experience of this global unwinding will reshape peoples priorities. Manufacturers whose product has broad global appeal, solid distribution and brand recognition stand the best chance of riding this out.
They probably will not need to lower their MSRP especially if they can control their input costs - yes, more will go offshore
Those who are big enough and are very brand savvy may develop a lower price offering - imagine Lexus establishing Toyota...
2) Distribution channel - here in the US the hifi store has been under tremendous pressure for a long time. (I have not travelled abroad enough to know what it's like elsewhere)
It seems very likely that a good many more will fail. Those that stick around will get increasingly picky about what they carry. Net result to the manufacturer is fewer outlets - which means that they can't afford to spend as much on advertising. Service will no doubt suffer as the retailers and mfgrs fight over service costs, as will the availability of in-home demos. Nor will anyone want to carry much inventory (see below)
No doubt there will be opportunities to pickup excess inventory and demos at attractive prices as individual stores and companies fail - you already see quite a bit of that here.
Newer companies - look at NuForce, Oppo and the Taiwanese DACs on ebay for example - will bypass the dealer and go straight to the consumer via the Internet. Most of them will probably offer versions they can sell worldwide thus effectively enlarging their prospect pool at very little additional cost to them in either engineering or manufacturing.
I will leave it to you to decide if these are in fact high end companies and if the model would work for a $3,000 preamp - my guess is that some will make it work and others will go bust trying
The best ones will be able to realize some modest economies of scale which might give them negotiating power with their suppliers. But all that is likely to do to prices is allow them to hold the line. Especially if as many people expect we are getting ready for a dizzying inflationary spiral.
2) Company size:
A lot of the premium players are very small shops - thinking Merlin, Wavelength,DeHaviland and the like. They can probably "survive" selling fewer units - no big staff, no big overhead. But don't expect them to invest much in R&D. And where dealers are involved, service and support will become ever more problematic as there are fewer dollars.
As Kirkus points implies, a lot of these folks are enthusiasts more then they are business people - this is especially true of the very little companies who can't afford the expertise to optimize their supply chain - nor build enough of any one thing on an ongoing basis to make it worth such an investment. Without such a change it will be difficult to lower prices and stay healthy.
3) Breadth of product lines. Johnk pretty well nailed it. Expect fewer choices. Neither the manufacturer or the dealer is going to want to (be able to) inventory multiple models and finishes. We are likely to see a return to "any color so long as it's black". Variants will be built to order on a schedule similar to furniture - say 12-16 weeks from order to delivery.
4) Consumer behavior. One would expect someone buying new to take more time, do more research and buy established standards or classics (ie blue blazers and little black dresses). These are choices of unquestioned excellence (Stereophile A) backed with service and support and a record of maintaining their resale value.
To the extent that is true; the people who buy new - the ones who are essential to the health of the industry - will be less inclined to swap in and out chasing the flavor du jour.
Net to us here is there may well be less variety of recent product; and prices may be more tightly clustered on the desirable stuff.
At the end of the day, those who have cash in hand, are oppotunistic and don't hesitate to pull the trigger will probably end up with some great deals - just as is true today.
Beyond a certain point, this remains a luxury hobby. Just because times are tough doesn't mean that there is any reason for it to change.