Analysing the market

For many manufacturers, the ultimate goal is to create products that become the best and most respected in their field, thereby creating a brand that is so respected, so desirable among end-users that your market leader position is unassailable.

But what happens when you already occupy that rare position, and yet still see sales going elsewhere? What if your product is already an object of desire for your potential customers, but nevertheless beyond their reach? It’s one thing to make equipment that everybody wants, but another entirely to make equipment that only the elite actually buy.

‘For pretty much the entire history of the company we have been known as a purveyor of very high-end exotic high-performance test equipment to the R&D market,’ declares Bruce Hofer, co-founder, chairman and head analogue engineer of Audio Precision, a company that enjoys an enviable reputation as the market leader in audio testing equipment. ‘But there is another side to this equation,’ he continues, ‘and that’s in the production market. The needs there are intrinsically different. End-users in the market tend to care about the speed of the equipment and how reliable the product is, but maybe not so much about the performance – although this is still important.’

Though this may seem like a small difference, its effects are actually dramatic for Audio Precision. Over the years, the company has observed that while it was still selling into the production market, it would make one sale compared to 100 of a rival product. ‘We were a reference unit that was occasionally used to compare results. So we thought: Why do we have to be the reference unit? Why can’t we be just the unit, the solution for the whole thing?’

This thought led to a review of Audio Precision’s current set of products. ‘We looked at what we were doing in our designs that we could do differently, to come out with a product at a much lower price point,’ recalls Mr Hofer. ‘Performance is certainly one aspect where you can make trade-offs in terms of price, but the big thing was configurability. All of our other products have panels on them with a lot of different interfaces – there is a lot of modularity.’

Audio Precision’s units have all been built so that different assemblies could be mixed and matched. ‘That does carry quite interesting costing internally,’ says Mr Hofer. ‘Instead of a simple cable between a board and mic you have to have a connector and those start to run up the cost.’ One solution therefore was a ‘one size fits all’ approach. ‘We pursued that philosophy, and as we went through the development we realised we would be able to get a pretty attractive price point.’

The first product to be designed following this philosophy is Audio Precision’s new audio analyser, the APx515, which was designed firstly with a price point in mind and then with the minimum performance levels that would be acceptable. Mr Hofer, as head analogue engineer, was tasked with designing it. ‘The biggest factor is it can’t do as many things, but for its mission it can do everything that is required,’ he explains. ‘It’s not right to think of it as a low-cost version of our high-end products, it’s more purposefully designed for its mission.’

‘The nice thing about it is it uses the same software as our higher-end instruments,’ says Tom Williams, VP of marketing for the manufacturer. ‘We didn’t have to design a whole new operating system because we already had one for our other analysers, so that was a cost saving.’ Not only was this was one of the key areas of savings for the manufacturer, it had the added bonus that translations between the high-end and the new unit would not be needed. ‘If you’ve got someone in Europe using one of our high-end instruments doing tests, then if they have a production line elsewhere they can email them the production file then they can run it on the production test version and everyone knows they are comparing apples to apples.’

Mr Hofer believes the software is a real differentiator for the product against many of its rivals in the lower end of the market. ‘A lot of the low-cost competitors have no software, it’s totally embedded – people make decisions from LED readouts.’

Matching up measurement readings when testing equipment is a major challenge faced by international manufacturers. ‘If you can trust the test equipment then you can spend more time on what is the actual problem, not working out if there is really a problem,’ says Mr Williams. ‘The nice thing about having a standard is if you’re measuring something where you are and I’m measuring something where I am, if we are both using AP then you know that you’re results are the same – you’re talking on a level playing field.’

The unit has received a lot of interest since its launch at the AES show in London in May. ‘There are certain customers who are put off by prices. Even though they may be R&D and wish they had a higher-end product, the simple reality is that there are some companies that are just very small operations, and we are seeing a lot of interest there because of the price point,’ says Mr Hofer.

Mr Hofer is cautious about whether the company will put out other products in the lower price bracket. ‘We’ll take that one step at a time. As opportunity presents itself and as it makes sense we will think about that.’ But the history of the company suggests that it is not adverse to change its business model as market needs change.

‘The historical roots of Audio Precision are certainly in broadcast,’ explains Mr Williams. ‘We’ve seen a move away from it now because fewer stations have a dedicated sound engineer, if a piece of kit stops working they just post it out to somewhere or get a new one. So most of the emphasis of the company now is in electronic tests of equipment from manufacturers or in R&D.’

Pricing for the biggest market

Celebrating its 25th anniversary this year, the company was founded by Mr Hofer in Beaverton, Oregon in 1984. With a range including analysers, filters, switchers and accessories, the company covers a critical part of the audio equipment manufacturing cycle. ‘The manufacturers are definitely our bread and butter, they are interested in knowing what the most recent audio test advances are, because that is what they are going to be rated against,’ explains Mr Williams. ‘If a customer is trying to make a decision about which mixing board to buy, they are going to look at the specifications of the board and they will want to know with which method it has been tested.’

Asia is an important market for Audio Precision, and one where it has been present for most of its history. The company goes to market with a distributor model, with local representatives for each country. ‘This gives us good coverage,’ says Mr Williams. China is one of the most important markets for the manufacturer, and its biggest in Asia. A number of sales come through here as it is a market for both R&D and production. Also important is Japan: ‘This market is almost exclusively the high-end R&D,’ says Mr Williams. ‘They have partners in China who do the production.’ Also included in the top sales group are Korea and Taiwan, but the volumes here are not quite at the same level as China or Japan.

In general, test gear has a long lead time, and this is true for Audio Precision’s products. Mr Williams feels that this can provide the company with certain advantages as it gives the manufacturer a longer period in which it can get into a customer’s budget: ‘Typically it will take six months to a year from introduction to signing the deal.’ It also means that the customer will not be sold a piece of equipment only to discover the manufacturer is about to release a cheaper alternative. A further advantage from this is by creating a window when customers know the product is about to be launched, a volume of pre-orders can be generated which will give the manufacturer more accurate sales predictions.

As for most companies in the market, 2009 was a challenging year for Audio Precision, but according to Mr Williams the situation has improved in 2010, driven by the new products it has released. A stand out for the company has been the APx BW52 ultra-high bandwidth option for the APx525 audio analyser, which is aimed primarily at the design market, but also has uses on the test side. This instrument is the first to offer 1MHz FFT – a feature which is required to see the harmonics of sound above the audible range.

‘Nobody has been able to do that before,’ says Mr Williams. ‘The advantage of it is, when you look at Class-D amplifiers, which are becoming much more popular, you are able to actually see the switching frequencies. That’s important because those frequencies can have an impact on audio quality.’ A further use is found in broadcast. ‘If you have equipment with very high out-of-band noise and you plug it in series with other instruments, these can be damaged,’ explains Mr Williams. ‘If you are able to look at it with high-resolution then you can make sure it won’t damage anything.’

While moving towards R&D testing equipment, Audio precision has not left the broadcast industry totally behind. One of its key tools in this area is its High Speed Tester (HST). ‘Radio stations want to be sure that they have a good quality signal in their service area. The way they have done that in the past is to drive out and put out an audio analyser, which is an acceptable way of doing it, but then play a sweep frequency tone, which is 20s of beeping. It is very frustrating as this is actually going out over the air,’ explains Mr Williams. ‘We’ve come up with a 1.5s multi-tone and it does all the same measurements as a much longer tone. You are able to get the same assurance of quality over the service area but without causing a distraction to the listeners.’ The device also has a script that allows it to email the performance back to the station.

The HST has also been designed with a focus on the trigger. ‘The problem with sine waves is that a lot of music has them, so it can set off a false trigger. The station could play some techno with a sine wave in it and the analyser will think the network is down. We have very intelligent triggering that won’t go off unless it receives our signal,’ explains Mr Williams. ‘We can arm the analyser and it will go for days without a false trigger,’ adds Mr Hofer.

The product is mainly aimed at big national broadcasters which have a huge service area to cover and need to know how they are performing and if they need to boost their coverage by putting up extra towers. As such, it has been very popular in France but is also attracting significant interest from countries such as India and Turkey.

Audio Precision has certainly evolved as a company throughout its history. It has shown good awareness to expand the markets it is active in and built up a reputation for its equipment that many would be proud of. Its products have been the driver for the company’s growth and opening up a new market segment at a lower price point will be key to its future success.

www.audioprecision.com