Mark Levinson is considered by many audiophiles and industry types to be the loftiest brand in the specialty AV business, but today, despite their ultra-profitable and high-profile Lexus premium car audio deal, the brand and with its sisters, Lexicon, Revel loudspeakers and JBL Synthesis, are being integrated with JBL Professional to become a new specialty company named High Performance Home A/V. The move comes as Harman International (HAR) is in the middle of massive cost-cutting throughout its operations, including JBL and Infinity speakers, Harman automotive, AKG and many other companies.

Harman Specialty Group (HSG) will be disbanded, and with this move comes heavy firings. The Westbury, New York office for Harman will be closed by June 30, 2009, with staggered layoffs between now and then, resulting in 130 Harman jobs lost. Madrigal, the former corporate moniker before Harman changed the name to Harman Specialty Group, moved from Connecticut a mere five years ago to Massachusetts. The Massachusetts office will now be closed, with the operations of the HSG brands going to the Professional division in Indiana and the design efforts moving to Harman's main headquarters in Northridge, California.

The reorganization of Harman's specialty property has created a significant "brain drain" at the company, especially among its most highly paid and highly experienced sales and engineering people. While former HSG president John Batliner will now be vice-president of sales and speaker designer and audio guru Kevin Voecks will remain with the company, most of the top engineers are leaving or have already left, although Jim Hardiman is staying as the lead player in charge of engineering. The most seasoned members of the HSG team, including the frontmen for Mark Levinson and Lexicon, have either left or have been fired. Harman has paid severance to those who were fired, HomeTheaterReview.com has learned.

Once source inside Harman tells HomeTheaterReview.com, "The specialty business is now more planned than just point-of-purchase sales of audiophile products. Home theater systems are bid, speced, ordered and installed over a matter of many months, which is a marked change from the traditional model. Being under Harman's pro division will ultimately make the company more in touch with the way the dealer and consumers buy our gear."

HSG has some new leading-edge, ultimate audiophile products like the Mark Levinson No. 502 AV preamp, priced at $35,000, and the Mark Levinson No. 53 hybrid digital mono power amps for $50,000 a pair, but with the economy in peril, the company needs to find a way to make more reasonably-priced luxury equipment that speaks to people with less than a net worth of eight figures if they want to be relevant going forward. The company also needs to market to a new generation of music lovers who are not audiophiles. While they may drive a Lexus, the entry level needs to be far lower to get new, younger, non-Baby Boomer clients into Harman's best consumer brands. This means media servers, Blu-ray players, wireless connectivity, Bluetooth and iPod synchronization.