Whale Hunting In The Desert - $20,000 Plus AV Components Are Everywhere At CES

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20k_audiophiles_gulfstream_450.gifI called this article Whale Hunting in the Desert because of a book that I just read of the same title about Steve Cyr, the man behind inventing the modern casino hosting game in the 1990's at The Mirage. It was a fascinating read that covered the transition from old Vegas to new Vegas from the casino host's perspective. Cyr implemented database marketing to woo heavy hitters in from around the country. He used private jets to stylishly shuttle in the "whales" who can afford to lose the most - and boy did they ever. If you think a "comp" is free, then you have another think coming. Casinos don't comp you unless you've proven you can lose and lose enthusiastically. Once you do - you are good in their books and there are few luxuries that you cannot have, in order to get you back to the tables. Today in the world of high end, audio video companies are also increasingly hunting for whales as seen by many of the products on display at the recent Consumer Electronics Show in January of 2011.

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Having worked at Christopher Hansen Ltd. in Beverly Hills and for Mark Levinson at Cello Music and Film Los Angeles in the early to mid-1990s - I am no stranger to the big ticket sale. I sold more than my fair share of Wilson WATT Puppy speakers, Transparent Cables, Mark Levinson electronic and well-over $100,000 Cello Music and Film systems that packed $50,000 amps, $70,000 Cello speakers and Vidikron 9-inch CRT video projectors packing $20,000 "line doublers." Closing the big ticket sale was the most fun you could have as a top audiophile salesperson and those are days that I remember very fondly. What concerns me today is that as we are coming out of a deep global recession, more and more companies are pushing $20,000 components to a smaller and smaller number of clients who can afford such audio jewelry.

At the recent CES trade show in Las Vegas there were countless products priced in the stratosphere from increasing numbers of companies who aren't always known for such high end products. As the sales guru that I studied, Tom Hopkins, always said: "You have to earn the right to the close" and many audiophile and videophile companies are simply just jumping into the uber-high-end game, with little to no game plan. VW came out with their Phaeton $70,000 luxury sedan built on a Bentley frame, but the car was mostly a failure as the luxury market wanted the cache' that comes from the likes of Mercedes-Benz, BMW and Porsche at the higher end of the market. It doesn't matter if you are a well-funded car company or an aspiring audiophile company - it's hard to crack into the ultra-high-end market without deep pockets, tremendous enthusiasm and lots of creativity. It can be done - just ask Lexus and Infinity or Kalidescape or Wisdom Audio on the AV side - but it isn't easy.

Another real-world problem that many, but not all, audiophile companies have that are trying to sell gear where the air is rare is: the traditional brick and mortar specialty AV dealers. These dealers, those who could possibly show and successfully sell such ultra-high-end products have a hard time justifying the investment that it takes to get them on the retail floor. Respectfully, these B-list audiophile manufacturers don't create the consumer demand needed to make the phone ring that often to justify parking $20,000 on a dealer's ceiling (at cost) or $15,000 (at cost) for a pair of speakers that may or may not sell for a lot less on Audiogon.com. Creating consumer demand is key to making these mega-products move. A-list audiophile company, Audio Research, knows this - which is why their 40th Anniversary two-chassis preamp will end its production run this spring. If you didn't order yours - then you'll have to buy one used, but that's at closer to retail for used than dealer cost. This is a smart way to keep the value of the product up as less supply paired with good demand equals high prices and high values for owners. Many Audio Research Ref 5 clients made the upgrade because their Ref 5 was so valuable on the used market. With unlimited amount of product in the market - it's hard to keep the values high. High values, stunning support and top performance keep ARC clients happy and loyal for decades; thus their position in the marketplace.

Read more about the realities of the AV market on Page 2.

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