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The Studio Business
What does the client want?
Economic Reality
Real Life Business Models
Additional Income
How to save money
Your Market Survey
The Digital Time Bomb
Advertising and Sales
Marketing means to listen!
The Future Studio
Record industry crisis
Band Legal Status
Myths of the Industry

   The Digital Time Bomb!

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The digital Time Bomb - what are you going to do about it?

As I write, I am watching two prestige digital desks on eBay. Back in 2002, they cost over 700,000 for the pair. Right now, bidding stands at 460. Yes, that's right! Four hundred and sixty Pounds.

One of these two desks has just 100 hours on the clock, the other not much more. We are assured that they work perfectly and are in as-new condition. They come complete with everything you need to plonk them down in the control room, plug-in and start work.

By the time I have finished this article, they will have sold, so you will have to wait to the end to find out how much they fetched!

I can tell you that the owner has tried selling them before and at prices more commensurate with what you would expect to get for a four-year-old desk of the very highest quality. But without success.

In four short years, these desks that once cost about three-quarters of a million Pounds have been transformed to their scrap value. There is nothing wrong with these desks - except for one thing, they are digital and the manufacturer has restricted support for them. There will come a time when a simple fault will make the product worthless.

One owner of such a desk, that he had bought used, was told by the manufacturer "Due to the complexity of the design and the scarcity of our component stock we are only able to provide full support to those owners who are the original owner or have an existing support package."

He was also informed that the company did not provide any in-depth technical documentation for digital products. In other words, "You're on your own, son!"

No Comment!

I called the manufacturer in question and when it became apparent that I was asking questions about technical support, I was asked to put my questions in writing in an email. Ten days and two reminders later, I have not received a reply.

Another manufacturer of prestige, digital desks for post production refused to answer any questions on technical support. "That is a confidential matter between ourselves and the customer." said a spokeswoman.

Other large companies, whose core business is not pro-audio, but have a significant presence in the pro-audio market, also failed to return calls and answer emails.

Openess

These, however, were the only manufacturers who reacted in this manner. All the others we contacted were very open about the fact that digital equipment is far more difficult to repair, service and provide general technical support for.

Steve Benney, Quality and Improvements Manager at Allan & Heath, "Good service is expensive and digital is more difficult than analogue, desks in particular. You have to design technical support into the desk. We do this by making future updates and boards backwards compatible when at all possible. In that way, if a part fails, it can be replaced by a newer version. But the impact of constant change is still not known, so we just have to hold a vast stock of spares. There just is no other way."

The giant Harman Group was equally as forthcoming. A member of their technical support staff also underlined the need to keep a large parts store. "Of course, it is the very nature of digital, that many components go out of production very quickly, so we have to keep as many replacement components as we expect to use over the lifetime of any piece of equipment."

When I asked him if there were any time limits or other restrictions on who may receive technical support, he laughed. "Even if we do not have that part, there is often a work-around and we'll always do everything we can to help. We are not in the business of turning paying customers away!"

Head of technical support at Soundcraft, Martin Hutton, "It really is a numbers game. Key components such as DSPs are produced in batches and a manufacturer has to keep enough stock to cover for the future."

But he sound a note of warning, "If you are buying any used equipment, it's a good idea to contact the manufacturer about availability of technical support, particularly if it is digital. But we always do our best to help anybody, regardless of whether they are customers of ours or not."

Smaller companies that have taken the digital plunge reflect similar attitudes. Peter McGuire, operations manager at Cadac, "We have a clear responsibility to our customers, so we have to maintain a stock of parts to support our products thought their expected lifetime. We occupy a niche market, in that I am not aware of any of our desks in the 40 year history of the company ever having been scrapped. With that kind of background, we have to take a long-term view."

A look at the pro-audio industry would not be possible without talking to Digi Design and their head of global servicing, Dan Muchmore.

"We keep parts as long as possible. For example the Pro Control is now 11 years old and the faders are no longer built, but we still supply them."

Much more emphasises that the ProTools family is built upon the philosophy of upgrades. "We will support anything out there, but the vast majority of our customers want to upgrade to have the very latest and best technology, so support for older products is not the problem that it might be for other manufacturers. When you buy ProTools, you are buying into a platform that is constantly moving forward. Processing power continues to expand. There just is no standing still."

He pointed out that the long-term trade-in policy, provides Digi Design with a steady stream of spare parts for older products.

So the large and the small in the pro-audio business seem to be able to provide support, but all sound a note of caution when dealing with digital. All stressed the importance of being open and honest about the levels of support available now and far into the future.

All; those prepared to talk about the problems of support for digital products were very clear about one point. As Steve Benny, quality manager at Allen & Heath, put it, "Technical support is very much a part of sales and marketing. If someone calls us for help in setting up their 200 disco mixer, I expect my team to give them the same level of support as someone who has bought a 20,000 live desk. That person will probably be a first-time buyer and we want him to return to Allan & Heath, when he buys his next desk."

The surprise for me was the fact that the companies that refused to talk about their ability to provide technical support, were, in the past, paragons of excellence, when dealing with technical support. All had built up a network of third party service centres, devoted to repairing previous generations of analogue equipment, but now seemed to be either having difficulties providing service for digital products, or at least, be having difficulties talking about it.

Something's going on here, but what?

To gain the bigger picture, I spoke to one of the marketing people at a large European audio manufacturers, who was prepared to talk, as long as I did not mention the name of the company.

They have three main activities, professional audio, domestic hi-fi and as OEM providers to other brands. Each branch accounted for roughly one-third of their business. The domestic hi-fi market, I was told, had come under the greatest pressure and, despite having a plant in China, this price pressure has lead to a 5% fall in profits. The OEM side of the business had remained more or less stable, thanks to long-term contracts. But the professional audio side of the business was showing a significant increase in profits of 15%. The reason, I was told, was digital.

The traditional, analogue product ranges were suffering escalating components costs and massive price-pressure from cheaper products. They also took longer to build than digital, therefore tying up plant and machinery, and were more labour intensive. A large part of the digital products are software. They can be assembled far more quickly, sub-assemblies are tested automatically, as they proceed through the manufacturing process, and final quality control takes place in seconds, or minutes - depending on the sophistication of the product - and on an automated test rig.

The cost of developing a digital product remains higher than traditional analogue products and that development is less easily transferable to future products.

All that adds up to higher profits for digital pro-audio. The fly in the ointment is the uncertain cost of future technical support. If a product is subject to a series of repeated faults, a strategic stock for repairs could soon be exhausted.

So, although the new generation of digital professional and semiprofessional products are far more profitable than their analogue predecessors, this profit could be threatened if support costs escalated without warning.

I'm not quite sure where this leaves the customer or even if there is a moral or a message to all this - other than perhaps that one has to be very careful who one buys from. Most manufacturers are dealing with the problems head-on. A few seem to be trying to avoid it. By doing so, they are, of course, doing their reputation no good at all and killing the used market in their products.

Once the guarantee run out, no manufacturer is under little legal obligation to provide anybody with any kind of help whatsoever, or even a repair service at a reasonable price. Unlike analogue, third party repairs of digital hardware can be difficult, or even impossible. That may not matter much on a cheap computer, but some digital desks represent a sizable investment, so talking in depth to the company and even obtaining a written statement that all spare parts and technical documentation will be available, even after it has been sold in ten years time.

And those desks?

Taken off eBay after reaching just over 10,000.

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The Byre Recording Studio