here are few truly global brands that cover the full breadth of the audio market, from entry level to high end. Indeed, I can only think of one: Focal, the French loudspeaker manufacturer that produce everything from the Grande Utopia EM down to five-in-a-box surround-sound systems and (admittedly high-end) car-audio drivers. I can only come up with B&W as competition, even if the Nautilus 800D is a long way from the likes of a Grande Utopia.
Nevertheless, B&W's history is instructive. Bowers and Wilkins, stalwart of the UK speaker industry and model of solid, conservative engineering, passed from its original ownership in the year 2000. A new millennium brought new impetus, and the company quickly threw off its staid reputation and low profile. The innovative nature of existing technological developments was moved center stage, visual design and brand identity shot up the list of priorities, and the end result was the Nautilus series, a radical new take on everything that B&W already stood for. It was a marketing coup of epic proportions, propelling the brand from relative obscurity to global prominence and paving the way for the even greater opportunities presented by then-emerging technologies -- represented at one end of the range by the adoption of the diamond tweeter and at the other by the creation of the all-conquering Zeppelin iPod dock.
In some respects, Focal are about to make a similar generational change. Founder Jacques Mahul, so long synonymous with each new development from the company, stepped down as CEO at the end of 2010. He left a brand and a business in rude health, but inevitably his decision invites questions about the future -- and the future direction of the company.
With so many important technological and structural changes confronting audios high-end manufacturers, dealers and customers, what better time to take the temperature of this giant of the hi-fi industry, a company which enjoys a genuinely global reach and perspective but also remains true to their high-end audio roots? With these issues and this context in mind, I spoke with Gérard Chrétien (shown right), head of product development and marketing for Focal and for so long Jacques Mahuls right-hand man.
Roy Gregory: Perhaps we could start by discussing the changes that have happened at Focal since Jacques stepped down and how they will affect the company.
Gérard Chrétien: We changed the organization [of the company] a little bit at the end of 2010. You know, Jacques is now 62 and he has not been so involved in the final product for some years. Originally, he was very much a driver engineer. His key knowledge is the drivers.
RG: He is a very traditional speaker engineer. The company has evolved completely from a driver-based manufacturer, starting with the inverted-dome tweeter design.
GC: The tweeter and the dual-voice-coil designs in 1979.
RG: So you started by producing drivers, mainly for OEM use, but now you design and manufacture drivers almost entirely for use in your own products.
GC: Yes. He started with Focal drivers, but in parallel he started JMlab [for his own speaker designs] because with Focal drivers supplied to so many major players, he wanted a separate brand so as not to compete with his OEM customers. These products were mainly aimed at the mainstream market, not high end but for chain stores like FNAC [think Tower Records], which gave the company the opportunity to grow very fast. We started exporting product in 1990, and the first high-end design, the original Utopia, was in 1995.
Now, in the new organization, Jacques is not stepping aside from the company, but actually moving up to what in France we call the Supervisory Committee, a group that oversees the main board of directors. So, if people hear that Jacques is leaving Focal and worry that the company will no longer be the same, they need have no fears. This is just the next step in the natural evolution of Focal, and Jacques and his ideas, his influence, are still very evident.
So, day-to-day running is in the hands of a board of three directors, with a new guy, Christophe Sicaud, who has just joined, not from the audio world but from industry, who will bring new knowledge and new energy for the future. He will now look after managing the business, all of the different departments, which means that I will be free to concentrate on product development.
RG: So you get to play?
GC: [laughs] Jacques asked me, What do you want to do? My answer was simple -- I am not a career man. I just want to enjoy my work. All the time that it is fun, then Ive no desire to retire or spend less time "in the office."
What is happening is that the company is evolving, gaining strength and new competencies: Christophe for the management, me for the audio culture and product strategy, and the third guy is our financial director.
RG: I think that one of the most interesting things about Focal is that you produce products that encompass the entire depth of the audio market, from the highest of high end down to entry-level two-channel and computer-audio systems. Combine that with genuine global presence and I think this gives you a unique perspective on the way in which the hi-fi/home-entertainment market is developing.
GC: I think the key point, as you mention, is that we are clearly at the top end and also exploring new territories, which hi-fi buyers might see as cheap things. For me, these are not "cheap things"; they are high-end products for a whole new range of buyers. The price/value perception of a product has changed a lot in the last ten years. This is a key point for our industry. We [the established audiophiles] are used to the idea that for a decent set of speakers we need to spend maybe £4000. But for the new generation, a product like the iPad at £800 is already defining the high end in this market. So if we want to appeal to this customer, to work alongside these devices, we need to be in this range of value.
RG: The cost/value equation has changed?
GC: Totally. In our industry the accepted ratio between cost and price is five; for an iPad it is two! This creates huge perceived value for the customer. This is one of the big questions for any new customer: how can I comprehend the value of a traditional hi-fi system? For them, this technology, this model, is already history. So we have to prepare for the future, but making affordable things for us, that doesnt mean simply finding a supplier in China. That is not the answer. The answer is to think differently. How can the company bring its knowledge of acoustics, of drivers, to create solutions for these new customers?
RG: How you can redeploy your knowledge base?
GC: Yes, but also to incorporate new resources such as electronics. Today people are familiar with separate, specialist manufacturers for high-end sources, electronics or speakers. But the next generation, they just want a single solution for sound. There will be no more distinction between speakers and electronics, so for Focal we have to push the acoustic limits by reducing the volume of enclosures -- its a new challenge. We have progressed well; with the CMS (Compact Monitor System) for pro audio, we have learned a lot in the last five years, and you see the results of those lessons in the latest generation of products, the Bird and the XS Book. For the electronic elements, we have had to employ new people so that we can develop product by ourselves but also in collaboration with new partners, all over the world. Buying a complete solution off of a Chinese shelf is not the way to do it. You have to develop your own, new solutions, because existing products will not serve, no matter how cheaply you make them. Real innovation is the only answer to the needs of this new generation of listener.
RG: Do you see these new customers "graduating" from these single-solution systems to higher-performance systems?
GC: Yes -- but clearly we have to educate people. We are in a vicious cycle where a customer can say, "I have compressed music so I dont need a good speaker." It leaves us no chance! It is what I call the McDonald's-ization of sound.
RG: With the traditional speaker range, which starts with the Grande Utopia EM and comes all the way down to the 700 series, are you finding that the pattern or distribution of sales is changing?
GC: We are seeing changes, but they are not the changes that I predicted. I have an outline for the next five years. Four years ago, looking at 2012, I predicted a decrease in sales for the 700 series of roughly 10 to 15 percent per year. In fact, the sales of those products have actually increased!
Im not sure that this reflects the market as a whole; I think it has more to do with Focals position within the market. For instance, a few of the historically important brands have disappeared, leaving us with a larger share of what might be a smaller pie. To compete effectively in this market you have to have real industrial muscle and also good technological application, and there are fewer and fewer companies who can meet that combined challenge.
Above the 700 series, 800V -- what we call the "affordable luxury segment" -- has been a huge success worldwide. I believe this is because it offers a classic solution but with versatile sonic and electrical characteristics combined with luxury finish at a reasonable price. For less than £1200 you have a very attractive and very good loudspeaker.
Then comes the Premium segment with the Electra series, and this is much more complicated. Between £1800 and £4500 a pair there is a huge number of competitors. There is a contraction, with those who do not have the economies of scale necessary to succeed lower down the market forced upwards into this price band in order to survive. Meanwhile, the top end or luxury segment -- where products are no longer remotely reasonable; Utopia is absolutely not reasonable -- presents a whole new set of challenges. To produce Utopia may not be reasonable, but it works; it is 20% of our turnover for home audio. But again, the finish, the technology, the performance, the exclusivity -- everything must be perfect to succeed in this market.
RG: You also have a huge stake in the car-audio market, a field in which you enjoy a fantastic reputation.
GC: Yes, but this too is a market that is changing. Originally our basis was in the specialist tuning arena, but this seems to be less and less sexy for young guys these days, while the original equipment fitted in a lot of cars is getting better and better, so we have to adapt. We have had great success in the high-end segment, where we are the number-one supplier of separate (as opposed to coaxial) drivers, but this is a tiny market. At the entry level there is a lot of competition, but again we have had some notable success -- for instance, supplying French-built drivers to Volkswagen in China, not as a first-fit item but as an option. That is an option to have French drivers in a German car in China! That accounts for a little over 20% of our total in-car business.
RG: When Focal first started, back in 1979, it was as a driver supplier to OEM manufacturers?
GC: Yes, in the very beginning. Jacques first client was Jim Rogers and later companies like Wilson Audio, which we still supply.
RG: But with more recent technologies -- the W-cone drivers and Beryllium tweeters, for instance -- those havent been offered on an OEM basis for other designers to use. Will they be?
GC: No. In the beginning there was both OEM and also the hobby/kit market. They were big markets -- by the end of the '90s OEM was probably 10 percent of our global business. But in the last 15 years our own speaker sales have also increased a lot, to the point where we have trouble supplying our own demand for drivers. It became necessary to stop offering these products to external companies, as we simply didnt have the capacity to meet demand. In 2002 we invested in new premises that have increased our capacity again, allowing for our own growth. At the same time we have integrated all aspects of production, allowing us total control. A lot of large speaker manufacturers have delocalized manufacturing, buying drivers in India or China. In comparison, Focal drivers cost a lot, so we continue to supply Wilson Audio and L Acoustic (for high-power sound-reinforcement systems), but these are for specialist, high-quality applications only.
RG: So for Focal it is a case of developing new product lines in-house, to exploit the new driver technologies?
RG: The Be tweeter has come down into the Electra line.
RG: The W-cone bass and mid units too.
RG: What about the EM [electromagnetic or field coil] drivers from the Grande and Stella?
GC: Ahhh [shrugs]. EM costs a lot, because of the cost of the copper and other raw materials used, costs which are increasing all the time.
RG: So no Electra 1028 EM?
GC: No. EM is very interesting, but it is like a turbo -- it is not always the solution that you need in every car.
My global vision? If you think of the evolution of our market, there are three main competencies: the people who deal with sources, the ones who deal with electronics and the ones who deal with speakers. The first pairing comes with CD, where those who produce electronics start to produce sources. The old mechanical-engineering basis of turntables, tonearms and cartridges is eroded, marginalized until now it is a tiny, very specialist sector. Now the same thing is happening again, with sources switching from electronics to IT companies. This creates a new paradigm, in which the source is dematerialized -- it has become a file-type format rather than a physical disc. We are seeing the digitalization of amplifiers, with new solutions like the Devialet from France, which for me is a stunning achievement. With the Stella it is fantastic.
RG: France has a very strong culture of digital development -- maybe from Thomson.
GC: And also from telecom companies like Alcatel or Nortel working for France Telecom. Contractions in that market in the last five years have released a huge number of highly creative engineers into the market. The guys from Devialet, they come from a telecom background. For me, their work represents a breakthrough, not just an evolution. Combined with wireless streaming and all this stuff, for me, electronics in the shape of amplifiers, will disappear. The sources have become an iPad or an iPhone; they carry all the interface and control functionality. The amplifier just becomes a black box, and as that black box becomes smaller, it will disappear.
Focal's XS 2.1 system ($599).
RG: Disappear into the speaker?
GC: There is no other choice.
RG: If that is the way that the market as a whole evolves, how long do you think traditional separates will survive?
GC: I think that the communications technologies will create in their turn, a new generation of listeners. There is also still a generation -- mainly over 40 years old -- who are interested in separate units, so they will support these. No problem.
RG: So its a generational change?
GC: Yes. People who are now 15 or 20 years old, they will never buy separates. So we have to bring something to show these guys. But its not a completion with separates; its just a natural evolution of the market. They will exist in parallel to start with and slowly the market will move more and more in this direction. This is what I feel.
What we want to do at Focal is continue making products like Utopia -- this is 100% fun. But at the same time we want to apply what we know about making drive units, and the more you reduce the size, the more these things become critical, so you have to optimize them and this you cannot do by computer. You need experience with the materials and technology. Miniaturization is a trend today, because people want small things, affordable things. But next year it will be less important than now.
RG: Things have already gotten too small?
GC: Yes, and people will realize that if they want good sound they will have to make some sacrifice in terms of size.
RG: I think that one of the interesting things that is emerging is that young people's perception of "a system" is very different. The division of responsibilities and competencies that you identify with this emerging market casts loudspeaker manufacturers in a very positive role.
GC: The reality is that whatever way the music is stored or replayed, you still need a loudspeaker.
RG: Do you see major changes in loudspeaker technology or do you believe that moving-coil drivers will remain dominant?
GC: In 2005 I read many things about nano technology, particularly carbon nano tubes. At that time I thought they might represent a breakthrough, leading maybe to a speaker like this [holds up and shakes a single sheet of paper]. In the end, thats what we really need. We have many contacts in this field; there are many companies in France working with these technologies. So we started some analysis of possibilities. Our first investigations showed that there indeed seemed to be compatibilities between the physical science governing these approaches and the creation of drivers -- dynamic range and frequency. People are planning to make artificial muscles from this technology. Making a muscle and making a driver -- its not so different, just a question of frequency range and predictable motion.
So we created a dedicated project team to pursue these ideas, but last year we came to the conclusion that there is no available solution to this problem, not to make high-end drivers, but even drivers with a reasonable performance and bandwidth. In one sense that leaves me a little disappointed, but in another it is reassuring. For the next five years I dont expect any major developments in driver technology, which is good for production stability, but it also leaves me a little sad.
Nanotech does not seem to be the dream technology we thought it might be five years ago. At the same time, there are a lot of people out there working on flat-panel technology -- semiconductors employing piezo technology. Last year we made some experiments, but there is no energy below 1kHz. So it is another limited-range solution, a bit like plasma.
The Bird system ($995-$1395, depending on configuration).
RG: So the revolution will not be in terms of technology but how the existing technology is applied?
GC: Nanotech will clearly be a revolution in materials and material behavior. It is a new paradigm, working at this scale. But today there is no clear path to a new, full-range system through this technology, just refinements on what we already have.
RG: Given that you dont anticipate a technological revolution, how do you see the market developing, and how can a global brand like Focal maintain its position and defend its reputation?
GC: You have to have a global appreciation. In Europe, I have already described the evolution of our company and its products. But in China it is a different story. In China there is a huge demand for crazy things manufactured in Europe, with European tradition and knowledge, because for the new Chinese rich, when they buy luxury products, its not just to spend money. They want some science behind the product. For us, the Chinese market is huge -- big enough to justify Utopia on its own, big enough to justify huge development efforts. But in a very traditional way.
RG: They value the lineage behind the product: tradition, culture, technology - all bound together to create the product.
GC: And longevity.
RG: It used to be very difficult to deal with the Chinese market. Is that still the case?
GC: There are many layers, many facets to the Chinese market. You have the old hi-fi market, although that tends to be a little old fashioned, especially as regards speakers; but now you have the top high-end emerging, above and separate from those traditional outlets. And then there is a third area -- the gray market. You can find every high-end brand in China at 30 percent less than it costs in the rest of the world, complete with service, installation and everything. These three networks make things very complicated. We have to try and control this, but we can only do it through controlling our products in the rest of the global market. For us this mainly affects Utopia. For Electra it is not a problem.
The XS Book system ($399 per pair).
RG: And can you control your distributors?
GC: We have a plan, yes [chuckles]. France has many luxury brands, like Hermes, Cartier, Chanel. They have the same problem, and we have to learn from them how to manage China.
RG: Do you have counterfeiting problems -- people making fake Focal products?
GC: Yes, for car audio. It is impossible to separate them visually from the real thing -- but for the sound. When you listen, it is obvious. But so far, for speaker systems this is not a problem.
But what you are really asking about is the market as a whole. Take the US: that is also another, separate story. Here, the financial crisis has cost us maybe half of the top high-end dealers because they relied on the custom-install business and that has just stopped completely, almost overnight. Europe is complicated because it is fragmented. China we have discussed. The US is a huge challenge. But although things appear complex, and we have to balance all these issues, we can make them simple by thinking in terms of brand.
Whenever there is a question that crosses borders between markets, we only need to ask, What is best for the brand? Focal, whether we are talking about professional products or home audio, its a brand and the brand values are simple. You can look at them like a cross, with one value on each leg. One leg is tradition, another is technology, another is market position. In each market segment, whether you are talking about pro audio, multimedia systems, or car audio, it makes no difference; we only enter that market if we can be the best. It is not a question of price but whether we can compete in each segment. And finally, there is the most important leg of all -- pleasure. We give pleasure. All these products, they are for pleasure. It is like food; it can be simple or so complex, but at the end -- wow! We must look at each product, each decision in that light, but in the end, our customers must be left with that feeling -- wow! Thats what we must always consider, what we must always aim for.
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