Why Did You Drop the Max Line?

I never used to say this, but the Max line was basically no different to the Home line in performance. In fact I'd go as far as to say that no-one would be able to tell the difference between a Max and Home with the same electronics and/or DAC.

The real mystery for me is therefore why they killed the Balanced Home, and I'm sure we'll find a logical answer soon!

You think that because they managed to squeeze a huge amount of the performance of the flagship line into the new desktop line that they've taken their eye OFF the ball? You're nuts. Headroom has made more performance available to more people for less money and in less space. When they do eventually (and there will be one, but I really would not hold my breath) release their new statement model. Expect it to raise the bar again.

Remember what people said about the iPod when it was released? That had apparently nothing to do with Apple's core business, yet 7 years later their core business is better in every way because of it. Not trying to compare the Audiophile Desktop to the iPod, but sometimes the best way to help your core market is to make something somewhat outside of it.

As far as their core business is concerned, I can assure you they are working their butts off on some very ambitious projects in terms of Headphone amplification and sources, it's just that they are more complicated and have a longer R&D/lead time than products like the Audiophile desktop which, if you consider that relatively little original design had to go into the amps either in terms of the enclosure or electronics (no criticism intended) are easy to make and spread the brand name well.

I'm not worried...

I think the appletv isn't done yet, it's just ahead of the curve. The appletv is for me the most exciting thing to happen in home entertainment systems in a LONG time. I can't wait til it gets the next iteration.

Given the state of the economy, I'd say a 'hold' recommendation is pretty good.

Okay, seriously, great question, let me do you the honor of a serious answer. There are a number of issues here, and I'll address them in brief from an 'outside looking in' point of view, but I'll add there are numerous internal resource management issues, I won't bore you with, that adds various weights to the scale.

Discontinuing the Max and Home. We feel that a statement product isn't of too much use once the statement has been fully made and the technologies therein have been moved to lower cost products. It's now time for us to do a fairly long development project to make the next statement.

This is something we were going to do more in the early 09 time frame, but due to the economy and soft sales in Oct/Nov we took the opportunity to 'cash out' the remaining inventory of Max and Homes in order to finance our Christmas season without tapping our credit line, and to reduce the inventory future labor requirements to support the line in order to enter next year---which is very likely to continue to be economically soft---a little leaner and meaner.

Desktop Audiophile. First, I'll make a little argument that stretching a product line is a good thing: When we introduced the first BlockHead and the concept of balanced amps, there was ZERO demand for such a product as there were ZERO people who had balanced headphones. Well, long story short, that turned out pretty good and today I'd guess at least 10% of our dollar sales are attributable to balanced headphone related products.

The link to the Desktop Audiophile, I would argue, may be more direct. Once you make something like the current Desktop Amp you realize that you've made a promise to customers. The Desktop Amp is---and eventually will be---better called something like a Desktop Preamp. As we struggled to convey all the versatility to customers we found ourselves up against a conceptual wall: people just didn't understand what it does. (I'm not talking about you guys, but about the average audiophile who is savvy about normal audio gear but not about headphone gear.) If you tell someone, "this gizmo is the center of a desktop audio system, well, you've got to show them a desktop audio system someway or another.

Now, here's the tricky bit: We could either spend a whole lot of time slapping people upside the head with a whole bunch of words (which mostly don't get read in an ad) and get them to understand that a Desktop Amp is basically a preamp on your desk, or we could simply show them a picture that made it possible to make some assumptions based on their understanding of big stereo systems.

Show audiophiles this picture:



and they 'get it.'

Then there's the fact as mentioned above, that technically, it was a fairly easy development.

Then there's this little slap of reality: HeadRoom has to continue to grow to at least five times it current size. There are enough audiophiles to support that, but they DON'T LIKE HEADPHONES, they like speakers. You can scream and shout all you want (and I have) but you can't escape that fact. Doing the Audiophile Desktop is a broadening of the brand that allows audiophiles to identify with our products much more strongly.

Lastly, this is important but a bit too complex to go into in any depth, HeadRoom is a bootstrap operation. It is hard as hell to get the wiggle room needed to finance furthering developments. If I had a big wad of cash in my pocket, sure, I'd keep the Max for longer and I'd discontinue it only six months before the introduction of the next flagship. (It's important that there be that time off with the flagship product so you don't piss of recent purchasers.) But I don't, so I can't.

You see, your initial premise is wrong right from the start: HeadRoom is not a vehicle for outside investors. It's a bootstrap development for a couple of VC guys who invested a very small amount to see if it could turn into an "American Dream" project with a long term cash cow payoff. The goal is to get there from here eventually and with no addition need for cash. And that, amazingly and slowly, we're doing.

Please compare the performance
between Blockhead and Balanced Max.
I wonder the result since I'm a Blockhead user!

This is fantastic business statement. It makes me twice as glad to buy your products. (They also sound great.)

Man, business is tough! All I can see is keep going, it's worked for this long, and I'm sure it will get you where you want to be. For shame on those people that will only do speakers, they don't know what they are missing!