[jude]

Last week I had a quick video call with Andreas and Daniel Sennheiser -- Co-CEO's of Sennheiser -- to find out what's going on with the company after they made an announcement last week about the realignment of their businesses. I'll start by saying I definitely felt better about Sennheiser's audiophile portfolio (and their Consumer unit in general) after speaking to Daniel and Andreas than I did before we spoke. (I'll explain why shortly.)

(Above) Sennheiser Co-CEO's Daniel Sennheiser (left) and Andreas Sennheiser.

Prior to that call -- after initially seeing those announcements -- I had as many questions (and was as surprised) as any of you. For those of you who haven’t seen the press releases, I’ve attached them to this post. While I encourage you to read those releases in their entireties, here’s my quick bullet point interpretation of them:

• Sennheiser has four business units: Pro Audio, Business Communications, Neumann, and Consumer Electronics.
  
  
  • The first three units are their Pro business units and the last is their Consumer business unit (which includes the audiophile portfolio).
    
    
• Sennheiser will shift to focusing their energy on their Pro business units.
  
  
• For the Consumer business, Sennheiser is looking for a strong partner to invest in it to best meet the dynamic, strongly competitive nature of the Consumer segment (making specific mention of the true wireless segment as an example of this).

Obviously, in this community, the Sennheiser products we have the most affinity for are their audiophile headphones (over-ear and in-ear), which are under Sennheiser’s Consumer business -- and the Consumer unit is the one they’re seeking a partnership for. To get some idea about the fate of their audiophile portfolio, I had questions about the future of Sennheiser’s Consumer business that those press releases simply did not make clear to me.

Are they selling the Consumer unit (and so the audiophile portfolio within it)? Is it being killed off? These are reasonable questions to raise, and a couple of news articles attempting to interpret Sennheiser's announcements -- as well as posts and comments in forums and social media -- have perhaps suggested those things.

It was nice to talk to Andreas and Daniel directly instead of joining the guessing game, and here's what I learned, and my opinions about what I learned:

• There are no specific prospective partners they were talking to at the time of the call. When I asked why they were making the announcement now, they said one of the key reasons was to be as transparent with their own employees before any news of these strategic changes leaked out.
  
  
• Just as both releases to the press last week emphasized their desire to secure a partnership to strengthen its Consumer Electronics unit -- with neither statement making any specific mention of a sale or divestiture -- Daniel and Andreas were very consistent in our call that it is a partnership for Consumer they're seeking.
  
  
  • Daniel said that they're seeking a partnership for Consumer as a growth strategy, with the intent of accelerating the unit and being able to make bigger plans (in a growing market with huge opportunities) than they can without such a partnership.
    
    
• I asked if there is a projected timeframe. That is, if in the next several months there's no partnership, what then? They answered very quickly and clearly that they are not under any time pressure here.
  
  
• They seem fully committed to continuing the audiophile product portfolio and acknowledged its importance, historically and now.
  
  
  • As I was familiar with Sennheiser's future audiophile product plans prior to this announcement, I asked how those plans were affected now. Their answer, much to my relief, was that those audiophile product portfolio plans until 2023 remain. Again, they also reiterated the importance of this category to the brand, and seemed very sincere about this.

Again, when it came to the Consumer unit -- and especially the audiophile product portfolio -- I felt much better after the call than I did beforehand, and am glad that no matter what kind of partnership they enter into for Consumer, the audiophile portfolio and plans until 2023 remain in place. (And those plans until 2023 were as far as I knew ahead of this announcement.) I wish I could give you more Sennheiser audiophile portfolio specifics, as you'd better understand my enthusiasm and relief then.

Here's my reading of what's happening and what has been announced: Sennheiser feels that alone they are very well positioned for the scope, scale, and demands of their Pro business units now and in the future. However, I think it's clear that Sennheiser sees that the scope, scale, and demands of the opportunities in the Consumer segment are huge, and so may require the investment and participation of a strategic partner to be better positioned to compete and grow to meet those opportunities.

And, also very importantly to us, it seems clear to me that Sennheiser is fully committed to their pre-announcement audiophile product portfolio roadmap, developments, and plans to 2023.

It was a short call made on short notice, so I appreciate Daniel and Andreas Sennheiser taking the time for it.

 

[xanlamin]

@jude, thanks for sharing. This should be on the homepage!

 

[Mediahound]

I think their headphones line basically doesn’t have a leader ever since Axel Grell left Sennheiser. He was the design engineer for all of their classics like the HD600 and the HD800 lines.

 

[jude]

I think their headphones line basically doesn’t have a leader ever since Axel Grell left Sennheiser. He was the design engineer for all of their classics like the HD600 and the HD800 lines.

While Axel was a driving force there until his departure, there were (and still are) scores of engineers and product specialists at Sennheiser. If you ever have a chance to tour their campus, you’ll see it’s a very engineering-focused company, still with tremendous capacity to develop products for the likes of us.

 

[dadracer2]

While Axel was a driving force there until his departure, there were (and still are) scores of engineers and product specialists at Sennheiser. If you ever have a chance to tour their campus, you’ll see it’s a very engineering-focused company, still with tremendous capacity to develop products for the likes of us.

Are you able to share any of their Audiophile product portfolio roadmap to 2023 at this time as you have seen this?

 

[gikigill]

Will existing products such as the HD800S, HD660, HD820 and others will continue being manufactured or are they being wound down.

 

[fsi22]

Seeing this reminds me, of, Olympus camera division and JIP. I hope they find a partner / buyer who can follow on, and push the Sennheiser brand to more interesting places.

 

[halcyon]

With some background in corporate speak, let me put this in Plain English:




- Consumer audio division is bleeding or not bringing in high enough profits and the prospects of competing against Apple/Samsung-Harman/all of China look bleak to Sennheiser
- They are looking to outsource or divest or license the brand of consumer audio. They will reduce their own investment in consumer audio significantly. Everything else is just flowery words not to scare off customers
- Their professional ranges are doing better, with better growth prospects and better profits. So they will concentrate on that in terms of channels, R&D, sales and marketing.
- Audiophile is part of the consumer audio, not professional line, expect it to to be reduced/downsized in R&D and just branded/outsourced just like the rest of the consumer audio

Personally, as a long-time consumer and fan of Sennheiser consumer audiophile products, I find this move disheartening, but understandable in the face of the competition and how the landscape is evolving.

 

[T 1000]

Profitable investment. In anticipation of a new star

 

[CantScareMe]

Focussing on their "Consumer" business, which the statement says is Premium Headphones, Audiophile, Enhanced Hearing and Soundbars.

What I'd like to know is how the Audiophile arm is doing.

I heavily doubt its the worst performing. It's probably where Sennheiser have the least competition and lowest marketing costs.

 

[darkarn]

I am wondering why isn't the Audiophile stuff being wound into the Pro Audio segment; don't the HD600/HD650 get heavily used by studios due to their accuracy?

 

[PsilocybinCube]

I am wondering why isn't the Audiophile stuff being wound into the Pro Audio segment; don't the HD600/HD650 get heavily used by studios due to their accuracy?

I think the pro division is for business (non-audio) businesses. For instance they have an amazing conference room audio solution that they tailor to the client.

 

[tkddans]

I am wondering why isn't the Audiophile stuff being wound into the Pro Audio segment; don't the HD600/HD650 get heavily used by studios due to their accuracy?

I think most of what “pro” refers to here may be their business geared products. Maybe microphones and audio intended for conferences, calls, presenting. If you check their pro product page, it features mics, headphones we never talk about in our community, and wireless systems for presenting.

 

[AmericanSpirit]

Let me have a critical thinking here, as one of the loyal customer of Sennheiser.

The facts of laying off 650ish employees remains still. This alone speaks to itself besides corporate talks. Sennheiser has lost competition and salvaging its capitals from consumer segment.
If this motivation was a part of cost leadership growth strategy per Harvard Professor Michael Porter, they wouldn’t need to layoff the working capital for the first place, unfortunately.

From the circumstantial facts,
Sennheiser is acknowledging its weakness in consumer segment, and its strength in professional segments, thus seeking focus strategy to secure its corporate growth.
Hope the future partner has solid understanding on Sennheiser’s branding to audiophile community and agree to strengthen or keep it above mid term planning that’s been referred as 2023.

 

[ipaddy]

With some background in corporate speak, let me put this in Plain English:




- Consumer audio division is bleeding or not bringing in high enough profits and the prospects of competing against Apple/Samsung-Harman/all of China look bleak to Sennheiser
- They are looking to outsource or divest or license the brand of consumer audio. They will reduce their own investment in consumer audio significantly. Everything else is just flowery words not to scare off customers
- Their professional ranges are doing better, with better growth prospects and better profits. So they will concentrate on that in terms of channels, R&D, sales and marketing.
- Audiophile is part of the consumer audio, not professional line, expect it to to be reduced/downsized in R&D and just branded/outsourced just like the rest of the consumer audio

Personally, as a long-time consumer and fan of Sennheiser consumer audiophile products, I find this move disheartening, but understandable in the face of the competition and how the landscape is evolving.

The pertinent question is "why?" Why can't S innovate like virtually all Chinese manufacturers?