State Of The Industry: A conversation with Shure President and CEO Sandy LaMantia, Senior Director Of Global Brand Management Mark Brunner, Senior Manager, Media and Artist Relations Mike Lohman and Pro Sound News Editor Frank Wells.
Shure director of Global Brand Management Mark Brunner (left) and president and CEO Sandy LaMantia.
FW: Checking in business-wise, over the last year, have there been any significant trends and directions that led you to say, “Okay, this is where we need to put some more emphasis, this is where we need to put a little less.”?
SL: What we’re seeing is a huge growth in our software. Not only software that’s embedded in product, but software used to control products and to control product networks. That’s the area in product development that’s just exploding right now.
FW: Software primarily related to your wireless products?
SL: Yes. Wireless microphone systems and conferencing systems, as well as personal monitoring systems. We’re introducing more and more products that talk to each other and we’re hoping this trend grows in the industry.
FW: How about audio networking? Are you looking at protocols like AES67 and the open standards projects that are afoot for distribution and for network control that you can perhaps expand in a friendly fashion on a network that’s even compatible with other people’s gear?
MB: We’ve been working quite hard on the AVB alliance and incorporating Dante into a lot of products, and we’ve been happy to see that a lot of the other pro audio companies have adopted the Dante networking standards.
SL: And hope that more do.
FW: By measure of penetration, Dante is a bit of a de facto standard, while AVB has been a bit slow out of the gate.
SL: We kind of covered our bases with AVB, but I agree with you, we see the trend going toward Dante.
FW: Right, and of course they’re AES67 compliant as well, so if we can get some of these incompatibility issues, and again, for your case, if you’re Dante, great, you’re compatible with a whole lot of stuff. It’s where you need to go, you need to go to a common standard because you don’t make digital mixers, or mixing consoles, and if you want to go straight into them that way then you need to be compliant with the networks that they’re using.
FW: On the DSP side of software, moving into the digital domain you’re your wireless systems means you don’t need processing for functions like companding, but going digital also means you can economically incorporate sophisticated processing into systems—probably more at the receiver end than the transmitter?
SL: Yes. Right now that’s where we’re focusing most of our DSP work, on the receiver side, although it’s going to be everywhere at some point. I think the trend toward more and more digital products is making it easier for us to implement different algorithms. So talking of trends, certainly the trend towards more digital products and more embedded DSP is on fire right now.
MB: Shure’s extensive history in transducer design brings a unique knowledge to what DSP algorithms to do to make microphones work better. So we’re also working on the front end of the audio chain as well with DSP and our investment in R&D.
FW: The DSP in that case being utilized to shape transducers’ response?
ML: Exactly, polar patterns, frequency response, room characteristics, these types of things. Cancellation.
MB: We see opportunity in products that are designed for speech reinforcement, more so than in professional audio or field operations where skilled operators are in place.
FW: Do you have any plans for digital studio mics?
SL: I think we’ve always had that in the mix, Frank, but we don’t have any near-term plans for product releases on that front.
ML: We’re so embedded right now on the wireless side. There’s really not a lot of talent left to spread into some of these other areas where we really would like to.
FW: Well, hire more talent!
MB: That’s happening.
ML: It is happening.
FW: Let’s talk about business for a moment. You are hiring more R&D. Are you expanding staff in general, are you replacing people? What’s the company workforce look like?
SL: I can tell you we’re not replacing people, that’s for sure, because nobody ever leaves! We’re expanding, we’re expanding almost everywhere in the company, with the emphasis on product development.
MB: When we were going through the recession in ’08, ’09, and ’10, a lot of companies pulled back then, pulled back on product development, on their marketing. We actually did the opposite. We pushed the gas even harder and it’s paid off in many ways, with us now developing more products than we ever did in a year. I think we took a huge leap in our efficient use of spectrum, Axient and all the technology that’s involved there. Everybody was hurt by the recession, but in many ways it was a good thing for us because it allowed us to leapfrog a lot of the competition in these high tech areas, and we went from being kind of the fast follower to a technology leader.
FW: You were poised to take advantage of the monies that became available as the recovery started, with innovations that areas where your competition was just beginning to invest. Makes perfect sense.
SL: Right, and you’ve seen it with Axient, you’ve seen it with our ULX-D system, and even I’m astounded at some of the things these guys are doing.
MB: Just another point as far as digital investments are concerned, and digital wireless in particular: The move to digital transmission schemes with wireless microphones has enabled us to create products in the unlicensed spectrum where with analog designs we would not have been able to participate. That’s helped move a lot of what we would call the MI customers, to get to provide unlicensed spectrum offerings for them, as well as some of our conferencing customers—our MXW microflex wireless system, is also a digital transmission scheme using a different type typology. These designs have enabled us to pull a large portion of the market out of the fray of the TV spectrum, which has really helped relieve some of the big issues there that I think the FCC and other governments are struggling with in terms of how to accommodate all this wireless mic usage. So our digital designs have created a relief valve, if you will, on the number of wireless microphones that are operating in the TV band, and that wouldn’t be possible without the digital designs. You wouldn’t be able to operate at 2.4 GHz or 900 MHz without digital architecture, or at least successfully.
FW: That’s one of the things that’s relieving some of the space in the TV band, while the other would be that the TV band digital systems are more efficient in terms of how many channels you can cram in the same space.
MB: True—all working after the same goal, just coming at it from different angles. And Axient, of course, its major value proposition is about interference detection and avoidance, which is another market-facing feature built upon a serious technology investment.
FW: I know you’re a private company. You’re not going to share numbers, but profitability, stability, how’s business in general going for you?
SL: Without hesitation I can tell you we’re financially stable, have no debt, and are doing very well.
FW: Up from last year?
SL: We’re considerably up from last year. And I can also tell you, because I just looked at this, that in the last four years, the amount of sales coming from new products has doubled. I haven’t told that to anybody else.
FW: Interesting. That is very impressive because you obviously have legacy products that are anchors to your business model, and your new products are actually leading the way. It says a lot that you are still growing.
MB: We’d be remiss not to mention that it’s not based in any region of the world, it’s all of them. I think the economy in China was a rising tide that lifted all boats in the past couple of years; our growth has remained consistent there. The European economy has not necessarily been anything to write home about but we’ve been growing there as well. This is really a result of concerted investments that we’ve made in infrastructure, sales and marketing and distribution, and people developing the market. The growth is happening all around the world for us and there’s no rising star or falling star as far as that’s concerned.
SL: Very good point, and we’re just putting more feet on the street around the world.
FW: Excellent. Anything new on the clone wars front, fighting knock-off products?
SL: It’s been a little bit quiet, which is a good thing, but every once in a while something will pop up. It’s just a continuous undercurrent. Every time we see it we fight it.
MB: Global supply chains contribute to this in a way too, or can exacerbate the problem of counterfeits and knock-offs. When components are sourced in different parts around the world, those can become incubators for counterfeit product.
SL: On the positive side though, to be fair, we should mention that we’re getting more cooperation in China. We’re getting more cooperation from the government and also from customs there. They have a program now where they’re actually looking for things crossing borders that might be suspicious. We’ve actually gotten calls from customs in China that something was suspicious and we confirmed that it was counterfeit.
MB: And the audio industry has increased its communication between partners as well, Frank. The various companies are sort of looking out for each other and in many cases banding together on some of these counterfeiting issues. It’s everybody’s problem and we find oftentimes that it’s various brands that are being pirated.
FW: How about new technology? Any hints on products in the R&D pipeline?
SL: We’re putting a focus right now on conferencing. I think there’s huge potential, especially on the corporate side. As you know, we made an acquisition a few years ago to kind of give us a leap into the conferencing market. We’re aiming a lot of our technologies, including wireless, at the market. I think that’s going to be our growth market in the future, a market where we’ll be innovative.
MB: If InfoComm is any bellwether for the verticals that we participate in, you’re seeing a larger and larger crew of Shure people at that show every year. The acquisition of DIS was definitely important in that, and we’ve been focusing on integrating that company both in terms of products and technologies, but also manufacturing and bringing the best of what Shure’s well-honed development and systems have to benefit the DIS product lines and now joining forces on new product development with the engineers that came with that company.
FW: Mark, I know that by the time this article hits, we’ll know more, but tell us about what’s going on with the FCC and the pending spectrum squeeze (again).
MB: It’s been probably the most chaotic and busy couple of weeks of lobbying and information presentation to the commission from all of the parties involved in this auction—from the telecoms to the white space community to the pro audio community and to, of course, the public interests that are still advocating hard for more unlicensed spectrum for wi-fi and other uses—it’s unlike anything I’ve seen at the Commission in the time that I’ve been involved there in terms of the visibility and the activity. There will be issues related to pro audio and wireless microphones that will probably move to additional dockets over the summer and through the remainder of the year. We also are expecting a decision of sorts on wireless microphone license eligibility expansion on the 15th as well, which has been a headline initiative for Shure now for the past six to eight years. The rules on wireless microphone license eligibility were written in the ‘70s and never revised. This is something that’s been long overdue. Wireless mic visibility is as high as I think it’s ever been. The chairman invited us in, we met with all the commissioners, but we know that when the door closes after we leave the meeting room that somebody else is coming in advocating an opposite position right after us. We know they’ve got a lot to think about. And this auction is somewhat different than some other FCC actions in that this is the result of an act of Congress, they have to pull this off. There are a lot of forces at play here. [Steve Harvey’s cover story in this issue—June, 2014—on the implications of the latest FCC actions includes comments from Mark Brunner made after this interview]
SL: If you remember, if you go back 10 years, I’m not sure the FCC had a clear picture of what a wireless microphone was. Today there’s never a spectrum discussion that goes on without wireless microphones being considered. To me that’s wonderful and it really talks to the work that Mark and others at our company have done to educate and get in front of the FCC and show them what a force wireless microphones are.
MB: The microphone industry is a small piece of that; it’s all the customers that we serve and the high visibility work they do with these products which has really helped bring the whole issue into focus for the Commission.
SL: For Mark to be invited to a meeting and actually take the lead on a meeting with the chairman, it’s really great for us and it’s great for the whole industry.
FW: How about the entry of Apple into the headphone market with the acquisition of Beats?
SL: It doesn’t worry me; I don’t think it will have much of an impact at least now, maybe in the future. Our part of that business has been doing pretty well. The earphone business for sure is really robust right now. Even with our highest end products, and that’s globally. I’m not too worried about this potential acquisition.
FW: Actually I think if anything it helps because it brings attention to the fact that there’re better products out there. Just the fact that Beats has actually made it cool to wear big cans instead of the tiniest buds you can find has actually benefited brands that cater to pro users and the MI markets.
ML: I think the continued proliferation of mobile devices has led more to our success than Beats.
SL: And the fact that our focus is on performance, it’s not on color and coolness.
MB: Frank, we have to mention that there was a recent Time magazine round-up of headphone manufacturers based on their scouring of the universe for reviews by end-users. Shure came out on top. Beats certainly expanded the market for headphones, that’s great, but it has also highlighted that there’s truly a professional class and there’s a consumer class.
FW: How about any changes in your manufacturing processes and infrastructure—anything to report?
ML: The biggest change is that we’ve hired a new senior vice president of operations named Chester Trocha. Chester has been here since August. He’s been going 100 miles an hour since day one –
ML: We’re starting to see some results from that. He’s just filled with plans that he’s just starting to implement, so I’m excited because that was an area that we frankly didn’t put a lot of focus on until now. We were working on marketing, we were working on product development.
MB: It also should be mentioned that while maybe not as visible to customers, at least not directly, we have been making considerable investments in all of our infrastructure and systems related to manufacturing. Our information technology and our processes have been a big source of focus in the past couple of years, and as Chester comes on board here he’ll be able to push those to the next level. That’s really about being positioned for growth. Some of the approaches that we had developed toward manufacturing had been in reaction to growth. This is an attempt to be positioned to be able to expand without the stresses that might occur from continued growth.