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How inexpensive could a pre-pro be? (1 Viewer)

AjayM

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The formats are still evolving. Spending a lot of money on a separate pre-pro may turn out to be an unwise investment. If you had put in $3K for a state-of-the-art pre-pro a couple of years ago, you may feel the need to upgrade, with the new 6.1, 7.1, DPLII, etc. demanding your attention, and the wide availabilty of DVD-Audio and SACD programming making your 2-year-old pre-pro (with less than 2 multi-channel inputs) somewhat obsolete.
The formats will always be evolving, there is no getting around that. You may be lucky to be an early adopter of a format that sticks around for a couple of years, but it's still going to change. However if you drop $3k for a pre-pro, you will have some form of an upgrade path. Anthem, B&K, Lexicon, etc all have upgrade programs.

There's another thread around here that is talking about buying an old Lexicon MC1 and a Sony 5.1 pre-amp to have a fully featured, up to date for formats and now you have everything needed for dual 5.1 inputs, full and real analog bypass, etc. And you can probably pick it up for just under $2k.

How about a B&K Reference 20 pre-pro, still a good pre-pro now, it's just missing the newer formats and a 5.1 inputs. You can pick these up for around $800-900 today, then send it to B&K and upgrade it Reference 30 standards (missing the component switching and THX certification) for $800.

Andrew
 

chung

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The formats will always be evolving, there is no getting around that. You may be lucky to be an early adopter of a format that sticks around for a couple of years, but it's still going to change. However if you drop $3k for a pre-pro, you will have some form of an upgrade path. Anthem, B&K, Lexicon, etc all have upgrade programs.

There's another thread around here that is talking about buying an old Lexicon MC1 and a Sony 5.1 pre-amp to have a fully featured, up to date for formats and now you have everything needed for dual 5.1 inputs, full and real analog bypass, etc. And you can probably pick it up for just under $2k.
If you believe that spending $1K to $2K every 2 years to "upgrade" your pre-pro is reasonable, you are clearly not the type who will have any interest in low-cost pre-pros, regardless of the performance level.

The expensive pre-pros use the same DAC's as those in good receivers. When it comes to DSP and HT, it is difficult to say what sounds better: it gets subjective. Who knows what that gunshot is supposed to sound? The mass manufacturers can do just as good a job with firmware, if not better, as any small audio boutique shop, and you will be hard-pressed to say that Sony's implementation of, say, DD-ES, is inferior to B&K's.

In listening to music on CD's, the preamplifier should not be audible, and it is not difficult to design preamps that meet that need. The levels coming out of CD players are already at a high level, and there is no equalization required. The difference between preamps is often in the volume control and in the switches, and integrated circuits today have made that difference much smaller, if not zero. If you can hear the difference between a good $1K stereo preamp and a $5K stereo preamp, you have much better ears than I have. BTW, my first job out of college is designing audio distortion analyzers at H-P, and I think we knew a little about designing high-quality audio circuits.

On the other hand, the art of designing power amplifiers really has not advanced much in the last 15 years. Great stereo power amps from the early '90's still sound great today, compared to current competition. You can't say the same thing about HT processors.
 

AjayM

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On the other hand, the art of designing power amplifiers really has not advanced much in the last 15 years. Great stereo power amps from the early '90's still sound great today, compared to current competition. You can't say the same thing about HT processors.
I agree on the amps, for the most part an amp is a much longer lasting piece of equipment. An HT processor can be the same as well, just don't live with the newest, latest, greatest format. A pre-pro bought 4 years ago that has DD and DTS sounds just as good today as it did back then, you are just missing the new 7.1 formats and DPL2, if you are mostly concerned with DVD's then neither of those formats is a great gain right now.

Andrew
 

chung

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And I can hear the difference between a $1k and a $5k stereo pre-amp, maybe you picked two bad examples.
Then I feel your pain :} Seriously, if you can hear the difference, there is something really wrong with one of those preamps. Can you hear the difference between a preamp with just a mechanical attenuator and a $5K preamp? Which sounds better? How much do you think that mechanical preamp costs to build? One can build a matched switched-attenuator network to be used as a volume control for very little money. That's basically how it's done in today's audio IC's.
 

AjayM

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The parts cost in the $3K pre-pro is a small fraction of $3K. You are paying for marketing, amortized R&D and huge mark-ups. The signal processing chips used in a $500 receiver are most likely very similar to those used in a $1K receiver; the differences are added features, additional connections, sheet metal, and most significantly, power supplies and power amplifiers. As I said earlier, there is no reason why companies cannot build an excellent pre-pro at the $500 price point. The problem is that there is no perceived sales volume for that product.
The parts cost in anything is a tiny fraction of the total cost. Doesn't matter if we're talking houses, cars, boats, computers, stereo equipment. And you would be suprised at how "un-huge" the markups really are. It's very simple business, you have to pay for buildings, employees, phone bills, electric bills, insurance, retirement plans, etc....and we haven't even touched R&D costs, advertising costs, etc. If you look for value in just the parts cost, you will never find it.

Look at Sony, something crazy like 50% of Sony profit comes from the Playstation line (and then mostly in software). This is one of the worlds largest electronics makers, and half of thier money comes from video games.

So again, do you think a major powerhouse of a company like Sony, or Phillips, or Denon, etc haven't thought about bringing out a $500 pre-pro? If you could bring out a pre-pro that offered excellent sonic quality and all of the features you would find in a $500 reciever (basically most that anybody would need) I bet you would sell a ton of them. But if the performance was poor, then who is going to buy it?

Again, we point to the Outlaw 950...how are you going to drop the price more than 50%?

Andrew
 

chung

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So again, do you think a major powerhouse of a company like Sony, or Phillips, or Denon, etc haven't thought about bringing out a $500 pre-pro? If you could bring out a pre-pro that offered excellent sonic quality and all of the features you would find in a $500 reciever (basically most that anybody would need) I bet you would sell a ton of them. But if the performance was poor, then who is going to buy it?
I'm not sure if you are getting my point. The mass manufacturers are not making those pre-pros, because they perceive there is no large market for such products. The need for pre-pros can often be filled by receivers with line outputs (that's why they put those line outputs in, at extra costs). There is no reason why a $500 pre-pro, if Sony or Denon decides to build one, will not be sonically excellent. You seem to think that for a pre-pro to sound good, it has to be expensive ($2K-3K). I do not agree with that. I already told you that the parts cost is small, and that Sony and Denon can leverage their R&D costs over a large number of units, IF THEY BELIEVE THERE IS A LARGE MARKET. It is a very small percentage of hi-fi buyers who opt for dicrete power amplifiers. Worldwide, receivers have much, much higher volumes. No, I don't think Sony or Denon can sell "a ton of" $500 pre-pros, even if they sound good. The average hi-fi buyer is very satisfied with current receiver performance. Those who frequent this forum are a distinct minority.
 

Kevin C Brown

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I agree with something that Ajay is alluding to, but I will state it more strongly:
The purpose of a company is to make money.
If a company thought it could make money on a $500 pre/pro, we would have seen them by now.
End of story. :)
 

chung

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agree with something that Ajay is alluding to, but I will state it more strongly: The purpose of a company is to make money. If a company thought it could make money on a $500 pre/pro, we would have seen them by now.
I agree with that, and my point is that companies like Sony do not see $500 pre-pros as good sellers. They would rather build receivers.
 

Jeff Kohn

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Dec 29, 2001
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The mass manufacturers are not making those pre-pros, because they perceive there is no large market for such products.
And they are right. Just because you would like to see a $400 pre/pro, and just because a few others on this forum would also like to make the move to low-priced separates, does not mean that there is a market large enough to support the economies of scale that companies such as Denon or Sony cater to. It's easy to get a skewed vision of things hanging out on forums such as this one; this forum is not an accurate representation of the public at large.
Also, it's been claimed by some that the parts in a $1K pre/pro amount to less than $200, and the rest is marketing, r&d, and the fact that these are smaller companies with more overheard per unit. You seem to think that the economies of scale are the answer to this question, since Denon or Sony could put out such a product for less overhead per unit. But consider this, if the parts are that cheap, and Denon has already done the R&D on receivers, how much could they cut the cost of their $500 receiver by taking the amps out? If we follow your reasoning, the logical answer is "not much". So lets say that it cost them $75 less to make a pre/pro without the amps. What's the point? How many consumers who go into Best Buy are going to choose a $400 pre/pro over a $500 receiver? Very few. Even if they plan to buy a separate amp later, the receiver still makes more sense, because they can delay the amp purchase by using the receiver's amps in the interim, and they can also use the receiver's amps for other things such as surround channels or zone-2 speakers in another room. There just isn't a valid reason to go with a pre/pro in that price range, when the cost differential of a receiver with the same processing capabilities is so small.
 

chung

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And they are right. Just because you would like to see a $400 pre/pro, and just because a few others on this forum would also like to make the move to low-priced separates, does not mean that there is a market large enough to support the economies of scale that companies such as Denon or Sony cater to. It's easy to get a skewed vision of things hanging out on forums such as this one; this forum is not an accurate representation of the public at large.

Also, it's been claimed by some that the parts in a $1K pre/pro amount to less than $200, and the rest is marketing, r&d, and the fact that these are smaller companies with more overheard per unit. You seem to think that the economies of scale are the answer to this question, since Denon or Sony could put out such a product for less overhead per unit. But consider this, if the parts are that cheap, and Denon has already done the R&D on receivers, how much could they cut the cost of their $500 receiver by taking the amps out? If we follow your reasoning, the logical answer is "not much". So lets say that it cost them $75 less to make a pre/pro without the amps. What's the point? How many consumers who go into Best Buy are going to choose a $400 pre/pro over a $500 receiver? Very few. Even if they plan to buy a separate amp later, the receiver still makes more sense, because they can delay the amp purchase by using the receiver's amps in the interim, and they can also use the receiver's amps for other things such as surround channels or zone-2 speakers in another room. There just isn't a valid reason to go with a pre/pro in that price range, when the cost differential of a receiver with the same processing capabilities is so small.
I'm a little confused. You seem to be arguing against what I wrote, but you are making the same points I was making. Are you agreeing with me, or are you arguing with someone else (in which case I apologize for responding)?

I am not the one who wants to see a $500 pre-pro. I already said that that need is being filled by receivers. And I already said that Denon and Sony do not see pre-pros as good markets to get into.
 

Ricky T

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Oct 28, 1999
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Great thread guys! I agree with Chung that you guys are coming to the same conclusion: there is not a market for a $500 prepro. Now, what about a $1000-1200 prepro? Similiar argument, just up a notch....ie, $1000-1200 prepro vs $1500-2500 receivers. And again, the crowd looking for separates is a small minority (probably even smaller when you take into account Asia and Europe, where integrated and receivers seem even more prominent).
 

Kevin C Brown

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Ricky- I'll chime in here. :)
I have a Sony TA-E9000ES that I have been mostly happy with.
But it does 24/48 internal processing. I want at least 24/96 in my next pre/pro. (Plus DD EX/DTS-ES, DPL 2, analog 5.1 pass through, and all the rest that everyone else is looking for!)
Now, I was originally allocating ~$1750 for the next one. (Paid $1270 for the Sony 3.5 years ago. Wow, that's a long time ago!) Came really close to getting a B&K Ref 30 (for closer to $2k). Looked into the MC-1 and DC-2 from Lexicon.
But now that the "reviews" for the Outlaw vs Rotel are coming in, I have switched gears to the Outlaw.
But man, I would really like to see Denon, Yamaha, Onkyo, etc, do $1k - $2k pre/pros...
=> I believe that about $1k is the price point that people will go down to :) and still believe that they can get "pre/pro level" sound quality. Outlaw has proven that.
I also believe that at the point when the big Japanese (and others!) receiver manufacturers have sensed that they have gotten 90% of the profits out of the receiver market that can be had, they will go after the pre/pro market (again; don't forget the Denon AVP-8000...), because at *some* price point, there is definately money to be made.
Thoughts?
 

MatthewJ S

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Again, we point to the Outlaw 950...how are you going to drop the price more than 50%?

Simple, take the amps out of a $500 rcvr...

Actually guys this is just the kind of discussion I was hoping for...while I know that we here are a small minority,the market is growing and changing( and I think getting smarter)and the big boys (denon,sony,yamaha,etc) are going to have to pay attention to what the little guys are doing...As for the increasing sentiment that "spending too much money on a pre-pro is a waste", while I don't agree, seems to be a creation of the industry which keeps making equipment SEEM obsolete . It does seem to me that among enthusiasts of lower economic means ,an end of the market growing faster than any other, there is an increasing interest into what is the cheapest cost of admition into the world of seperates.I know that this possibility is a ways off but with the rapidly increasing # of "every-day Joes" learning about and buying this gear ,how far off could we be?......
 

AjayM

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It does seem to me that among enthusiasts of lower economic means ,an end of the market growing faster than any other, there is an increasing interest into what is the cheapest cost of admition into the world of seperates.I know that this possibility is a ways off but with the rapidly increasing # of "every-day Joes" learning about and buying this gear ,how far off could we be?
Are you trying to get into seperates just to say you have seperates? Or do you want the best possible performance you can get for your money? :)
If you want to move to seperates on the cheap, buy used. You'll have to sacrifice the latest/greatest formats, but there are great deals to be found (especially now that new formats are taking the "limelight", such as the Marantz 560, or the Sherwood/Newcastle piece (either can be had for as low as $350 if you shop around). Or pony up a few more bucks and move higher up the scale, a B&K Ref 20 can be had around $800-900 (can be upgraded to new specs), an Anthem AVM-2 around $1400, Lexicon DC-1's (current software) in the mid $1k range, Marantz 9000's are new for $1k, Sony 9000ES's are all over the place but new for low $1k, used even cheaper. Want to get real fancy, Krell HTS's can be had for around $2-2.5k, a great piece that sold for what like $6k new? It can also be upgraded to new specs for some heart stopping price :)
Andrew
 

MatthewJ S

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Follow what I'm saying here,

I'm specifically talking about people who want the latest and greatest formats AS SOON AS THEY APPEAR ON THE MARKET and while you and I may not believe that a $1500 pre-pro sounds as good as a $3000 one or that a $800 one would sound as good as a $1500 one, there are people(a growing #

of them) that would rather dedicate more and more to the amps(which are not format dependant or slated for planned obsolecsence)...If the market keeps expanding and is supporting lower cost pre-pros and other consumers keep using rcvrs as pre-pros then why not eventually do this ?
 

AjayM

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Follow what I'm saying here,

I'm specifically talking about people who want the latest and greatest formats AS SOON AS THEY APPEAR ON THE MARKET and while you and I may not believe that a $1500 pre-pro sounds as good as a $3000 one or that a $800 one would sound as good as a $1500 one, there are people(a growing #

of them) that would rather dedicate more and more to the amps(which are not format dependant or slated for planned obsolecsence)...If the market keeps expanding and is supporting lower cost pre-pros and other consumers keep using rcvrs as pre-pros then why not eventually do this ?
Ok, out of all of the $500 recievers sold today in total, how many are used as pre-pro's? 1%? Probably a bit less. Even with all of the enthusiasts that populate sites like this one, we still represent a small number of total people purchasing equipment. So maybe the market quadruples, we're still under 4%. A big company (the kind that could bring out a $500 pre-pro) aren't very concerned about 4% of the market.

Want to get more complicated, say Sony does it hoping they will pick up that whole 4% of the market, the only problem is not everybody likes Sony, some people prefer Denon, Kenwood, JVC, Technics, etc. So out of that 4% of the market, let's half of those people don't want to buy a Sony, so we're back down to under 2%.

Andrew
 

chung

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If the market keeps expanding and is supporting lower cost pre-pros and other consumers keep using rcvrs as pre-pros then why not eventually do this ?
I don't think that will happen. Receivers are inherently the best deal, for the following reasons:

(1)Even if you use external stereo power amps, you can still use the built-in amps for the surrounds.

(2)It's not clear to me at all why a receiver used as pre-pro should sound worse than the same receiver stripped of its amps and packaged as a pre-pro.

(3)Because of the much larger volumes, receivers get the latest upgrades the soonest.

The marketing people at Sony, Denon etc. know the business. Pre-Pros are a small niche market with very limited revenue. I think they are happy to have companies like B&K have a go at that market. I also think many people who at one time think of getting separate pre-pro's realize, after sticker shock, that receivers offer much better value. Like I said earlier, one should put as much money on the L/R speakers first. That accounts for the biggest difference between systems.
 

Zbigniew

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Large scale sales ????

Jeff T from Denon admitted that upgrade pre-registration brought 300 names, which is about 5-10% of total 5800 sales. So total sales in US for 5800 - Denon Flagshiw in 2 years were 3000-5000 units. Say that 25% of them were used as pre-pro only - so market for pre-pro equivalent to 5800 was staggering 1500 units.

One would expect that such product will be priced 25%-33% below MSRP of reveicer, somewhere around 2200-2800 MSRP, with a street price between 1500-2000$$.

Think margin vs cost of manufacturing, testing, supporting, storing spare parts, training, marketing.... nightmare.

Unless you hit a drastically low price point - like Outlaw, your market is very limited. It would be interesting to get numbers from TAG, Meridian, Lexicon, Krell, Theta on how many units are sold yearly.

I would love to be able to buy a pre-pro based on 5803, and a transport based on 9000 DVD player. I do not hold my breath, but rather look for one more consulting stint to pay for standard issue - even when I am buying unnescessary amp in 5803, or replicate DAC stage in 9000 when used with 5803.

_zjt
 

Kevin C Brown

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2 thoughts:

1) Why do Ford, GM, etc, get into car racing? They certainly don't make money on it. But, the *interest* in racing from fans can and does translate into sales of "normal" passenger cars.

Point being, that if company X puts out a $1 - $3k (or whatever) priced pre/pro, I personally would have a lot more confidence that they knew what they were doing in a $500 - $1000 receiver. I.e., technology trickles down. And, or, the expensive pre/pro as the "test vehicle" with which they get all the bugs out for the receiver that is released later on. (That's how it used to be, but now receivers drive the market.)

2) Here's a weird one: I have ~$1750 allocated for my next pre/pro, right? Well, I had started to look at receivers-as-pre/pros. (When Outlaw was taking so long.) My choice would have been the Denon 3802, at about $800. (I looked mainly at Denon and Yamaha, and just a little bit at Pioneer, Onkyo, and Marantz.)

Just strange that I could justify paying almost twice that for a dedicated pre/pro, but felt I could get what I wanted for just $800 in a receiver. Maybe yet another example of why we'll never see a $500 pre/pro. And also maybe another example of the "economies of scale" whereby you can really get quite acceptable performance in a receiver that doesn't cost that much.
 

chung

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Just strange that I could justify paying almost twice that for a dedicated pre/pro, but felt I could get what I wanted for just $800 in a receiver.
That's my belief also. Much better to use the money saved to buy DVD's and CD's, IMHO.
 

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