[Rajkumar]

Hi All

I was looking into audio processors for processor + amps separates configuration. Looked into anthem which costs about > $3000 for the processor alone. My question why in the world does anybody have to charge that kind of money for a processor. The top of the line DACs dont cost more than $6 in volumes and the top of the line audio dsp chip decoders from Cirrus logic dont cost more than $20 in volume. Where the hell is the mark up in. Unlike an amp where the transformers and capacitors cost a lot of money where are the expensive stuff in a processor.

Sure, the sales guy points out the jitter handling capability, hell it cost less than $ 25 to design a 20 ppm jitter transfer PLL circuit. Unless I am missing something here isnt this a ripp-off pricing for external processors.
Any enlightenment is welcome.

Raj

[Michael Reuben]

Quote:

Where the hell is the mark up in.

1. Intellectual property. Most of these processors have enhanced or proprietary processing modes, for which someone has to create or license the code.

2. Smaller number of units over which to spread the cost of R&D, support, maintenance of an ongoing business enterprise (salaries, overhead, etc.). If Anthem or Lexicon or any of the others could sell as many processors as Sony sells receivers, I'm sure the price would come down.

I'm sure there are additional factors that others will point out. In the end, though, it's the rule of the market. These processors cost that much because there are buyers who will pay it.

M.

[Evan S]

When I was a receiver owner, and I had any difficulty with the unit, I was up the creek without a paddle if there was no warranty coverage. Even if the unit was under warranty, securing timely service and making arrangements to get it shipped out and returned was a huge hassle at best.

Now that I have made the jump to seperates (namely the Anthem AVM-20), anytime I have even the slightest question about the unit or it's workings, Nick or Frank will answer my e-mail often within the hour. The customer service I have gotten from this company is second to none and has almost assuredly secured a customer for life.

For me, this is worth a very high price premium, even if I agree with you that processors are VERY expensive. But I do believe you get what you pay for in this regard as the sound improvement I have gotten since going from a receiver to separates is also worth the added cost.

[EdS]

Interesting point regarding why do pre/pros (and amps) cost as much as they do. I recently purchased a 57" HDTV ready RPTV for under $2000, delivered. Let's look at the content in a HDTV: 3 CRTS, 3 Lens Assemblies, 3 Screens (Lenticular, Anti-Glare/Protective), Line Doubler, Multiple Video Inputs, High Voltage Power Supply, Tuner, Lots of labor (assy, calibration, tweaking), Weight (greater than 200 lbs, must be moved individually, probably with fork lifts), Storage (a single RPTV takes up as much space as a pallet full of pre/pros). Sets are updated yearly with latest technologies and chipsets. Seems like there is so much more content and storage/shipping costs to RPTVs that they are truly bargains when compared to the content of say a $2000 amplifier. Pre/pro technology on the other hand is changing rapidly, but no more so than HDTV technology.

[Rajkumar]

Michael

Thanks for the reply. I perfectly agree with you on the price/volume ratio and the economies of scale. On the licensing front for proprietary audio technologies, I would assume that it would be the same for all vendors wether it is a $200 DVD player with an built in decoder or the $3000 Anthem. There has to be some fundamental Intellectual property coming from a high priced decoder vendor that is not found in other generic mass market brands. Anthem to my best knowledge does not make their own ASICS. The Audio DSP vendors like Cirrus logic also provide the software drivers that goes with these chips. So net-net what I am trying to understand is that how can the Gross margins of a separate decoder be so high and even more puzzling how does the market bear it.

If your last statement is true that these prices exist because there are people who will pay these prices then we are entering the realms of Vooddooo Psycology and not logic .



Evan

Good to hear from an Anthem processor owner and glad to know that you get great service from them. When you did your research for buying separates how did you evaluate the quality of the processor. What I am getting at is that would there be an audible difference in quality from a $1000 receiver whose preamp outputs have been connected to the same power amp as the $3000 dollar processor from anthem.

[Chu Gai]

Markups can be incredible on just about anything out there, not necessarily audio. For example, the margin on liquid Similac (baby formula) is over 90%.

[Michael Reuben]

Quote:

There has to be some fundamental Intellectual property coming from a high priced decoder vendor that is not found in other generic mass market brands.

I tend to agree, which is why I own a Lexicon (currently on my third model).

Quote:

then we are entering the realms of Vooddooo Psycology and not logic

Or in more common parlance, "economics".

M.

[Lewis Besze]

I would also add "artificial market demand".
There is an ever popular myth, that below a certain price point,"it must be compromising something", even if no objective evidence supports such "opinion".
and lets not forget brand "recognition".

[Yogi]

It costs Coca-cola a nickel to manufacture a coke can. Mark up is in everything you can think of. Some more so than others.

[Chu Gai]

and for someone like that, when you save 1/1000 of a cent on a can if you sell a trillion cans, you've just improved your bottom line by a billion.
rum and coke anyone?

[Bryce Miner]

I don't think you'll be truly satisfied without a inhome demo of both a rotel, outlaw, parasound vs Anthem, B&K, sunfire, lexicon, krell.

[Drew Eckhardt]

In my last company, we sold disk based-digital video recorders - like Tivos. IIRC, our inexpensive boxes were about $40K and the loaded boxes $250K.

Our niche markets (newsroom automation, commercial spot
playout, HD time delay) were willing to spend the money for the functionality we provided (up to 360 Mbps, frame accurate control, interface to their automation equipment, network transfers at greater than real-time). The volumes/startup costs involved with ASICs meant that we had to use programable logic that was a lot more expensive on a per-unit basis; although nearly all the big price tags went to pay for engineering costs that were the same whether we sold 100 or 100,000 units.

If you don't like it, buy used because high end equipment depreciates horribly ($20K projectors can be had for $2-$4K, $5K processors for $1-$2K, $600 amps $200, etc).

Or build.