Focal and Naim: The Beginning of the End?

by Roy Gregory | August 22, 2011

or any small, niche industry, the merger of two major players is always going to send shock waves through the marketplace and customer base. But for anybody not directly immersed in the UK audio community, it’s hard to appreciate the earth-shattering impact of the announcement that French speaker manufacturer Focal and British audio iconoclasts Naim are to merge. Not only is Naim fiercely, almost bloody-mindedly independent and notoriously dismissive of alternative technologies and approaches, they were one half of the Linn/Naim axis that transformed the UK market in the late 1970s, imposing an almost cult-like devotion in their followers (both dealers and customers) and remaining the guardians of that revolutionary zeal to this day. One of the great identifiers of any member of the UK press, or any dealer or customer, is his attitude regarding Naim; you are either for 'em or agin 'em, with little or no middle ground.

For this paragon of individuality to be merged with another company -- especially one that is technologically and (at least on the surface) philosophically so different -- strikes directly at the faith of those for whom Naim is the truth, the light and the only way. And when they brazen out the initial shock and look a little closer, these acolytes are going to find cold comfort in the details.

Guys (and gals), I’ve got news for you.

• Rule one of any takeover: always refer to it as a "merger," thus reassuring the employees of the junior "partner."
  
  
• Rule two of any takeover: always state that the two companies will continue to enjoy "complete independence," simply pooling R&D or some other aspect of operations, thus reassuring the existing customers.

Oh, dear. Did I just use the "T" word? Yup, looks like I did. Let’s not kid ourselves -- Focal and Co., the holding company that owns and runs Focal, has bought Naim Audio, and when two companies "merge" it is always the major partner that dictates policy. You can call it anything you like, but the long and short of it is that Focal have taken over the ultimate responsibility for Naim, its products and customers, and the question that will eventually, naturally, bubble to the surface in the minds of many diehard Naim owners and dealers is, has Naim merged or are they about to be submerged?

Light at the end of the tunnel?

ersonally, whilst I can understand the psychology that would lead to such a stark assessment, particularly given the nature of Naim as a company and the recent history of takeovers in the audio industry (especially the mass migration to China or Chinese ownership, of old and hallowed names within UK audio manufacturing), I think that the Focal/Naim amalgam fits a different pattern entirely and one that points a way forward for the audio industry as a whole.

In many ways, these two companies could not be more different. Naim are solidly traditionalist, weighed down by the burden of history to the extent that any deviation from the accepted "tried and true" is greeted by howls of outrage from the more extreme elements in the dealer and customer base. Product development thus becomes more about refinement than revolution. It’s a philosophical and cultural constraint that has left the company developmentally hobbled at a time when the market and technology are moving with increasing speed. This is a culture that has consistently refused to embrace advances in audio cabling or high-frequency drivers. While there are those who might applaud the former, most would consider the latter to be downright bloody-minded.

Night at the wax museum: This graphic sent out with the press release on the Focal/Naim merger features actual board members!

In contrast, Focal have always been innovators in both technological and materials terms. They are engineers who actually manufacture their core components -- the speaker drive units -- that are used throughout their product range. They also have a long history of collaboration with other companies and suppliers, and considerable investment in software solutions, both in the realm of manufacturing and actual products, and blue-sky research projects that may or may not lead directly to a product but nevertheless inform the company’s strategic knowledge base.

I recently interviewed Gérard Chrétien, Focal’s managing director, specifically on the subject of the future for high-end audio, the threats Focal face and the solutions to those challenges. His responses were both refreshingly frank and, probably as a result, extremely thought-provoking. Seen in the context of Focal’s recent product launches -- the XS computer speakers (driven from a USB input), the even more affordable but conventional XS Book speaker system, and most telling of all, the Bird amplifier/speaker systems with their wireless connectivity capability -- the mantra is clear: if you want a new generation of customers to buy your products, then you need to make those products relevant to those customers. They need to deliver the functionality those customers seek and do it at a price that fits within their budgets.

As Gérard pointed out, the next generation of audio consumers is already inured to multi-functional portable devices, and within that product segment the iPad is king. What that means is that to be relevant, any new product needs to embrace and interface with products like the iPad, with its music files and control capabilities. But more important, the iPad also defines the upper price limit -- the new high-end, if you like -- for the market. It’s not that any related product can’t cost more than an iPad, but it has to exist in the same price band. The challenge for audio companies is, therefore, to deliver real performance in products that can compete on grounds of facilities and functionality and to do so at a price that is competitive with those alternatives coming from the computer industry, with its economies of scale and wafer-thin margins. Or, as one wag (who shall remain nameless) would have it, "The iPad -- if it had been designed and built by the high-end audio industry, it would cost ten times as much and wouldn’t actually work!"

Now consider the Focal/Naim "merger" in the light of all this and the landscape shifts. Whereas Naim aficionados would probably assume that it’s the CD players/server-based system, amps and the chance to revamp the UK company’s moribund speaker line that has piqued the interest of the French, I’d suggest that it’s actually the (as yet unrealized) potential of the Naim Net technology as well as the Uniti products that are of real interest. This isn’t about next year; it’s about the next decade, and in those terms the CD player is essentially dead and separate amplifiers are living on borrowed time. This is about meeting the needs of an established generation of customers but also looking ahead to the next generation. It's about delivering genuine high-fidelity audio performance in the context of new technologies and system contexts -- about introducing this new generation of listeners to high-quality audio, the very concept that "we can do this better."

The end of the beginning

here does this leave us? What does it mean for all those existing Naim customers as well as the rest of us?

Well, if you are sitting in front of a stack of carefully cherished olive-case Naim electronics, then you should rejoice. Focal and Naim together can go to places and achieve things that neither company could do on its own. They can develop new products and engage with new customers who can ensure the survival of both companies. And whilst those products, the technology that drives them and the music and other media that inhabit them, may hold no interest for many aging audiophiles, neither Focal nor Naim are about to abandon their existing customers -- or the business they represent.

Hi-fi is changing. The way we store, transport, distribute and listen to music or watch movies is no longer the same. The formats and social/cultural imperatives that supported the separates hi-fi system are either going or gone. They’ll linger all the time there are still systems and those who use them in circulation, but for a whole new generation of music fans, the very nature of the listening experience and the hardware that goes with it has moved on. High-end audio is reaching the end of its current road. The merger of Focal and Naim is a symptom of that fact. The only real question you need to ask yourself is whether you want to stall at the stoplight of denial or set out on the new road stretching ahead. All those with their feet on the brake should be thankful that at least some people running high-end audio companies have their pedals firmly to the metal.