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Back in February, I had a video call with Andreas and Daniel Sennheiser to discuss their announcement that Sennheiser would be realigning their company, shifting their focus to their Pro Audio business units and looking for a strong partner to invest in their Consumer Electronics business unit (which includes their premium/audiophile products). To recap:
For those of you not familiar with Sonova (the acquiring partner), they specialize in developing innovative hearing care solutions, with their core business brands including Phonak, Unitron, Hansaton, and Advanced Bionics, among others. Sonova is headquartered in Stäfa, Switzerland. (Some of you may also remember that in the past Phonak did make audiophile in-ear monitors, including the Phonak Audéo PFE232 (pictured right), which was quite well regarded.)
Of course, I was curious to understand the full implications of this announcement of Sonova's acquisition of Sennheiser Consumer, and was able to talk to all three CEOs involved -- Andreas Sennheiser (Sennheiser), Daniel Sennheiser (Sennheiser) and Arnd Kaldowski (Sonova) -- to discuss what this all means, especially where Sennheiser's audiophile products portfolio is concerned.
Clockwise from left: Daniel Sennheiser (Co-CEO of Sennheiser); Arnd Kaldowski (CEO of Sonova); Andreas Sennheiser (Co-CEO of Sennheiser)
Like so many hobbyists with a deep affection for (and history with) Sennheiser, I had questions and concerns about the future of Sennheiser Consumer after this announcement. Would Sennheiser Consumer go the route of a couple of other storied headphone brands whose operations were effectively dissolved after being acquired?
I started by asking all three gentlemen if (as we've seen in other acquisitions in our space) the original staff and facilities would be disbanded and moved to Sonova's headquarters in Switzerland or elsewhere. Arnd Kaldowski (Sonova's CEO) was the first to answer:
What was particularly encouraging to me was how Arnd also discussed Wedemark in the context of the future and growing needs of Sennheiser's Consumer segment (which they clearly intend to grow), stating of Wedemark that "If we need more space we need more space. You're not going to be able to relocate the number of capable people, nor is there an argument made why you would try to do that. If we over time learn we need more space -- we need a little bit more separation -- we'll figure the local buildings out. But ultimately what we're most interested in is to not have a disruption with all the capable people we have and the talents we have (in Wedemark)."
Daniel's comment reflects something all three emphasized in our call (and also in an audio press conference that took place days beforehand): The two companies bring complimentary competencies but with essentially no overlap, except for a shared passion for audio (though realized very differently in their products). I think that because there is so little functional overlap -- and with Sonova's desire to keep Sennheiser's team in its place of origin -- the spirit of the Sennheiser we know will continue, and was a key component of this acquisition.
While Arnd did confirm that the acquisition had much to do with Sennheiser's (Consumer unit's) core positioning in its market (which I'll get to shortly), I was also intrigued by their interest in Sennheiser's audio engineering and know-how for how it could improve Sonova's hearing aid business, stating "We believe we are known for the best hearing performance improvement," especially with things like speech intelligibility. Arnd believes that their hearing products (already market leaders) could gain further strength with improved audio. "We know that's important if we want to be successful in our business," he said. He also mentioned their interest in hearables in the context of how Sennheiser better positions them there, too.
Arnd also made clear that moving into the high-growth segments their acquisition of Sennheiser enables also puts a high value on Sennheiser's channel experience and access in those areas.
Buoyed by what I felt was Arnd's very genuine enthusiasm for the synergies between their companies, I asked how important the audiophile component of Sennheiser's Consumer unit (and its portfolio) was to Sonova, since the audiophile portfolio is responsible for just 14% of Sennheiser's Consumer unit sales:
Only serving to further validate the importance of the premium and audiophile components of Sennhesier's Consumer unit to Sonova is a graphic accompanying one of their releases about the acquisition that shows how the premium and audiophile headphones segment fits into their vision for the consumer journey that Sonova wishes to cover from end to end -- that is, being able to provide products for a consumer from the beginning of his audio journey (with consumer audio devices) to the latter parts of it (with medical hearing instrument devices).
(I've attached that full release presentation PDF to this post.)
Back in the February call, Daniel and Andreas Sennheiser said that the audiophile product portfolio already had product plans and releases out to 2023, and fully intended to see those through in any partnership. When I asked Arnd about this, asking if he sees audiophile product plans continuing beyond that, his answer was quite clear that he does.
He enthusiastically added:
In terms of operations and integration, because the Sennheiser campus in Wedemark, Germany currently includes Sennheiser's Pro business units and the Consumer unit being acquired, there's still much work to be done on the specifics of the integration and sharing that these two companies (Sennheiser and Sonova) will obviously have to do to make this all work. I asked how challenging this would be, and how stratified Sennheiser currently is, with respect to shared staff, resources, intellectual property, etc., between Sennheiser's Pro and Consumer units. Andreas Sennheiser answered:
Given the operational integration that will be required of these two companies in Wedemark, I can see why they still continue to refer to this acquisition as a partnership. It no doubt will have to be a strong collaboration for the success of both companies, and for the foreseeable future.
What's my feeling about all of this? That Sonova's interest in acquiring Sennheiser includes improving their core hearing instrument products is encouraging. That they're also looking, via this acquisition, to drive stronger momentum into the fast-growing hearables segment -- and looking to expand into consumer devices (including true wireless and premium/audiophile headphone products) -- is rosier still. That they intend to keep the heart of the Sennheiser brand rooted with the teams, culture, and city of its origin (including future expansion needs) should, in my opinion, give Sennheiser diehards like us great optimism that Sennheiser's products, heritage, and future will continue into the foreseeable future with Sonova.
- Sennheiser had four business units: Pro Audio, Business Communications, Neumann, and Consumer Electronics.
- The first three units are their Pro business units and the last was their Consumer business unit (which includes the audiophile portfolio).
- The first three units are their Pro business units and the last was their Consumer business unit (which includes the audiophile portfolio).
- Sennheiser is shifting to focusing their energy on their Pro business units.
- For the Consumer business, Sennheiser was 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).
- Last month (May 2021) Sennheiser announced that Sonova would be acquiring their Consumer business unit which will continue under the Sennheiser brand.
Of course, I was curious to understand the full implications of this announcement of Sonova's acquisition of Sennheiser Consumer, and was able to talk to all three CEOs involved -- Andreas Sennheiser (Sennheiser), Daniel Sennheiser (Sennheiser) and Arnd Kaldowski (Sonova) -- to discuss what this all means, especially where Sennheiser's audiophile products portfolio is concerned.
Clockwise from left: Daniel Sennheiser (Co-CEO of Sennheiser); Arnd Kaldowski (CEO of Sonova); Andreas Sennheiser (Co-CEO of Sennheiser)
Like so many hobbyists with a deep affection for (and history with) Sennheiser, I had questions and concerns about the future of Sennheiser Consumer after this announcement. Would Sennheiser Consumer go the route of a couple of other storied headphone brands whose operations were effectively dissolved after being acquired?
I started by asking all three gentlemen if (as we've seen in other acquisitions in our space) the original staff and facilities would be disbanded and moved to Sonova's headquarters in Switzerland or elsewhere. Arnd Kaldowski (Sonova's CEO) was the first to answer:
"I can't envision or see this." He affirmed that when it comes to this segment "the center of gravity is in Wedemark (Germany) and the people are there." He made clear that Wedemark (where Sennheiser is headquartered) is the place where they'll continue to develop these kinds of products (Consumer segment including audiophile products), as Sonova has no capabilities in that space, that doing so would require the same number of engineers, and that there's no cost savings in Switzerland (versus Germany).
Daniel Sennheiser added: "We'll share labs and things like that as well, so that is something going forward we have agreements for, between Sonova and Sennheiser. We've seen in negotiation that we have a similar spirit in terms of culture and understanding, in terms of attention to detail, in terms of also valuing engineers and the great work that is being done here. So I remain confident that we'll remain two separate companies operating under one brand and staying good friends while doing this."
Daniel's comment reflects something all three emphasized in our call (and also in an audio press conference that took place days beforehand): The two companies bring complimentary competencies but with essentially no overlap, except for a shared passion for audio (though realized very differently in their products). I think that because there is so little functional overlap -- and with Sonova's desire to keep Sennheiser's team in its place of origin -- the spirit of the Sennheiser we know will continue, and was a key component of this acquisition.
While Arnd did confirm that the acquisition had much to do with Sennheiser's (Consumer unit's) core positioning in its market (which I'll get to shortly), I was also intrigued by their interest in Sennheiser's audio engineering and know-how for how it could improve Sonova's hearing aid business, stating "We believe we are known for the best hearing performance improvement," especially with things like speech intelligibility. Arnd believes that their hearing products (already market leaders) could gain further strength with improved audio. "We know that's important if we want to be successful in our business," he said. He also mentioned their interest in hearables in the context of how Sennheiser better positions them there, too.
Arnd also made clear that moving into the high-growth segments their acquisition of Sennheiser enables also puts a high value on Sennheiser's channel experience and access in those areas.
Buoyed by what I felt was Arnd's very genuine enthusiasm for the synergies between their companies, I asked how important the audiophile component of Sennheiser's Consumer unit (and its portfolio) was to Sonova, since the audiophile portfolio is responsible for just 14% of Sennheiser's Consumer unit sales:
"I think it's super important because it's ultimately the core of the positioning of Sennheiser. So I don't think you can only measure revenue. I think you have to look at it as this is the place where you can advance your technological capabilities on the one hand. And, on the other hand, it has this strong halo effect on the rest of what you're selling."
Still, the revenue growth possibilities and opportunities the Sennheiser acquisition brings are of course not lost on Sonova, with Arnd adding "We can tell it's also a nicely growing segment."
Only serving to further validate the importance of the premium and audiophile components of Sennhesier's Consumer unit to Sonova is a graphic accompanying one of their releases about the acquisition that shows how the premium and audiophile headphones segment fits into their vision for the consumer journey that Sonova wishes to cover from end to end -- that is, being able to provide products for a consumer from the beginning of his audio journey (with consumer audio devices) to the latter parts of it (with medical hearing instrument devices).
(I've attached that full release presentation PDF to this post.)
Back in the February call, Daniel and Andreas Sennheiser said that the audiophile product portfolio already had product plans and releases out to 2023, and fully intended to see those through in any partnership. When I asked Arnd about this, asking if he sees audiophile product plans continuing beyond that, his answer was quite clear that he does.
He enthusiastically added:
"We're also technical people. And we like to have good sound -- and you wouldn't believe how many people at Sonova who have unveiled to me that they are audiophiles. I even have three audiophiles on my management board, and I didn't know that before! And they're all excited. But I think on the other hand, it's just the place where you want to win, and then ultimately that has good positive consequences to the rest of your portfolio."
In terms of operations and integration, because the Sennheiser campus in Wedemark, Germany currently includes Sennheiser's Pro business units and the Consumer unit being acquired, there's still much work to be done on the specifics of the integration and sharing that these two companies (Sennheiser and Sonova) will obviously have to do to make this all work. I asked how challenging this would be, and how stratified Sennheiser currently is, with respect to shared staff, resources, intellectual property, etc., between Sennheiser's Pro and Consumer units. Andreas Sennheiser answered:
"There's very little (Pro and Consumer overlap). We more or less have two overlaps. One is on the headphone side -- we have pro headphones, and there we have shared engineering people. And there's a little overlap when it comes to microphone tunings and microphone beam-forming algorithms for better speech enhancement. So those are the main overlaps. And there's of course joint machinery used. The IE900 (for example) is milled on a machine where also we have pro microphones being milled.
"I think the only really shared part, technical part, is the labs, quality assurance, those areas. There we have transitional service agreements to make sure that we can still provide the same level of service also to Sonova."
Andreas reiterated that the overlap is small, that Pro and Consumer have been fairly well separated for many years. While there are clearly many details to hammer out with respect to having the two companies coexist on the same campus, it seemed to me all three felt very confident -- and foresaw no problems -- getting to that point.
Given the operational integration that will be required of these two companies in Wedemark, I can see why they still continue to refer to this acquisition as a partnership. It no doubt will have to be a strong collaboration for the success of both companies, and for the foreseeable future.
What's my feeling about all of this? That Sonova's interest in acquiring Sennheiser includes improving their core hearing instrument products is encouraging. That they're also looking, via this acquisition, to drive stronger momentum into the fast-growing hearables segment -- and looking to expand into consumer devices (including true wireless and premium/audiophile headphone products) -- is rosier still. That they intend to keep the heart of the Sennheiser brand rooted with the teams, culture, and city of its origin (including future expansion needs) should, in my opinion, give Sennheiser diehards like us great optimism that Sennheiser's products, heritage, and future will continue into the foreseeable future with Sonova.
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The Phonak Audeo indeed is a familiar name. I recall I have their PFE.
