Our Next Savior: The “New High-Grade Component System”

In the summer of 1993, during a meeting in Hakone with the top leaders of audio makers called the Future Forum, which I hosted for 10 years, I made a proposal for high-grade component systems.

Although the audio market had reached a peak in 1988, the conventional life cycle of mini component systems had been prolonged thanks to the appearance of CDs, and they were still going strong.

The system audio market that I had been watching until then had been in a state of constant decline, always unable to come up with the next category. The gap from component systems to the appearance of mini component systems was especially long. At that time, the industry was recognized as being in a structural depression and was struggling.

However, even after the collapse of the bubble economy, mini component systems, though going downhill, were still breathing, so the 12 companies that were forum members were quite happy.

We were gathered at a lakeside restaurant called Shishi in Hakone. Out of the window, Lake Ashinoko glistened in the twilight as I started to speak to the dignitaries before me.
“As the sayings go,” I said, “one should always be prepared and one should never lose heart. Thanks to the appearance of CDs, the mini component system market is still robust, but judging from the conventional product cycle, it is beginning to move toward decline. So far, we have always missed out on our timing in introducing products to create the next market and consequently have struggled. We successfully moved from separate components to component systems and then to mini component systems, but we have always had a hard time during the transition periods. If we don’t build the next category, the next genre, now, while mini component systems are still doing well, we will end up struggling once again.”
There were cries of “Hear! Hear!” from the audience and also, “So, what should we do?”
“Therefore,” I continued, “I would like to propose the genre of high-grade component systems. Our goal should be a \100 billion market.” Again, exclamations of surprise and expectation filled the room.

“The basic concept of my proposal,” I explained, “is the maker’s system. In other words, each maker should confidently assemble a quality system that is in no way inferior to individual components and thereby create a new category.
“The product concept should be (1) high-grade, in other words, with a higher quality than that of individual components; (2) high-level design, so that the system, measuring less than 30 cm in length, fits unobtrusively in the living room; (3) ease of operation, with connectivity between systems and definitely with a remote controller attached; and (4) reasonable price. The name of the category should be ‘high-grade component system.’”
I sensed excitement and positive response from the forum members, who cried out in chorus, “Let’s do it!” The next day, when we arrived back at Tokyo Station, Mr. Onami of Pioneer said to me, “We’ll definitely do it!” Then we firmly shook hands and parted.

High-grade component systems appeared on the market at the end of that year. Retail stores welcomed the new products with open arms, and customers showed their support as well. We managed to create an entirely new market.

Sixteen years later, the audio industry has changed considerably. I cannot help but feel that the main reason lies in the weakening of system product marketing. If the industry as a whole does not have the power to share and develop market-creation ideas, the market is going to continue shrinking. While it is important for individual companies to offer specific proposals, nothing will happen without a category plan to move customers. I believe that the “new high-grade component system” will be our next savior.