A Naim worth investing in

A Naim worth investing in

Attention to detail and a willingness to embrace the digital future of audio delivery has enabled an established, yet little-known, brand to flourish in an increasingly competitive market

Paul Stephenson remembers his first encounter with a company that has gone on to become one of the greats of the largely unsung British audio equipment industry.

He ran a hi-fi retail business and was looking for new brands to fill his store. “I came across Naim and it seemed as though it had no real sales or any marketing in place – they were all engineers, beards and weird guys. It was just totally product-oriented, which is fine, but it doesn’t get you much business,” he recalls.

So he joined as sales manager and, by 2000, was managing director. Now, he is proud to say, the company has 1000-plus accounts, even if it remains what Stephenson calls a “fairly unknown brand”.

Indeed, its reach is good going given that Naim is, Stephenson suggests, one of a small band of companies operating in their own small sphere of audio experience.

“In fact, I think we’re part of a market of audio specialists that is only just emerging, offering something that is very different to, say, the more commercial take of Japanese makers. Theirs is a commodity approach – it’s not about using your ears to decide if something sounds good. The way people listen to music at home is different to what engineers think they’re making out of electronics at a work-bench. It’s about sensitivities and emotional values, not what you see on an oscilloscope.”

Naim02The Salisbury-based company has just celebrated its 40th birthday so, beards aside, it must be doing something right. Founded by the late entrepreneur Julian Vereker – who, frustrated by his own experiences of listening to recordings of live performances decided to experiment building his own amplifiers and loud-speakers – Naim can count itself a two-time Queens Award for Enterprise winner, and has the contract to supply stereo systems for Bentley, the “technically challenging, noisy environment that is the inside of a car,” as Stephenson notes.

In 2011 Naim grew considerably when it merged with French loudspeaker manufacturer Focal. But it has also grown, Stephenson argues, because of people’s increased attentiveness to the audio experience – a surprise perhaps given these so very visual times.

“The internet has provided a platform for people to find out about us, and also to be better informed about audio generally,” says Stephenson. “But, more than that, we’re seeing a big change. Typically when people buy their computers and X-Boxes, hi-fi is about no.282 on their list of priorities – but audiois becoming fashionable again. People care about sound.”

Indeed, remarkably – given the oft-discussed demise of the CD – it’s not even MP3 where audio is at: already some 35% of Naim’s business is in products to stream music direct from the internet.

“The changing landscape of audio is challenging. Five years ago we would have been afraid of the idea of streaming, and would have regarded streamed music as the lowest common denominator way to listen,” says Stephenson. “But coming out of that you realise that millions of people are listening that way, millions more are going to, and what they are out there looking for is a way to do that with quality. Thankfully Apple has done a great job.

Without their efforts what we do would come across as pure geeksville. But consumers now are much more advanced than their parents in terms of understanding tech and their willingness to invest in it.”

Most of Naim’s products are now connectivity-enabled although, Stephenson notes, “you still need speakers and amplifiers – streaming technology has been the carrot to pull people in to buy other products.”

That might include CD players, but not often. They now account for just 17% of sales, with much of those going to China, where there is still a preference for what Stephenson calls “the physical manifestation of music. Vinyl has the tendency to sound better than CD and offers a different, mechanical experience. But a CD is this little plastic box with a bit of silver metal in it – it’s just not very sexy.”

Streaming, on the other hand, may be unnervingly intangible to anyone over 30, but it is, Stephenson assures, the future - operating with a higher fidelity than CD, with a solid state back-up solution and software upgradable – and a future Naim wants to be a leader in (even, that is, while operating a service department busy looking after machines now older than the first home computers).

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For anyone under 30, there is another factor that the company must prove itself a leader in. “Style is becoming extremely important,” says Stephenson, “though maybe not for the audio aficionado. The fact is that most people don’t want audio equipment that looks out of fashion in a year, or, for that matter, dominates a room. We’ve always tried to take a form-follows-function approach which doesn’t work for some markets – they want machines that light up like Las Vegas, and every man and his dog has tried to out-Zeppelin Zeppelin in the way some systems look. But I think we’re shifting back from such extreme styling now.”

There is, in this, also a kind of green thinking, moving away from the consumerist habit of frequent upgrading (and consequent dumping of the perfectly serviceable but now seemingly outmoded kit) with audio equipment that lasts, both in use and looks, for perhaps a lifetime. Stephenson concedes that this is probably to cost the company revenue – a quick modification to a stock product remains an easy way for more mass-market manufacturers to make a quick sale. But that is not what he, or Naim, are about.

Suffice it to say that the company’s last big launch was in 2008 and the next is due this year, but still under wraps. Its most recent launch was certainly big in scale and sound: this spring it released its Statement speaker, with all of its 746 watts of power – or one horsepower – and projected $200,000 price.

“Well,” says Stephenson, “we’re a British company and we make everything in Britain.

To be able to make here taps into long traditions of engineering and design and craftsmanship and puts your products in a higher league, even if it doesn’t always put them at the higher price point too.” Not always at least.