Yeah, I couldn’t believe the $350,000,000.00 price tag when I read it. I think Samsung’s Harman got all of Masimo’s Sound United for a great bargain! Hopefully, Sound United’s brands will be a little more profitable for Harman at this price.
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It’s certainly an interesting transaction.
The global HiFi industry is smaller and less profitable than many people think. Analyst reviews tend to lump ‘proper’ HiFi gear (electronic components that are separate from speakers, for example) in with the high volume stuff that generates a lot of revenue (Bluetooth speakers, Sonos (especially a few years ago), etc.), which makes the whole market for brands like Denon and Marantz (and Onkyo, Pioneer, Yamaha, etc.) seem bigger than it really is.
The brands are important to us, and seem like the bedrock of the industry we enjoy. But they are, in reality, quite small businesses.
Sound United (the company that Masimo bought in 2022) had sales at the time of around USD900m and earnings or around USD125m (as reported by Masimo). Sales have slipped to less than USD700m (down more than 20%). Profitability is undoubtedly under pressure - Masimo hasn’t reported earnings for Sound United, but it’s not usual for a business that suffers a 22% sales decline to be profitable. Right-sizing the expenses to match declining sales tends to take some time.
Many industry observers thought that Masimo paid well over the odds to acquire Sound United. The market certainly thought so - the Masimo share price fell 30% on the day and never recovered.
Samsung/Harman is managed by clever people who know how to count the beans. $350m is almost certainly exactly the right price to pay for this group of brands and assets, based on a sensible view of opportunities looking into the future.
It will be really interesting to see how Samsung/Harman incorporates the Sound United brands into its overall R&D, selling, marketing, manufacturing, distribution and sales operations.
I expect that we’ll see many changes. I expect that there will be much hand-wringing and lamenting the trajectory of ‘brands we have known and loved’.
But the higher-volume part of the HiFi industry has changed immeasurably in the last ten years, and the only way that these brands can survive is through significant cost reduction, manufacturing consolidation, range rationalisation and increase in channel efficiency.
And Sound United isn’t the only group facing these issues. Voxx International (home of Klipsch, Pioneer, Onkyo, Integra, Magnat and a couple of others) has recently been acquired by a maker of automotive electronics for around USD160m. Same questions and considerations here - what does the new owner need to do for these audio brands (which have suffered years of sales decline) to survive?
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If they where to release a Roon Ready streamer with hdmi arc , Dirac with the Marantz DSD upsampling algorithm I would definitely buy a unit 
There is a lot of overlap between the two, I would imagine some streamlining as to what company specialises in which area. AVR market is very small market, they will have 4 brands covering that sector now. Seems overkill.
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Not sure I agree that AVR market is that small, but totally agree 4 brands overkill. Would guess that they won’t have 4 for that long
I bet Sonos shift more Arcs and Beams than home AVR’s, plus all the other cheaper soundbar solutions out there. I dont know one person with an AVR, I ditched mine and went back to pure stereo 2 years ago. Its still a good market but these will be digging into its market share substantially.
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Another interesting data point:
- Sonos global sales in 2024: USD1.5billion
- Sound United sales in 2024 (Denon + Marantz + B&W + Boston Acoustics + Polk + Definitive Technology + Classe + Heos) = USD0.7billion…
I used to work for a distributor of AVRs to major retail chains in my country. We used to sell thousands upon thousands of AVRs per year, across half a dozen models. Today, you’ll struggle to find the one or two AVRs on offer in those stores. It’s just not what people are buying. Mainstream living room audio (the family Stereo System) has gone the same way.
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So Massimo bought the brands at an earnings multiplier of just over 8 ($1.025b / $125m) which doesn’t actually sound that bad.
If sales have dropped over 20% I agree profit will have taken an even bigger hit in the short term, possibly even going negative. So Harman is unlikely to have used the earnings multiplier when deciding what to pay. It feels like a more strategic purchase based on the opportunity presented by Massimo screwing up. An opportunity that Samsung can more than afford.
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Masimo’s purchase of SU was a silly idea in the first place, and they never properly managed it. As much as I don’t love the idea of any one company (Samsung) building a monopoly, there’s no question that the SU brands will enjoy the proper funding and management they deserve.
I’m still a relatively new Roon subscriber, but don’t think Samsung is going to make new customers out of these technologies. My Hi-Fi purchases have been slow and methodical (brought a new sub home last night), and plan to buy more but these days I don’t buy anything with enough frequency that a strategy meeting could plot on a graph.
The other problem is that I’m old and unusual. Regardless of my habits, I’ll be listening to the stuff I love for many more years and likely won’t deviate. For example, my lifetime subscription to Roon isn’t going to add anything to future balance sheets.
So how would my data be useful for the is forthcoming combined company to solve a potential problem for me? I’m not asking for it, but see that as a potential strategy for generating revenue.
So, in terms of home theater / surround, I’m living in the ice age with a 5.1 system with a Denon AVR we still really enjoy.
Question: Is the market for AVRs and surround processors growing, static or declining?
Not sure but soundbars (which can come with surround speakers as well as 1 sub as standard) have definitely eaten into AVR sales.
Samsung and JBL (now both part of same group) and Sonos extremely popular in soundbars.
It would have been wise for the big AVR names to really make compelling soundbars but Samsung, JBL and Sonos got way in front.
In my opinion, it would be cool to see these AVRs function as Roon Servers so I would need one less piece of equipment. I haven’t seen much sign though yet of pursuing any type of tighter integration with Harman products.
At this point though, unless and until Roon supports Atmos with one of the streaming services, even if it’s baked into my AVR I’m probably not using it.
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