Hello Gibson boombox, goodbye Onkyo

01/08/2012
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TOKYO (majirox news) — Gibson, who dukes it out in a three-way battle royale with Fender and C.P. Martin for the title of the best guitar maker in the world, has bought Onkyo, which can be charitably described as a down-at-the-heels Osaka audio maker.

The announcement that Gibson had bought 51 percent of Onkyo’s American subsidiary and 15 percent of the parent company, giving it control of Onkyo, was treated with yawns of disinterest from the Tokyo stock market. Onkyo struggled up to an uninspiring 175 yen on news of the purchase and has since settled back down to the 150-yen range.

Onkyo was formed in 1946 in Osaka and did well during the glory days of Japanese exports when Japan was the only country in the world capable of producing an endless flood of cheap, reliable and well-made consumer audio electronics to meet a seemingly insatiable global demand. Those days are now long gone as one Japanese consumer electronics company after the other succumbs to Asian and American rivals. So many second-and-third tier Japanese audio makers have disappeared that many people are not even aware that Onkyo still exists.

However, Onkyo retains a well-deserved reputation for high quality speakers. The problem is that most people are now getting their music through earphones. As well as fighting off the onslaught of low-priced Chinese and other Asian makers, the iPod and all its clones have made Onkyo’s tabletop tuners and amplifiers increasingly irrelevant.

In 2007, in an attempt to widen its market base, Onkyo bought Sotec, a Japanese PC manufacturer, and began manufacturing PCs under its own brand name. The Japanese public greeted them with polite disinterest, and in December of 2011, Onkyo was forced to withdraw from selling its PCs through electronics stores and is only offering them online.

At the same time, Gibson, the manufacturer of Les Paul guitars, which Guitar Magazine called “the best selling guitar of all time,” has been aggressively moving to establish a Pro Audio Division.

“Right now, we have an extremely powerful brand that people recognize and value,” says Henry Juszkiewicz, CEO of Gibson Guitar. “But the musical instrument category is inherently limited. The new division expands our reach to fellow music lovers and allows us to reach 20 out of 20 consumers instead of the one in 20 we currently reach.”

Gibson has purchased some of the leading manufacturers of professional audio studio equipment, control rooms, broadcast studios and manufacturers of equipment for DJs, such as Cerwin-Vega, KRK systems and Stanton DJ. Where exactly Onkyo will fit into this is a good question. Gibson’s Pro Audio Division is exactly that — aimed at professionals instead of more general consumers — while much of Onkyo’s production is aimed at general consumers.

That boombox from Gibson may never materialize as Onkyo’s technology and production capacity for higher-end speakers is absorbed by Gibson’s Pro Audio Division and the rest quietly let go. Onkyo seems now to have joined the increasingly long list of Japanese companies that were, in the words of the Economist, “once World-beaters, but are now falling by the wayside with the end of low cost manufacturing in Japan.”

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