[THE INVESTOR] The rise of new technology puts an end to the methods of today.
This was what Seoul-based audio company iRiver learned from the birth of iPhone, which felled its once-thriving MP3 player business at a stroke. In the mid 2000s, the company made a meteoric rise with its cubic digital music players that dominated 70 percent of the local market and 25 percent overseas.
The 2007 debut of Apple’s iPhone that put every digital element – from Internet surfing to cameras -- into one hand-held device drove iRiver to the brink of collapse.
iriver CEO Park Il-hwan poses at Stradeum, a music house and art hall opened to customers wanting to experience lossless sound reproduced by Astell & Kern, in Itaewon, Seoul. / The Investor (Lee Sang-sub)
But the business didn’t end there. It started anew, but differently.
Starting from scratch, iRiver rebranded itself as a high-end audio business, targeting an industry that has been long dominated by classic brands like Bang & Oulfsen, Bose and JBL. In an attempt to discard its image as a manufacturer of affordable digital audio players, it named its new business Astell & Kern, meaning the center of stars in Greek and German, in 2012.
Instead of returning to the mass market, Astell & Kern targeted audio purists who value the quality of sounds more than the number of digits on the price tag.
Its signature product AK 380, for instance, is priced at over 4 million won. Ear phones that usually cost more than 1 million won per unit are optional.
But is it worth spending that much on an audio player when you can just use your smartphone? iRiver CEO Park Il-hwan says yes.
“Because the high fidelity sound moves our hearts; smartphones cannot.”
AK 380 / iriver
“If you say you feel mesmerized by a Chopin piece performed by pianist Cho Sung-jin at Chopin Competition that was played on a smartphones, it is a lie,” said Park in an interview with The Korea Herald at Stradeum, Astell & Kern’s music house in Itaewon, Seoul.
“Smartphone can reproduce only 20-30 percent of the sound. You are missing what really makes the music incredible.”
The big innovation Park and his company claim to have made in the high-end audio business so far is converging two contradictory features -- the analog and the digital -- in a palm-sized audio set.
Astell & Kern loaded high-performance digital-to-analog converter chip that converts digital data to analog sound, reproducing the music just as it was played in concert halls or in a studio, as well as a built-in amplifier that further clarifies the sound.
Astell & Kern is not the world’s first company to introduce hi-fi portable audio, but it is the first to gain market recognition, particularly from high-class audiophiles, the company said, as other companies‘ efforts have been too bulky to sell well.
“Most big-name audio companies are just good at one thing: How to make analog sounds better. But they fear digital technology,” said Park, conceding that electronics companies, on the other hand, do not have analog skills.
“iRiver has put these two features of a different nature into one device. And I believe that creates an absolute value.”
Astell & Kern’s obsession in analog has a lot to do with the growing human desire for comfort and warmth in rejection of colder, dryer digital options.
“The demand for LPs are growing around the world. We came to realize that more and more people tend to feel comfortable with analog sounds. And that is what we wanted to offer,” he said.
In design, Astell & Kern, employed “light and shadow” as its core concept. Most of its products are asymmetrical in design and use metal covers to flaunt its exclusive provision of “lossless” sound.
The volume control wheel adds an analog touch to the device, which is mostly controlled by its Amoled touch screen and the pressure-sensitive metal touch home button.
Introducing its first portable high resolution audio device the AK 100 at the 2014 CES, Astell & Kern started to draw attention from big spenders around the world. The company moved fast to debut the next line up: the AK240, the first in the AK family to include Wi-Fi, the AK 380 and so on.
The company has won several awards. The AK 380 won the 2016 CES Innovative Award in the portable audio and accessories category and an iF product design award in Germany. Its biggest market is Japan. But the company is making a push for high-end markets in 25 other countries in the U.S., China and France.
Astell & Kern audio devices are also now used by some of Hollywood stars, a public representative of the company said, refusing to give their names.
Driven by its growth in overseas markets, iRiver turned a profit for first time in six years in 2014 with 53.2 billion won in sales and 2.3 billion won in net profit. In the same year, SK Telecom acquired the then debt-ridden firm with 30 billion won. The South Korean telecom giant holds a 49 percent of stakes in iRiver.
The acquisition brought structural and financial stability for the company. But it was the people who pushed iRiver’s dream to retake the market.
“I guess we were lucky that we had people who shared our vision,” said Park referring to sound experts who participated in the Astell and Kern project with no pay.
“In the digital era, people like analog sound engineers have no place to work. They heard about our project and came to us to share their experience,” he said.
Astell & Kern may be the successful newcomer in the high-end audio market. But it must make utmost efforts to go beyond what it has achieved today.
“I think our rival is Astell & Kern today. After all, what makes this a good brand, a luxury product depends on how much effort we put into making the product more innovative and better than it is today,” he said. “If we stop that thinking. There’s no tomorrow for us.”
Park said he was contemplating how to expand its product line targeting mid-tier consumers, and possible collaboration with smartphones.
“Will there be a way to make a smartphone as a bridge for Astell & Kern while keeping the sound quality of Astell & Kern? I think it is the time to try.”
By Cho Chung-un (firstname.lastname@example.org)