Over the past several years, the young and particularly value-focused company Soundfreaq has become one of the best speaker designers in the Apple accessory industry: it has earned high ratings for numerous products, notably including its portable Sound Kick, which earned our 2012 CES Overall Best of Show Award — and the versatile earlier unit Sound Step Recharge. This year, Soundfreaq won another Best of Show Award for its new Sound Platform 2 speaker, which again ups the ante in performance and features for the price.
iLounge wanted to learn how Soundfreaq keeps generating hit products, and reached out to the company for the special interview below. Because company co-founder Matthew Paprocki shared many great insights with us, we decided to run as much as was practical, splitting the Q+A into two parts. Part one focuses on how Soundfreaq designs and prices Apple-ready speakers in a crowded marketplace. Part two discusses Soundfreaq’s perspectives on Apple and the accessory business as a whole.
iLounge: Almost all of Soundfreaq’s products sell for less than $200, and one of your most noteworthy speakers — Sound Kick — delivered a major breakthrough as a $100 portable system. Why do you keep targeting $100, $150, and $200 price points?
Matthew Paprocki, Soundfreaq: Although it may seem like we begin with price, our focus is not designing for a particular price point. We identify different scenarios for our customers and consider the different listening experiences that they are looking for. There are two sets of related product attributes we consider in design:
1. Product size and sound performance (volume output, sound quality),
2. Features and price.
We set a goal for what we think would be the ideal balance for a particular listening scenario. We then look at the competitive products on the market and if there isn’t one that meets our standards for quality and value, we move forward to create a product that fills the need. We then maximize the value that our product offers within what we deem to be an appropriate price point for our customers.
Take our Sound Rise bedroom speaker/alarm clock, for example. For the bedroom, we found ourselves considering two listening scenarios:
* In bed: listening to music, watching TV/movies/video or playing games with a computer/tablet.
* Getting ready: making the bed, getting ready for work in the morning and getting ready to go out at night — all of which require moving around the entire bedroom.
For product size and sound performance: customers put this product beside the bed on their nightstand, which is typically a small surface area and very prime real estate.
We set a target footprint of about 50 percent of the size of current premium alarm clock stereos on the market. The sound output needed to be loud enough and the sound good enough to hear throughout the room whether you’re in bed or walking around. We experimented with different speaker configurations and found that a 2.1 worked well. We placed one larger, down-firing driver to focus on the lower frequencies and two smaller, full-range drivers firing up and out from the top corners. Going vertical with the design not only allowed us to produce great sound with a small footprint, but also projected the sound out into the room, instead of firing it directly into the pillows on the bed. We also found that raising the display also made it more convenient to read the time both when lying in bed or walking around the room.
For features and price: for both scenarios, Bluetooth wireless was key whether in bed or getting dressed, because everyone wants to keep their devices in hand. However, while people sleep, they want a home for their devices to charge, so we also included the Dock Connector as well as an additional USB charging port.
Once we established this as the ideal design, we created prototypes. We costed out the design and saw that with our consumer-friendly margins, we could hit a $99 price point. We then checked our value proposition against the competition to make sure that we were able to achieve our standard for value.
I think that the reason that our products have ended up in the $99-$200 price point is that retailers have been pushing suppliers into a “good” and “best” merchandising strategy that’s been scaled back from a broader “good, better, best” assortment because of shrinking space for speakers at most retailers.
Typically the “good” products offer a better overall value, but they are pushed toward a lower price point that’s too low to deliver the high quality audio, features and design that we want to offer our customers. To lower development costs, these products increasingly have become sourced direct from factories or re-purposed from off-the-shelf designs. This speeds time to market, lowers risk, lowers capital expense and amortization of tooling and R&D. The flip side is that it also leads to a lot of me-too designs and commodity products. Factories by their nature, and appropriately so, are good at reproduction, so when they are leaned on to design, it’s only natural that they would look backwards at what has been successful and mimic it, as opposed to looking forward.
The “premium” brands that fill retailers’ “best” slot are typically higher quality sound—although ironically, often not better features.
But their overall value is compromised as the economics are encumbered by large advertising/marketing budgets, higher capital costs and organizational inefficiencies in development, management and administration. In my experience, these companies treat their factories more like vendors: having factories compete through RFQ’s, dictating engineering and design details that may or may not integrate well with a factory’s competence, and keeping factories on a need-to- know basis to protect proprietary information. While these are logical business practices, they’re counter to developing mutually beneficial relationships because they are rooted in distrust.
As an aside, I once heard that a major consumer electronics brand was complaining that a factory was making a speaker for them that didn’t sound as good as they thought it should. The factory responded that they couldn’t optimize their mechanical engineering design without more information about the electrical engineering. This was “confidential and proprietary” knowledge that the company wasn’t willing to share with the factory for fear that they would copy it and share with their competitors. So the end result was a product that didn’t reach its true potential. But at least no one could copy it, right?
iLounge: From a component standpoint, how can Soundfreaq put as much or more into a $100-$150 speaker system as some other companies would sell for $200-$250? Walk us through the tradeoffs.
Soundfreaq: Offering “more speaker” for the dollar is fundamental to why we started Soundfreaq. We’re focused on maximizing the value for our customers. There are three parts to how we do this:
1. Efficiency: Our organizational overhead is low. I’ve seen so much time and money wasted in development: evaluating, rethinking, validating, consumer testing what is truly obvious… We’re a very small team, that is nimble and experienced. Our product development doesn’t run through phase gates and our days aren’t spent in meetings. We’re not silo’d into divisions. We work very closely so that we can maintain focus on both the details and the big picture holistically. We trust our gut and support each other.
2. Autonomy: We’re not beholden to shareholders, venture capital or a board of directors.
