Business Models Archives - Creative Connectivity

Full Bandwidth Audio – the next big audio market

Within the audio industry, both hardware manufacturers and content providers have have reached an interesting impasse, which is how to extract more money from consumers. The bulk of users appear happy with the audio quality they’re getting from their current hardware, as well as being satisfied with their audio streaming services. Unlike the video streaming industry, which is spending billions on generating new content to attract subscribers, audio streamers are largely relying on their back catalogues. Whilst manufacturers and streamers have tried differentiation through enhanced quality, specifically by providing hi-res or lossless codecs, they’ve found the take-up disappointing, mainly because few consumers can notice the difference.

This poses a quandary for the industry. They’ve invested significant amounts of money developing new, high quality codecs, which can sample audio at rates which only bats are likely to hear. The components industry has also poured cash into developing new audio transducers, producing micro-electro-mechanical system (MEMS) speakers, capable of rendering audio at frequencies way beyond the limits of human hearing. This technology has led to a new generation of microphones with frequency responses which are flat up to 100kHz – a major step forward from common studio microphones, which typically have frequency responses that start falling off at 14kHz. Once again, however, what they capture is beyond human hearing.

It’s all very clever technology. But nobody really knows what to do with it. In the absence of any credible ideas, the the audio industry, which has done what it does best – coin a new initialism of FBA to describe the experience as Full Bandwidth Audio. But, at that point, they have stumbled. With the exception of a small, audiophile market, who will pay obscene amounts of money to convince themselves they have super-human hearing, the audio industry has found little consumer interest in purchasing something they can’t hear. They desperately need to find a new market where consumers will shell out money for new equipment and new subscriptions.

As often happens in audio, when the industry incumbents struggle with innovation, development appears from outside, where a totally different range of companies have started exploring the potential new markets which could be created by embracing Full Bandwidth Audio. In this case, that innovation is coming from a rather unlikely source – the pet industry.

A world without 14 nanometres. Or how things could fall apart.

I recently wrote about how our current generation of technical achievements is critically dependent on just one company in Taiwan. TSMC is the only chip company in the world that is capable of making the most advanced chips that drive our latest smartphones and data centre servers. Without them, we might need to wait another five years for AI or 6G to progress, and Apple would probably be unable to make anything more recent than an iPhone 12.

It’s an example of how so much of what we rely on is bottlenecked by a single company. In this case, it’s also a single country, as it’s proving difficult to replicate TSMC’s engineering experience outside Taiwan, despite hundreds of billions of dollars being thrown at the problem. These bottlenecks aren’t uncommon. They may be due to a company that make a component, a company that makes the tools to manufacture that component, or even the raw materials. If any part of this chain is disrupted, things will start to fall apart.

We saw some elements of this during Covid, but those were mostly supply chain issues, where things were in the wrong place. Manufacture didn’t stop; shipping became difficult and some industries failed to plan for the resulting extended lead-times. But what if, at some point in the future, manufacturing did stop?

Has the audio industry lost its imagination?

If you read the glossy audio magazines (audio enthusiasts still buy them), or spend some time browsing Amazon, you’ll see an audio industry which appears to be in good health. Depending on your personal preferences you can get something that’s smaller, shinier, lossless, retro, or virtually any adjective you can think of. But if you strip off the marketing glitz, it’s questionable whether audio quality has improved much in the last seventy years.

For the first 25 years, families huddled around horns. Then, in 1925, loudspeakers appeared, bringing sound to everyone in a room. The industry spent the next quarter century improving quality, to the point where most music lovers thought that audio reproduction was about as good as it was going to get. 1950s and 60s novels were populated with characters enthusing about their preamplifiers and graphic equalisers as they listened to the finer points of Mozart and Beethoven.

Then the focus changed. Other priorities took over, as multiple disruptions changed the way we listen to music. What’s interesting is that each of these disruptions was accompanied by a reduction in audio quality, as consumers decided that other features were more important. It’s not a message that the audio industry likes to acknowledge, as trying to push “higher” quality often seems to be the limit of their imagination. But history suggests they may be about to have another shock. So, let’s look at the reality of what happened. It all started in 1957 with:

Why Grabbing Greenland could kill 6G and burst the AI bubble

You’ve probably noticed that there’s a bit of a penchant for land grabbing at the moment. Russia wants Ukraine, Israel wants Palestine, China wants Taiwan, and now, America wants Greenland. The problem is that as more of it goes on, the behaviour becomes normalised and the international barrier to grabbing is lessened. America’s Christmas foray into Venezuela has further regularised the concept of interference, which means there’s probably a mandarin in Beijing who’s already cancelled their summer holiday and written “Taiwanese unification” on their wall calendar.

The problem with grabbing Taiwan is that it’s not just land-grab. It comes with some interesting unintended consequences, which may profoundly alter the technology balance between China and the US, bursting the AI bubble and upsetting telecoms evolution along the way.

How HP valued Humane

Last week HP announced that they were acquiring the patents and key staff from Humane for $116 million. A few years ago, I wrote an article questioning the value of patents for startups (of which more later), so it seemed a good opportunity to try to dissect the purchase price to see if it’s possible to put a value on Humane’s patent portfolio.

Humane’s not your average startup. From the start it was viewed as a potential unicorn. Its first product – the AI Pin, which turned out to be its downfall, had high ambitions. Although few reviewers appeared to notice it, if it had succeeded, it would have been the first nail in the coffin of the smartphone. The product failed to meet that promise, and the company appeared to be heading for a fire sale. Fortunately for the core team, HP saw their value and snapped them up for the bargain price of $116 million. Let’s look at how they might have worked out that purchase price.

The Superhero SIM

Almost everyone in the world knows what a SIM is. It’s the little piece of plastic with gold bits on it that makes your mobile phone work.

Almost nobody in the world knows how a SIM works.

That’s about to change, as over the next few years we’re going to see SIMs disappear. Or at least the bits of plastic with gold bits on will disappear, as the things that a SIM does get integrated inside your phone. It brings the prospect of changing the way phone contracts work, allowing your phone to do far more, and has the potential to disrupt the current business models of network operators.