Curious. What do you all make of this opinion piece?
Exactly 25 years ago Widex introduced Senso , the first digital hearing aid, utilizing a 3-channel dynamic-range compression and a frugal feedback-management system. Back then, in 1996 the hearing aid industry consisted of companies designing and marketing physical devices, most of those still analog amplifiers with tiny microphones and speakers, manufactured in Europe or the US by manually soldering those simple electronic components together.
Last week Sonova , a leading hearing aid company, announced the acquisition of Sennheiser , a traditional German maker of consumer electronics. An outsider might have thought that in the last 25 years nothing had changed, and the hearing aid industry is still about manufacturing small “things” with microphones and speakers inside.
But Sennheiser was acquired for a round sum of 200 Million Euro , which indicates that the importance of the deal stretches beyond the mere hardware synergies: the boundaries between the consumer electronics and hearing aids are rapidly disappearing, the use-case is changing fast - and for hearing aid companies it very much makes sense to start looking outside of the walls of their hearing-aid shops. And Sennheiser is a ticket to enter this outside world .
This acquisition might also mark the end to the retail era . For 20 years hearing aid manufacturers have been amassing retail stores, shifting their competitive advantage from product innovation to distribution power. Location, location, location! The success of this approach provided huge profit margins, but also curbed product innovation, resulting in the commoditization of the hardware.
In other words: The economies of scope and scale were skillfully utilized for twenty years, while the hearing aid product remained firmly bonded to a Hi-Pro box from the late 1980s.
Where are we now?
The hearing aid industry is still referred to as the " Big 6 ", describing the consolidation and the seemingly oligopolistic practices. Today, it is hard to tell what does this mean. Does Amplifon now belong to the “Big 6”? Or Costco ? Where does this industry begin, and where does it end?
In any case, the definition of the " Hearing aid industry " needs a revision - we even could retire this term altogether, and admit that the use-case of “hearing loss compensation” has spread to many products and industries:
Bose, Nuheara, Whisper…
Bose just has introduced a “self-fitting” hearing aid, that physically resembles traditional hearing aids. However, it was from the beginning designed for user-fitting and carrying such a strong brand, this product is firmly anchored in the realm of consumer electronics. This might be the first important device in the ambiguous OTC category.
Hearable companies as Nuheara are claiming to compensate for hearing loss - with a device that initially is developed for streaming of audio content. Just an opposite use-case as a hearing aid that can stream a telephone call.
After a long, rigorous reign of the “big 6”, first hearing start-ups such as Whisper AI are introducing real innovations for hearing aids. With investment money in abundance, other hearing start-ups might soon appear from a stealth mode.
Companies such as Intricon and Austar are producing OEM hearing aids, based on same HW platforms by ON-semiconductor. Another sign for the commoditization of the hardware. Before long, those devices will be open for innovation outside of the device itself.
Hearing test apps such as Mimi are used to personify TV sets, telephones, and other audio devices. -Another dilution of the use-case.
Since “Audio” has become a buzzword, Facebook reality labs and other players with platform business-model are attracting talents from the traditional hearing aid companies. The future might already be happening there.
Whatever the name - the industry of hearing devices seems in turmoil. The use case is changing - and with it the business case. Long gone are the days when the hearing aid industry was a small, closed community that relied on the aging generation of “baby boomers” as the guarantee for growth. For decades, “boomers” were an obligatory notion in every corporate report, a universal promise for every business projection. The world seemed OK.
Today, the “boomers” are rarely synonymous with wealthy best-agers. They quietly disappeared from the shiny pages of corporate reports, at the same time as in the real world, they became subject to jokes and pity, a clueless generation waiting to be replaced by the generation of their children. And this new generation seems to dare questioning everything - even the use of hearing aids.