Oticon & the Business of Hearing Aids

Hearing Aids
#1

Why did William Demant Holdings (aka Oticon) create the HearLink (Philips) series of hearing aids?

On the surface the answer is obvious: to take advantage of Costco’s enormous market presence to increase sales volume. The under story must also be that Bernafon sales were deemed to be underperforming in that market and so a new brand with new buzz was needed to maximize market potential.

But why not simply take an existing hearing aid like the Oticon More at the time and rebadge it with the Philips name? That’s what Phonak did with their flagship model, selling it as a “Kirkland” to disguise what it was and thereby protect the private audiologists. And it’s what Signia does with its premium model, selling it under the Rexton brand. The value of this approach is that there are no additional costs, no new R&D. They get the best of both worlds by getting the high profits from private audiologists’ sales and the high volume from Costco sales - albeit with lower profit margin. All with no new investment.

However, Demant/Oticon has chosen a different path. The Philips HearLink series doesn’t seem to be a rebranding of any other hearing aid nor a Knick off of an existing hearing aid. Out of the blue, the new “Philips” hearing aid appeared on the market in 2019 after a preliminary announcement of the Demant/Philips “partnership” (licensing agreement) in 2018. This was not like the days when Demant bought Bernafon, for example, with an existing concept, an existing technology, and an in place R&D team. Instead, first there was nothing and then there was a Philips hearing system fully formed. Something out of nothing.

We know that nothing works that way. We know that Demant invested the cost of R&D to develop, test, and bring to market these new hearing aids. So my question of those who understand this industry better than I do . . , Why? Why the extra cost for a product that would have a low profit margin in the Costco market place? Why not simply rebrand what they already have at no additional cost? Were they simply trying to protect the integrity of the Oticon product line that they sell through private audiologists? Even if that was their reasoning, people have and will continue to speculate that it’s just an Oticon More/Real knock off regardless. One Costco HCP told me recently that the HearLink is just a Bernafon with a new name. So, there you have the rumor mill which runs on its own energy.

On a slow day, I’m just trying to gin up some conversation. So any thoughts?

Rexton BiCore R-Li T just purchased by friend at Costco
#2

I’m just a user and no HA industry analyst or anything like that. But since you asked, I’ll proffer my guess. I’m guessing that because William Demant owns 3 different HA companies under their belt (Oticon, Sonic, Bernafon), they’re in a different position than Phonak or Signia because they’re not a single HA company. So I’m guessing that perhaps the 3-company environment fosters more technology incubation than a single company environment, it’s possible that perhaps there’s some cross collaboration effort between the companies that resulted in a new core technology that becomes a marketable and sellable product all on its own legs. Even without a collaboration between companies, it’s also possible that in Oticon’s effort to develop its DNN version of the More and Real, maybe they started out focusing on doing AI development with a focus on speech in noise, and it became a viable product, but maybe not suitable enough to be consistent with their open paradigm, so they pushed ahead for a DNN approach that’s more synergistic with their open paradigm compared to a less “open” AI focused on speech in noise exclusively like what they pushed out on the Philips.

But because it’s still a good enough and viable enough product line on its own that’s marketable and saleable, so instead of starting to cause confusion by selling a different core technology under the Oticon name, it makes more sense to license it to Philips to sell for them through the Philips network of sale points. This way they don’t need to rebrand the Oticon products and therefore cannibalize their own premium brand for no reason. It’s apparent in William Demant’s marketing that the Oticon brand is their prized flag ship brand that they want to maintain intact, while the Bernafon and Sonic are the smaller sister brands that they can marry one off to Costco to take on the Costco name.

I’m sure that if, at some point, the Oticon brand sale starts to flail badly, then maybe William Demant would be more keen to consider doing a rebrand on it. But if it’s selling well, they would not have any incentive to rebrand for market expansion because they already have plenty of other brands that can ensnare that market expansion for them already.

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#3

So what makes you think Phillips is not a rebranded model from William Demant, hearlink it’s not made by Phillips everything is supplied by William Demant, so what is it, could be sonic, looks like the same software or a Bernafon, but Phillips don’t “make or develop” hearing aids, they did many moons ago, but this is just Phillips dipping their toes into a multi million dollar market without a big outlay, lots of companies doing this, so nothing special.

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#4

Market share and positioning.

Audi, VW, Seat, Skoda……

Common platforms, common parts, different badges.

Just different slices of the pizza.

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#5

Volusiano, your explanation makes complete sense. I’ll just note that Signia is part of W/S Audiology, which includes Widex, Rexton, and some other smaller brands. If your speculation is correct, then Oticon/Demant has created a whole new subsidiary, which they’ve spun off from their existing operations. This is different than buying an intact company as they did when they acquired Bernafon. In the case of Philips HearLink, all they’ve bought is the name.

#6

Tenkan, I don’t think that HearLink is a rebranded model from Demant because there’s no indication that Sonic is using AI and because Bernafon has its own unique approach which emphasizes a focus on phonemes and which has evolved into their current hybrid model. Neither sounds like what HearLink is doing.

#7

@Um_bongo, the analogy to those car companies makes sense if Demant were trying to have HearLink compete in the open market as those car companies do. But it’s not. Philips HearLink was released for the purpose of being sold by Costco with its capped pricing structure. That’s a lot of money to invest in R&D to develop a product which will be limited to a low profit margin distribution channel. It makes sense when you’re simply rebranding an existing product and there’s no new cost or investment. This is the very point that confuses me. Why take on the added expense for limited ROI?

And do they have common platforms? The early literature 4-5 years ago indicated that HearLink would be using the Velox platform. Are they still doing that? I don’t know. I haven’t heard any mention of it since the 9010. Also, the early specs for the HearLink 9010 listed something called “phoneme focus”, which sounds like Bernafon, but no mention of that since then.

#8

If the corporate code base is organized so as to facilitate reuse, and if HearLink has no unique leading-edge features, then this cost might be less than one would think.

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#9

Just looking from the software perspective, the KS10 from Costco which is a rebranded Phonak Paradise (? I hope I remember right) can be used with the Paradise programming software right out of the box, right? That’s what I recall reading from the DIY forum, but if I’m wrong here, someone feel free to correct me. That’s obviously a rebrand right there because even the software programming is the same. On that basis, the Philips HearLink brand uses its own programming software called the Philips HearSuite, which is different than the Oticon Genie 2 or the Sonic ExpressFit Pro or the Bernafon Oasis.

In terms of accessories, the Philips Audio Link (intermediary BT streaming device) looks exactly like the Oticon ConnectClip, but from what I read on this forum, they’re not interchangeable, meaning that you can’t use the Audio Clip with an Oticon aid and vice versa, use the Philips 9030 or 9040 with the Oticon ConnectClip. Interestingly enough, the Philips Charger Plus (with the built-in rechargeable lithium-ion battery) doesn’t look exactly like the Oticon SmartCharger.

If you read the marketing brochures or technical whitepaper between the Oticon, Sonic, Bernafon and Philips, their core technology descriptions don’t seem to be the same, while many of their peripheral technologies (like frequency lowering, sudden sound stabilizer, wind handling, feedback optimizer) seem to correspond on an almost 1 to 1 basis.

So those observations would lead one to believe that the Philips HearLink is not a rebrand of the Sonic or Bernafon or Oticon aids. Instead, it looks like William Demant is working with Philips to create their own hearing aid brand that’s not a rebrand of something else.

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#10

Yes it’s right that Phonak target can be used with KS models, it was hidden until you made connection.
But the software for hearlink is very similar to whats offered by sonic and the App is very similar as well, they even look like a sonic, Bernafon ete from William Demant, I donno but I think hearlink is definitely from the parts bin and not a true model from Phillips, I think if Phillips were to release their own respective version it wouldn’t be like anything else, plus develop own software and App.

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#11

Yeah but they have the exact same chip/circuit, William Demant just defeated them and then flashes a new firmware “for” Phillips, Phillips don’t do anything but the marketing fluff, there’s nothing in there that Phillips “make” or develop it’s all from William Demant parts bin.

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#12

Yeah, they didn’t do any of that stuff.

They did the R&D on the high end devices, the Phillips product is a method of creating another wedge of the market at the budget end without compromising their higher brand integrity. The fact that it’s controlled by Costco works even better, they don’t need to run it indefinitely, but will shift a load of product that will make the IC fabrication more economical.

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#13

Okay, if they didn’t do R&D, how did they bring this product to market. I get that they their heaviest R&D was on their top of the line products, More & then Real. But the HearLink is not one of them, so there still have to be design costs at a minimum.

#14

You don’t seem to understand ’badge engineering’.

This Phillips HA uses the Bernafon shell-set and otherwise standard DeMant bits.

The ’Phillips’ front end you see, is just a bit of lasering on the shell, minor tweaks to put a ‘skin’ over programming and the app.

It’s more integrated than the VAG range; where at least they bother to redesign the outer bodies of the cars for each manufacturer.

Probably the only real leg work was the type approval by the FDA, but there won’t be any objection to that; as the submission will simply reference the More (or whichever legacy platform they’re putting out). They’d also have in-field performance data to sit with the application, so I’d imagine there’s no extra studies needed to confirm to the FDA that it was a legit product.

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#15

You’re right. I don’t understand badge engineering. If I’m understanding what you’re saying, they just threw together a bit of this and a bit of that and that it didn’t require much to accomplish it. If so, they did one heck of a job because people rave about the Philips HearLink hearing aids,

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#16

Well yes this is because all the hard work was done by WD, they are already proven technology inside the Hearlink

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#17

All this speculation about positioning and technology sharing is interesting. I will probably never try Oticon because my needs are very well met by Philips, Costco will continue to evaluate and sell the best HAs to meet most needs at lower prices. Also, with the entry of OTC brands (e.g. Sony, Bose, etc.) I think we will see improved HAs and possibly lower costs.

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#18

Sorry, but what is WD?

#19

William Demant, I was being lazy with this ; )

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#20

Oh, thanks.

So are we saying that WD has essentially taken “spare parts” from their other hearing aid companies and pieced them together to come up with a new hearing which offers many people superb results - all with minimal additional cost?