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Indy Audio Labs wiring for relaunch of high-end home theater brands

September 23, 2009

Two former Klipsch Group engineers plan to return to the market a brand of amplifiers famous among audio enthusiasts.

Indy Audio Labs, owned by Rick Santiago and Ted Moore, bought the Aragon and Acurus brands of amps, pre-amps and sound processors from Klipsch in April for an undisclosed price. Now they’re trying to arrange for manufacturing and meet a planned second-quarter 2010 launch.

Klipsch bought the lines in 2001 from Mondial Designs Ltd., of Dobbs Ferry, N.Y. But responding to changing trends in the market and a decision to refocus its core loudspeaker business, Klipsch discontinued production of the Aragon/Acurus lines in 2005.

Beyond delivering high-performance audio to multi-room audio-video and home theater setups, Santiago and Moore aim to make the line of amps and processors a platform to connect seamlessly with new digital media devices, such as Blu-Ray players, iPods or networked media servers. Santiago, who formerly worked on audio systems at Chicago-based Shure Inc., focused on applications of new digital media devices while at Klipsch.

“High-end audio-video has become more affordable in recent years, but we’re in the midst of a digital media revolution,” Santiago said.

Indy Audio Labs also aims to carve a niche in ultra-intuitive operation. Many increasingly complex audio devices now require a user to know too much about the device’s architecture. That’s something many baby boomers who tend to buy these products have diminishing patience for as they age.

“We actually want the equipment to be able to start to learn what the user’s [expectation] is. The equipment should be smart,” Santiago said.

Today’s audiophile market has hundreds of brands catering to boomers, who once drove the success of high-end brands like Aragon and Adcom, noted Jerry Del Colliano, publisher of Beverly Hills-based HomeTheaterReview.com.

“Those same customers already have top-performing AV systems. So Acurus and Aragon will need to tap into the 2-million-strong iPod-owning audience to show them why they need better AV equipment than you can [get] from mainstream electronics companies,” Del Colliano said.

The key to the brands’ success, he added, “will be if they can create consumer demand. The days of an audiophile company building a better mousetrap were over long ago. The most successful new brands bring millions of dollars to the table to create consumer demand.

Indy Audio Labs has cobbled together funding mostly from friends and family to this point, Santiago said. But he’s also embarked on a campaign to find seed funding, with a goal of at least $600,000. One thing going for the upstart company is that next year it will have a product to bring to market to generate revenue almost immediately—tweaked versions of the last Aragon and Acurus lines.

“A technology doesn’t have to be brand new to be good,” he added.

Santiago, who also is a saxophone musician, said the company will not sell into mainstream retail channels but rather specialty audio firms and to home theater installers.

“Brick-and-mortar dealers may or may not add the line, which is why many lines looking to capture market share have gone to selling directly to the consumer,” said HomeTheaterReview’s Del Colliano.

Klipsch had been manufacturing the units in California. Santiago and Moore said they’d like to build the units in Indiana, if possible.

Now, the company is based out of the founders’ homes. Indy Audio recently became an affiliate of the new Purdue Research Park at Ameriplex, just south of Indianapolis International Airport.  As the company grows, it could become a tenant of that facility.

Consumer demand for higher-end audio devices has been challenged. Sales of audio receivers costing $800 and up have fallen 37 percent in the first half of this year versus the same time last year, according to the Consumer Electronics Association. Sales of stand-alone amplifiers are off about 75 percent, said the Arlington, Va.-based industry group.

Largely, “only the tried-and-true enthusiasts are primarily the ones that are buying—either that or the super-wealthy,” said CEA analyst Steve Koenig.

However, Koenig said consumer wallets are predicted to loosen the middle of next year, about the same time Indy Audio plans to launch the Aragon and Acurus lines.

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