How a Pennsylvania company makes the sweet sounds of innovation - Ensoniq Corp

Nation's Business, Dec, 1991 by Sharon Nelton

It's good thing Robert J. Yannes is not a good musician and Albert J. Charpentier has lost a bit of his hearing. Because of their limitations, they and David B. "Bruce" Crockett, founders of Ensoniq Corp., a Malvern, Pa., company, have introduced sonic technology that is a boon to music lovers and to the hearing-impaired. And they've only just begun.

The three engineers, who developed the Commodore 64 home computer, left Commodore Business Machines in 1982 to start a competing company. But they had barely launched their new venture when, Crockett says, "the first home computers went through their zenith and crashed and burned." With the market for their planned computer so much weaker than they had expected, they were forced to think in terms of other products.

It was Yannes, now 34, who nudged them into electronic keyboards. He is an amateur keyboard player but, he says, not a good one. "I was looking for something that would allow a person of very limited musical talent to make music," he says. While the synthesizers then available could produce a wide range of sounds, they were expensive. Yannes, who had designed the sound chip for the Commondore 64, thought Ensoniq could advance the technology and bring down prices.

By 1985, they had introduced their first product, a "sampling" keyboard called the Mirage. While synthesizers mimic acoustic instruments, samplers are computers designed to record andd manipulate sounds--modifying your own voice so that you sound like a chorus, for example, or creating the sound of an entire orchestra. And you can store your creation on a disk.

Until Ensoniq came along, comparable samplers cost musicians $8,000 or more. The Mirage's price tag was $1,695. "Overnight, in the musician's world, the keyboard world, we were a known commodity," says Crockett, 50, Ensoniq's president.

By entering the market at such a low price, Ensoniq took such competitors as E-mu Systems, Yamaha, and Roland by surprise. By 1986 it was showing a profit of $2 million on $22.6 million in sales. The company now makes a variety of keyboards priced from $995 to $2,995.

Ensoniq's founders view it not as a music company but as a technology company--it custom-designs microchips. But Crockett says it was more than innovative technology that brought the Mirage's price down: "It was our mind-set." He and his partners eliminated features they felt customers didn't really want, and they used their technological expertise to make the other features cost less.

Mind-set enabled Ensoniq to make another innovative leap when Al Charpentier discovered his hearing loss. While fine-tuning one of the company's instruments one day, and engineer called a noise to Charpentier's attention. Unable to hear it, Charpentier thought the engineer was kidding--until the volume was turned up enough that Charpentier could hear it too.

A hearing test confirmed a loss in the high-frequency range. But when Charpentier, who is now 39, learned that the hearing aids available couldn't pick up and amplify the particular sounds he was missing, he saw the opportunity for a new application of Ensoniq's technology.

Two years ago, Ensoniq introduced the Sound Selector, a computer-programmable hearing aid that can be more precisely tailored to a patient's hearing loss than other hearing devices, amplifying tones the patient wants to hear without boosting background noise. The Sound Selector is based on a chip that functions like a sophisticated stereo system's graphic equalizer, creating more balanced sound by adjusting it among 13 frequency bands--compared with two or three frequencies in most other hearing aids.

Now worn by about 4,000 people, the Sound Selector put Ensoniq in the vanguard of the hearing-aid industry. But at a price. "We ended up putting about $4 million into it," says Crockett, "and I gottal tell you, it just about broke the company, because it took a lot more time, a lot more effort, and one hell of a lot more money than we ever suspected it would."

After what Crockett describes as "two years of very, very tough times," Ensoniq is bouncing back, expecting sales of $35 million for the fiscal year ending Jan. 31, 1992--up from $23 million the previous year. It is shipping its products to nearly 30 countries and recently signed an agreement to produce the electronic assemblies for Baldwin Piano & Organ Co.'s new digital grand pianos.

Ensoniq is also poised to take advantage of new opportunities. As computer and game companies begin to expand the audio capabilities of their products, Ensoniq's new Semiconductor Products Group can supply the technology for all kinds of top-quality sound. And, again, it expects to beat its competitors on price.

Instead of trying to find untapped market niches, as many entrepreneurial companies do, Ensoniq goes after existing markets where technology is underutilized. That strategy is likely to mean less growth--but safer growth--than might be achieved if Ensoniq went into untapped markets, says Charpentier. He and his partners would be happy with sales of $100 million within five years.