ONKYO and Pioneer Have Quietly Merged!

【Legendary Trio of Japanese Hi-Fi】
Sansui Electric｜Legendary Trio?｜Pioneer｜Merger with ONKYO

As mentioned previously, Pioneer was somehow still managing to put out a trickle of pure audio products as of 2014, but following its withdrawal from plasma televisions in 2007, the company had been steadily scaling back, and things finally reached the point where negotiations were underway in 2014 to sell its audio, visual, and AV divisions to Funai Electric… a proper fall-from-grace, sell-off situation. There had been whispers on Twitter over the winter and spring that a certain very well-known Japanese audio manufacturer was about to pull out of pure audio altogether — could that have actually been PIONEER they were talking about?

Funai Electric, of all companies… a consumer electronics maker focused mainly on exports, best known for VHS video decks, whose core business is OEM supply of DVD players and recorders — as an audiovisual brand, sorry to say, but the image is firmly rock-bottom, a third-rate name. (Note: as an OEM manufacturer, it is in fact a major company. This is purely about its standing and brand image among consumers in the Japanese domestic market.) Naturally, I was quite ready to declare proudly that there isn’t a single Funai product in my home — being the home electronics obsessive that I am — but when I looked more carefully, there was one after all: [On the performance of the DX Antenna US100A FM/terrestrial digital antenna.] DX Antenna is now a subsidiary of Funai, so in a sense one could call it a Funai product. Anyway, this news broke on 15 May 2014, with negotiations reportedly aiming for a conclusion by around July — but then when the lid was finally lifted, it turned out that…

ONKYO and Pioneer merge… into a joint operation

In the end, a business alliance with Onkyo was confirmed on 24 June! Such a sudden turn of events — I was so astonished I couldn’t close my mouth.

It takes the form of a capital and business alliance, but in practice amounts to a transfer of the business through a share sale — still, ONKYO has always been a commercially astute company, and even through the prolonged recession it kept rolling out new consumer products without a break — covering everything from portables to pure audio, handling design and production in-house throughout, and in 2012 entering into a capital and business alliance with TEAC/TASCAM, each taking a 10% stake in the other — there is a certain sense of timing and momentum to the way they keep up with the latest business trends.

The Pioneer brand has had the technical ability but has somehow always lacked that decisive edge — its sales and PR instincts have been a little off, and it has been languishing for quite some time. Perhaps this will be the moment it finally revives? I find myself harbouring that faint hope. The one thing that does give me slight pause is that 51% of the stake is held by a Hong Kong investment fund, Baring Private Equity Asia. (Are those Hong Kong and China-connected types quite above board? Are they really? I do wonder.)

Even so, what this essentially amounts to is Onkyo absorbing Pioneer‘s entire AV audiovisual business wholesale — and in an earlier era one might have expected the giant Pioneer to swallow up a mid-tier ONKYO, not the other way around, yet here we are with Onkyo coming to Pioneer’s rescue. Times do change, don’t they. Incidentally, the “Pioneer” brand name is apparently staying as it is. The arrangement would seem to follow the model of Denon and Marantz (under D&M Holdings) and JVC/KENWOOD, where management is integrated but design and development operations are kept clearly separate. (I do hope the Exclusive brand and the separately incorporated TAD are also left intact.)

What kind of company is ONKYO?

Onkyo, the company absorbing Pioneer’s operations, is a mid-sized Osaka-based manufacturer that has traditionally steered clear of expensive high-end audio. It has always maintained a solid lineup of pure audio equipment at popular price points from top to bottom, and alongside that has kept a full range of mini systems and home theatre products stocked in high-street electronics shops — a mid-tier brand that has steadily and quietly built a certain level of recognition and market share not only among enthusiasts, but among the general public as well.

In pure audio, Onkyo was among the early adopters working to put digital amplifiers into practical use, and has continued to produce integrated amplifiers, separates, SACD/CD players, and its own in-house speaker designs — something increasingly rare now that foreign competition has thinned the field. (Regrettably, domestic factory production was discontinued in 2012.) On the other hand, Onkyo has always been weak on the visual side — televisions, video recorders, that sort of thing — and has largely stayed out of that territory, making it a truly pure audio company in the literal sense. One could say it has built its reputation not on the prestige of a luxury brand image, but on strong value for money, practical sound quality, and a knack for reading what users actually want without becoming overly niche.

Pioneer was a major company that played a significant role in Japan’s audiovisual industry

PIONEER, by contrast, was a large-scale, comprehensive AV equipment manufacturer leading the world in both audio and visual products — as typified by the LaserDisc format, whose standards it led. After posting substantial losses in 2008 it withdrew from the unprofitable plasma television business, and its prized DVD player/recorder division ground to a halt on new product development and has been quietly fading away. The PC optical drive business, which once dominated the market, was merged with Sharp. Pure audio ticked along without distinction. The only real remaining source of revenue was the Carrozzeria-branded car audio business — a situation that rather symbolises the prolonged downturn, with one retreat following another. It may be the archetypal case of commercial acumen and technical quality moving in opposite directions.

Pioneer’s withdrawal from the plasma television business was, I think, a tremendous loss for visual technology and for consumers who care about picture quality. I still use a Pioneer PureVision plasma television from seven years ago, and I have yet to encounter a consumer LCD display in any shop that surpasses the picture quality of the higher-end KURO models that sat above it… A flat, featureless 4K panel is no match for the sheer realism of a KURO.

ONKYO and Pioneer compared through the eyes of a Hi-Fi enthusiast

Comparing ONKYO and PIONEER side by side like this, even though both are audio manufacturers, the areas each brand has excelled in and the customers they have attracted are actually not all that similar. PIONEER was a company that carried everything from professional equipment and the high-end TAD loudspeakers and Exclusive-branded flagship products at the top, right down through a complete lineup of mid- and lower-priced equipment. And in AV amplifiers and home theatre, it consistently led the industry across the full price range from budget to premium. TAD and Exclusive have a weighty, imposing character — the sort of thing that looks at home in a top executive’s office — the kind of presence that, frankly, makes me want to take a step back.

ONKYO, on the other hand, is a company that has its strengths in mini systems through to high-quality compact systems, entry- to mid-priced pure audio, and compact bookshelf loudspeakers at accessible prices. In the mini system segment — from low-cost all-in-ones to premium compact systems — ONKYO I think is overwhelmingly strong, and in recent years Onkyo has also been more adept at developing its pure audio business. As for loudspeakers, the lineups look at first glance as though they overlap, but when you look carefully they don’t overlap nearly as much as you might expect.

What remains of PIONEER’s pure audio loudspeaker lineup — setting aside the high-end TAD, which doesn’t overlap with Onkyo’s products — amounts to the Pure Malt speakers (beloved of the whisky-addled, though I jest) released in 2006, the S-A4SPT and S-PM300, and the hi-res compatible S-CN301-LR launched in 2012, which could be thought of as an entry-level TAD of sorts — barely clinging on in one corner. Everything else in the lineup is essentially home theatre speakers. And yet, searching through it all, they did at least have speakers spanning from bottom to top. Even so, as someone who considers himself an audio enthusiast, I find their presence somehow easy to overlook — which is quite the opposite of the flashy, attention-grabbing way that Carrozzeria (which I’m currently using for car audio) presents itself.

Pioneer has a longer history in headphones and earphones, but the high-margin DJ headphone business is apparently not being transferred to ONKYO. Onkyo is relatively new to portable audio, but from 2013 it has had the ONKYO HF Player for iOS (which I use myself), and has been steadily pushing into the space with high-quality headphones and earphones aimed at audio enthusiasts, and the portable headphone amplifier DAC-HA200 (TEAC HA-P50SE), their first co-developed product with TEAC. 《These two models, similar as they look, differ in the fine-tuning of details such as op-amps, and have distinctly different sonic characters.》 The ONKYO/TEAC desktop compact audio and portable audio products of recent years are all ambitious releases whose quality exceeds their price, so do give them a listen if you get the chance.

～ Summary ～

In the end, it seems Pioneer is also considering divesting its prized DJ equipment division. When I think about the people working there and what lies ahead for them, it is not something I can welcome without reservation — but speaking as the author of this blog, two brands that have given me so much in the world of home Hi-Fi audio and visual equipment, ONKYO and PIONEER, are now coming together, and I find myself wanting to view that with cautious optimism — nervous excitement, you might say, rather than dread.

【Legendary Trio of Japanese Hi-Fi】
Sansui Electric｜Legendary Trio?｜Pioneer｜Merger with ONKYO