Elite British hi-fi companies like Arcam have long been the preserve of big-spending audio- and video-philes like our own Peter Jackson. But now the firm is about to launch a must-have portable speaker system for iPod, iPhone and iPad owners, reports Charles Arthur.
The exterior of Arcam's office, on an industrial park near Cambridge, isn't particularly striking; it's what goes on inside that makes it special. In that way, the British hi-fi maker is just like the equipment it produces: for years, it has been known for making hi-fi separates, usually in brushed aluminium, which command a premium price for their remarkable sound, if not their looks.
But now Charlie Brennan, Arcam's managing director, who led a management buyout five years ago from the founders of the 38-year-old company, thinks that is about to change. The key is the company's latest product, which began shipping this month. The "rCube" is a black iPod boombox - though that word doesn't do it justice; the sound quality is truly astonishing, and What Hi-Fi? magazine will next week crown it the best in class, outdoing pricier products and better-known names such as America's Bose.
"Before, I've told friends about things we're doing and they've been 'yeah, yeah'. This is the first time they've been saying to me 'I want to get one.' That hasn't happened to us before," says the Dubliner.
He shows the cube off with a salesman's relish. First there is the remarkably good sound. Then there is the fact that you can beam your music to it from your iPod (or iPad) using a highly efficient wireless technology called Kleer, via a little dongle that can be passed around at parties.
Finally, with a flourish, he unplugs the mains lead - and the sound continues. It has a rechargeable battery that can run for up to eight hours, and an inbuilt handle, so it can be carried into the garden or another room.
The price? £500 (though it will retail here for NZ$1495) - but, as he points out: "That's no more than an iPad. It's a consumer price."
Brennan recognises the irony that, financially, record labels are on their knees, yet the amount of music people actually listen to has gone up. What frustrates him is that compressed formats such as MP3 mean sound quality is lost, and cannot be recovered. "A lot of people who would exclude themselves from "serious" hi-fi because it's all too serious are now condemned to listening through crappy devices," he says. "It's a lost generation of music lovers."
To demonstrate, we listen to the Pink Panther theme on an Arcam system, first in 128K MP3 (standard on the web), then at 256K MP3 (typical of Amazon or Apple), then in the original CD sound. In the last, you can almost hear the saxophonist licking his lips; in the others, the music sounds flatter. Most people would find that adequate, he says, because they never hear it any other way.
Yet as Andy Moore, Arcam's senior designer, points out, the original raison d'etre of MP3 compression - to save space on small-capacity hard disks - has now gone: "You can get a one-terabyte (1000 gigabyte) disk (capable of holding 1600 uncompressed CDs) for about £100. You don't have to squash your music up. Then you can hear what it actually sounds like."
In the factory downstairs, each piece of kit is assembled and tested before being sent out. That's typical in the small pool of top-end British hi-fi manufacturers, some of which date back to just after the second world war.
Just as many Formula 1 cars owe their existence to tiny British outfits, so audiophiles around the world seeking perfect sound reproduction leaf through brochures from British companies such as Bowers & Wilkins, KEF, Quad, Cambridge Audio, Linn and Naim Audio. Much of Russian president Dmitry Medvedev's now-notorious hi-fi rig was made in Britain (though none, to Brennan's chagrin, at Arcam).
The rCube, which is going on sale through distributors around the world (it should be available in New Zealand says the company's local agent), would be pricier if Brennan didn't think it was going to sell in large numbers. But he expects to make up in volume what he sacrifices in profit margin.
And Arcam could do with some of that. It managed a profit last year - £250,000 on a turnover of £7.8m - but in 2009 and 2008 lost £1.6m and £1m on turnovers of £8.1m and £10.8m. The losses forced serious staff cuts, from 80 to 45 people, though the key engineering team was retained. "We're an engineering company," Brennan says simply. "But I guess I'm pretty much the marketing team now."
Technology shifts so rapidly that small firms can fall into a financial chasm. Arcam was set up in 1972 by Cambridge undergraduates John Dawson and Brian Whitnall and has always aimed for the high end, making amplifiers and speakers using the highest-quality components (even now the engineers will listen to products prototyped with different makes of capacitor to discern differences an oscillosope cannot). But despite private equity backing, the business struggled. Brennan was brought in 13 years ago to refocus it, and in 2005 led the management buy-out and brought in its North American distributor as an investor. Even so it has struggled as technology changes have come thick and fast.
Brennan gave the firm a new focus on design and tracking trends. It has products to improve computer audio output, an iPod dock and amplifier, Blu-ray and home cinema rigs, and even a pair of "budget" (NZ$836) speakers. Among its fans are film director Peter Jackson, who owns three of its video systems.
And you can't fault its attention to detail. The rCube includes a "damped" steel developed by Toyota for its Lexus cars; its stiffness prevents distortion at high volume. Other products use radar-absorbent metal developed for stealth bombers to absorb radio frequencies that can otherwise cause subtle - but audible - interference with components.
But it's the exterior that Brennan is thinking of with the rCube. "We'll have a white version. Maybe a grey one. We can do limited versions in other colours. I'm sure we'll have someone saying they want to do a bling version, with Swarovski crystals," he says. "I'm looking forward to saying no to that."
Best of British: UK hi-fi heroes
Quad - One of the oldest names in the business: founded in 1936 and based in Huntingdon, near Cambridge. Originally famous for its speakers but now has products across the spectrum.
Tannoy - Another old name, dating from 1926. It is short for "tantalum alloy", used in its first products. Based in Coatbridge, Lanarkshire, it makes speakers that are a reference point for many studios.
KEF - Well-known for its speakers, founded in 1961 and based in Maidstone, southeast England.
Meridian Audio - Founded 1977 by Bob Stuart and Allen Boothroyd to make loudspeakers but branched into CD and other players. Bought in the 1990s by Britain's KEF, then by a Hong Kong company but then repurchased; now British-owned again.
Bowers & Wilkins - Founded in 1966. Most notable for its Nautilus speakers, which look like a cross between a tuba and an alien, and its Zeppelin iPod dock.
Linn - Based in Glasgow, set up in 1973 and famous initially for its turntables. Had to cut a third of its staff in 2007.
-TimeOut / ObserverBy Charles Arthur