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The Swiss Audio Juggernaut

The Swiss Audio Juggernaut

TAS has never done an in-depth examination of a geographic region that figures prominently in the world of audio, but it’s about time. America is fascinating for its entrepreneurial spirit and a business ecosystem that makes it easy for those entrepreneurs to pursue their visions. Japan takes advantage of its manufacturing prowess and synergistic inter-relationships. China, of course, is revolutionizing audio by dramatically reducing the cost of quality. All of these regions are worth exploring at greater length, but for our first feature on an audio region, we chose Switzerland.

Why examine Switzerland? For one thing, the country has a habit of hitting it out of the park in any industry it pursues. It has done this for watches, chocolate, and banking, among others. The country has long harbored a small, quiet audio industry, but recently it has turned into something of an audio Mecca, with over 100 companies turning out primarily high-end goods. That’s a lot of audio energy concentrated in a country you can drive through in two-and-a-half hours.

Switzerland’s cluster of audio activity is not only intense; it’s also pedigreed. Those hundred companies include veterans like Thorens, which was founded in the late 1800s, stalwarts such as Piega and Weiss Engineering, and brash newcomers like Soulution and CH Precision. Based on the results we at TAS have recently heard at shows and written about in these pages, there is little doubt the Swiss are doing it again: carving a flourishing niche in a premium category with world-class products.

The Swiss Audio Juggernaut

The question is: just how are they doing it? Compared to the U.S., Japan, or China, the secret to Switzerland’s success is not obvious. It is a tiny country with limited natural resources and virtually no domestic market to support its industries. Yet the world universally recognizes “Swiss quality” and “Swiss precision” as ultimate accolades. How has this come to pass, and how has it translated to high-end audio? Indeed, why go into audio at all?

To find out, I ventured across the German-Swiss border immediately following the Munich High End Show. As the last oompahs faded, I boarded a TGV to Zurich, rented a car, and commenced a week-long tour that included four companies, a factory set at the foot of a famous ski slope, and a dealer in the middle of a cow pasture. I wish I could have visited many more than four Swiss audio icons and newcomers, but time and logistics relegated me to just two of each.

The icons were Weiss Engineering, the highly respected maker of professional-grade digital gear, and Nagra, known for its unique design aesthetic and skill at miniaturization. The newcomers were Soulution, the electronics builder familiar to any who read these pages, and CH Precision, another electronics firm that is less familiar in the States but well-established in Asia.

I realize, as will anyone perusing the above list, that I somehow neglected to include a single turntable or speaker company. That was not intentional; it just worked out that way.  Nonetheless the cross-section of new and old hands I visited proved invaluable to my search for insights into what has given rise to this new force in audio. Those insights did not come all at once. Rather, they came piece by piece, conversation by conversation. It wasn’t until the end of the week that I felt I had a firm grasp on the unique nature of the Swiss audio industry.

 

Spin(-off) City
If there is a small town in Switzerland that isn’t charming, I haven’t seen it. Weiss Engineering’s home base of Ulster is no exception. The cobblestone streets are adorned with fountains and flowers. Daniel Weiss and I enjoyed a typically simple, typically expensive lunch at one of the many cafes. This was my first exposure to the country’s stomach-wrenchingly high cost of living.

A short walk beyond the city’s central area leads to what the Swiss consider an industrial zone. No smokestacks here, though; instead, there are paved streets filled with non-descript buildings that house both offices and assembly areas. Within one such building, Daniel Weiss has been turning out simple, elegant, high-performance digital products since 1984.

How Weiss came to found his own company is emblematic of the Brownian motion of the Swiss audio industry. Prior to striking out on his own, Daniel worked at Studer, the legendary builder of professional tape machines. He was on the team charged with bringing Studer into the digital era. Disenchanted with certain management decisions, Daniel left and founded his own company—one of many Studer off-shoots. There he built a pro-market digital mastering system that comprised a sprawling seventy modules. Weiss soon discovered that his pro customers and audiophiles had much in common, and that the same technology could be sold to both. This led to Weiss’ first DAC in 2000, followed quickly by a series of lauded DACs that became more and more consumer-oriented.

The founding of Weiss Engineering could serve as a blueprint for virtually every Swiss audio company. CH Precision is another perfect example of the Swiss penchant for spin-offs. Co-founder Florian Cossy was hired by Goldmund upon his graduation from the prestigious EPF University in Lausanne. He spent four years at Goldmund, working his way up to amplifier designer. Goldmund’s original designers, who had themselves been contracted from a company called Swiss Physics, designed the original products and initiated the concept of wide bandwidths and high slew rates.

The Swiss Audio Juggernaut

Florian was content to follow the Goldmund design blueprint—but only so far. When he proposed changes that he felt would have resulted in greater stability and more consistent performance, Goldmund chief Michel Reverchon balked. In the same time frame, Florian’s longtime friend Thierry Heeb was encountering his own frustrations working in Goldmund’s digital arm. The two commiserated, ultimately deciding to leave. They started Anagram, which became renowned for its digital advances. Finally, in 2005, after having split Anagram into three parts and, yes, spinning them off, the two were ready to form CH Precision.

As a result of these rampant spin-offs, the Swiss audio industry is unusually close-knit. That facilitates cross-pollination, such as Florian being invited to design Soulution’s CD player. But the primary benefit is that it expedites the evolutionary process. When a company is moving too slowly for creative talent, the talent forms its own spin-off that takes the best of went before and works hard to improve upon it. For instance, Florian liberally borrowed Goldmund’s pioneering work in “mechanical grounding,” even while improving upon the basic circuitry.

Of course, none of this would be possible if it weren’t a straightforward matter to create a new Swiss company. But the country is well aware of this, and has gone to some lengths to make that process quick and painless. “Due to the very low bureaucracy,” Florian explained, “you can start a new venture literally in hours. In France, it takes months.” Furthermore, Switzerland offers its citizens a generous safety net, off-setting entrepreneurial fears about their employees’ fate should the new company go under. Finally, startups need not worry about shouldering health care costs, as health insurance is provided by a combination of public and private means, but never through employers.

All told, Switzerland has created an atmosphere conducive to spin-offs and startups, and the audio industry is taking full advantage of it.

 

The Swiss Mind
Ask Daniel Weiss why there are so many Swiss audio companies and his answer is immediate: “Because there are so many watchmakers.” The Swiss fascination with—and prowess at—detailed work is recognized worldwide. But how does this apply to audio? “The two industries share the same need for precision, and require the same love for detail,” Daniel maintains. Later in the week, Florian echoed the identical sentiment. “Precision manufacturing is a tradition in Switzerland. It started with watches.”

I could see where they were coming from with respect to turntables and tape decks. Those components require a great deal of precise mechanical engineering. Indeed, legend has it that Willi Studer was so obsessed with mechanical detail, he made his own screws. Yet I still failed to see the connection between watches and audio electronics. Daniel explained: “The field of audio electronics is not so detailed in mechanical terms; but it is in electrical terms. As with watches, you have to have a reason for every part.”

I observed this obsession with detail in every one of my visits. Soulution spent literally years perfecting a new, powerful-yet-compact power supply for its amplifier line. Nagra still winds its own coils, insisting it would be impossible to duplicate externally the expertise they have developed internally.

A penchant for detail is not the only thing that animates Swiss audio designers. Although every designer I met loves music, scientific challenges are their creative fuel. Weiss proudly proclaims that his new designs are justified strictly by improved measurements. “In digital,” he say, “if it measures well, it will sound good.” Those measurements include timing, which explains why the company’s original DAC 1 was well ahead of its contemporaries in incorporating extensive de-jittering.

When Cyrill Hammer and his business partner Roland Mans formed Soulution, the two went about product planning in typically pragmatic Swiss fashion. They framed their challenge not in musical but in scientific terms. They decided, for example, that vacuum tubes present problems with amplifier current stability and power output, and so would be avoided. Cyrill describes their thought process as follows: “Once you decide on solid-state, you have to apply negative feedback to reap those advantages. But that can compromise sound. The only way around this is to make the feedback process as fast as possible. This is what led to a high-bandwidth, high-slew-rate, high-damping-factor design.”

As with Soulution, CH Precision’s founders made some early decisions. No op-amps. Only discrete analog. Digital would be synchronous. Jitter would not be tolerated. Although CH Precision’s circuit designs differ in significant ways from those of Soulution, both exhibit the design philosophy of extremely wide bandwidth and high slew rate that has been handed down since Goldmund days. CH Precision’s U.S. importer and lover of all things Swiss, Gideon Schwartz of Audio Arts in New York, says this consistent approach has sonic ramifications. “There is definitely a ‘Swiss sound,’” he says. “Just put different Swiss amps side by side and listen.

They are all fast, linear, and take control of the speakers.” In keeping with their focus on science in the service of art, Swiss audio products are decidedly un-showy. When I suggested to Daniel Weiss, over dinner one night, that he could elevate his visibility by producing a performance flagship with a thick aluminum chassis and a dazzling display, he was uninterested. “Actually,” he whispered conspiratorially, “steel is just as good.”

Similarly, Soulution’s Cyrill Hammer noted that “while our components are large and heavy, they are decidedly understated. There is nothing flashy about Soulution gear. Look at the small size of the logo.”

These elements of the Swiss mentality—detail, pragmatism, modesty—stand in stark contrast to the sensibilities of many American and other audio companies. The audio industries in other regions are replete with technical issues addressed with force rather than finesse, and products packaged with an eye as much to form as functionality. The Swiss approach is different but, clearly, equally valid.

 

The Institutional Advantage
Swiss audio companies have help in the form of the country’s institutions. By “institutions,” I refer to the university system and the government. Regarding the former, Zurich is home to the ETH technical university, one of the most prestigious in the world for EE degrees. There are equivalents throughout the country. Audio is a major emphasis on these campuses. Why? Because the country is investing in that industry, of course.

The Swiss academic community doesn’t just teach audio in the abstract; students get their hands dirty. Indeed, the ETH created Studer’s first mixing console, as well as its early DSP hardware and software. That’s a level of academic/industry cooperation rarely seen elsewhere. Even more conveniently for Swiss companies, the ETH mandates that every student take a six month internship within an industry of interest. Weiss Engineering, like most Swiss firms, takes advantage of this situation by offering intern positions, then hiring the graduates it especially likes. Audio is a popular choice among ETH students. As Daniel points out, “If you like music, it’s logical to get into this profession.”

The government helps, too. I’ve already mentioned the low bureaucratic hurdles to forming new ventures, which allow people and their innovative ideas to flow freely. But this is only the start of the highly favorable business environment the Swiss have cultivated. According to Florian, taxes are much lower in Switzerland than in other parts of Europe.

Further, anyone with sufficient talent and smarts can attend the highest of universities for next to nothing: about $1000 a year. Finally, there is a national program called KTI that proactively coordinates projects between industry and academia, with government-assisted financing.

Here, clearly, is another ingredient of Switzerland’s “secret sauce.” Not only does the Swiss character readily lend itself to audio, but the institutions of government and academia cooperate to ensure a steady supply of well-qualified workers in the field.

The Swiss Business Model
Cyrill Hammer, the driving force behind Soulution, took an unusual path to audio. He began his professional career as a consultant for the Swiss arm of the international Boston Consulting Group. His father, meanwhile, worked at Spemot, a diversified Swiss industrial manufacturer of, among other things, motors and appliances. Hammer Senior eventually bought Spemot, but died shortly thereafter, leaving Cyrill to take over.

What happened next illuminates why the Swiss focus on the high end of their chosen industries. Upon taking Spemot’s reins and analyzing its situation with his practiced business consultant’s eye, Cyrill realized that the firm could not survive as it was currently structured. Spemot existed in an industry characterized by extreme price sensitivity. Unfortunately, like all Swiss products, Spemot’s prices were high. Why, you might fairly ask, didn’t Cyrill simply lower them? The answer is that Swiss products are expensive not by choice, but by necessity.

Here is the Swiss price calculus: Switzerland’s cost of living is high, which means salaries must be high or no one could afford to live there, which means the cost of goods and services produced in Switzerland must include the cost of those salaries, which means prices must be high to cover those costs and make a profit. Cyrill could not have lowered Spemot’s prices and still had a viable business.

But the Swiss also know that the world will not buy their expensive products if those products do not deliver commensurately high quality. This explains why the country makes Rolex and Patek Philippe watches, not Seiko and Timex. It also explains why you won’t find the Swiss in industries that place a higher premium on price than on quality. According to Cyrill, Spemot did make better motors than its competitors, but none of their customers was willing to pay the uplift.

Cyrill had to find another industry, one that could follow the Swiss model and leverage the engineering talent he had on staff. He selected audio because he was a musician and his business partner, Roland Manz, was a long-time audiophile. Most importantly, though, was the fact that the audio industry has a segment— the high end—that is not especially price sensitive. Ultimately, Switzerland’s demography and sociology conspire to make exactly one business model work: high price, combined with high value through quality. High-end audio fits it perfectly.

 

Swiss Tradition
At thirty-one employees, Nagra was the largest company I visited by an order of magnitude. My time there included a tour of the design center, the factory, with its in-house CNC machining, the listening room, and, unique on my trip, a museum. Nagra’s long history is plain for all guests to see.

If Weiss Engineering typifies the pragmatic Swiss nature, Soulution typifies the Swiss business model, and CH Precision typifies the old boy’s network that populates Swiss startups, Nagra embodies the country’s mechanical soul and the value it places on tradition.

Stefan Kudelski founded Nagra in 1951. Along with Thorens and Studer, it was one of first Swiss audio companies. Nagra earned fame by creating a tiny portable tape recorder. Drawing on Switzerland’s reserves of watch-making expertise, the Nagra unit was revolutionarily small, allowing it to be used in new applications such as security and field recording. In the late 90s, Nagra moved into hi-fi. Recently, the company spun off—there it is again—from its owners to become a stand-alone entity.

The Swiss Audio Juggernaut

Given its start in diminutive tape machines, Nagra’s product heritage as it moved into audio was to be as small, light, and energy-efficient as possible. But this triple mandate necessarily adds complexity to products. In order to meet the challenge, Nagra became the first company in Europe to use surface-mount technology. And the intricacy of its transformers—with their multiple windings for superior phase linearity and mu-metal cores for better shielding within tight spaces—requires Nagra to wind its own. Fortunately, this comes naturally due to the experience gained from building its own tape heads.

Nagra was the last company I visited, and its CEO Mattieu Latour confirmed all that I had learned earlier, but added one additional point. He wanted to be sure I understood that the Swiss obsession with quality is not simply a matter of economic necessity—it is an inalienable tradition. “Swiss people have a high intrinsic sense of responsibility and quality. It would be impossible, for example, to ask a worker to go faster but sacrifice quality. He simply wouldn’t do it.”

Matthieu also believes geography dictates some of Switzerland’s strategy, and in describing why he unwittingly summed up the entire Swiss formula for success. “We are a small country surrounded by much larger countries, so we had to find a way to be different and somehow better.” Apparently, the Swiss have.

By Alan Taffel

I can thank my parents for introducing me to both good music and good sound at an early age. Their extensive classical music collection, played through an enviable system, continually filled our house. When I was two, my parents gave me one of those all-in-one changers, which I played to death.

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