Oticon & the Business of Hearing Aids

Just to be clear, the “we” here would not include me. Others may not agree with me, but I think the core technology licensed to Philips is different and unique from the cores used by Oticon and Sonic and Bernafon. To me, it’s ridiculous to make an assumption that you would want to scrap together bits and pieces and spare parts from 3 other HA companies to brand it into another major brand altogether. Not unless you have something substantially different that is competitive enough. Otherwise, it’s not going to hold interest in users. Afterall, we should give users the benefit of the doubt that they’re not that dumb when they determine what the differences are.

If William Demant wants to expand their market share to the Costco crowd, they’ve already done so for many years with Bernafon, they don’t need to add Philips to the fray late in the game like this. But apparently the Bernafon core technology is not successful enough with the Costco crowd compared to their rebranded Costco competition like Phonak and Signia, so they needed to introduce a more effective core technology than the Bernafon has in order to up their game and snap more of the Costco market share.

Why would they just take scraps and pieces and spare parts from Bernafon and others to put together for the Philips brand if the original genuine Bernafon brand has not been as successful at Costco in the first place??? It’s easy to speculate that the Philips brand is a Frankenstein of the other 3 brands, but personally I think that’d be a dumb thing for WD to do if the Bernafon Cinderella couldn’t sell and you’d try to replace it with Frankenstein. If the Philips brand is really the Frankenstein of the Bernafon Cinderella, then why does Frankenstein seem to be selling much more successfully than Bernafon Cinderella? All we hear lately on this forum is Costco Philips this, Costco Philips that. When have you seen similar doting attention on this forum for Bernafon this and Bernafon that?

It’s very easy to make that generalization (that Philips has nothing new and unique to offer) because all 3 brands do share a lot of the peripheral technologies (like frequency lowering, tinnitus, spatial processing, sudden sound and wind noise handling, etc), and especially also a lot of the hardware accessories, like from the look and feel of the physical hearing aid shells, to the streaming device, TV adapter, dome fittings, charger and what-else-have-you. But it’s not difficult to fathom that a 3-HA company conglomerate like WD can foster more technology incubation via inter R&D cross-collaboration to come up with newer and more unique core technologies than just the 3 flagship cores of the 3 companies.

For a previous comment that the Sonic XPressFit Pro and the Philips HearSuite softwares look just the same, I beg to differ. Below are the snapshots of the core page of those 2 software programs. The first 2 screenshots is the core page for the Sonic XPressFit Pro. It shows their core technology features like Speech Variable Processing and Smart Compress and SPiN. The third screenshot shows the latest Captivate model from Sonic, and its listed feature is still using the same features as with the previous Enchant models.

The fourth screenshot is the core page of the Philips HearSuite software. You can see its SoundMap Noise Control feature for the Noise Reduction AI, and other follow through features like the Speech Clarifier in there as well. It’s not obvious to me at all that Speech Variable Processing & Smart Compress and SPiN = SoundMap Noise Control AI & Speech Clarifier.

Ive personally done an extensive review of the Sonic Enchant 100 a few years ago, granted it’s not the latest that Sonic has. And while I don’t wear the Philips HearLink aids, I’ve taken some time to read through their AI whitepaper. I personally haven’t really found any striking similarity between the old Sonic core features and the new Philips core features at all.

Yep, that’s it, but wait there’s more…

@Volusiano said:

Costco crowd, they’ve already done so for many years with Bernafon, they don’t need to add Philips to the fray late in the game like this

It’s not WD’s idea, it’s Phillips, Phillips wanted to do it, and they found a willing partner, Phillips could see that to make this viable they would need to sell through Costco, WD said no way are you gonna sell our Oticon…I mean our tech there, ok hold on we have an idea, we’ll pull Bernafon from Costco that was just a complete disaster and we’ll let you sell our/ your tech under your name…deal done.

@Volusiano said:

All we hear lately on this forum is Costco Philips this, Costco Philips that. When have you seen similar doting attention on this forum for Bernafon this and Bernafon that?

Yeah that’s the thing, it’s not a Bernafon, it’s like we’ll all 3 (Oticon, Sonic, Bernafon) all put together for Phillips, that’s why a lot of people are happy with them, it’s well proven technology being used.

@Volusiano said:

For a previous comment that the Sonic XPressFit Pro and the Philips HearSuite softwares look just the same, I beg to differ.

They are so similar that you cannot say that it’s anything but from WD, nothing from Phillips but the name.
I think the Hearlink 9010 would be more like that Sonic 100, maybe the latest 9040 is more like a More after all but defeatured so as not to “burst Oticons bubble”
The day that Phillips make their own style, and design their own respective version of a HA which is “totally different” from the rest in every way, only then can “we” all say, this is a new kid on the block.

@Volusiano said:

But it’s not difficult to fathom that a 3-HA company conglomerate like WD can foster more technology incubation via inter R&D cross-collaboration to come up with newer and more unique core technologies than just the 3 flagship cores of the 3 companies.

Just from a commercial POV, why would anyone put more/any R+D into the run-out bargain product in the range; other than to squeeze a few more dollars from the existing tooling that has already hit its break even point?

It makes no sense, especially as you’d be competing with your own leading edge technologies.

When you put out the ‘ iPhone SE’ - a version of your recent, but not necessarily latest model, you create another customer ’wedge’ while growing the overall pie by attracting customers over more income categories. That device doesn’t use ‘new’ R+D, but does pull from you existing parts bin and software, even though you might ‘skin’ it differently.

@Volusiano said:

But it’s not difficult to fathom that a 3-HA company conglomerate like WD can foster more technology incubation via inter R&D cross-collaboration to come up with newer and more unique core technologies than just the 3 flagship cores of the 3 companies.

@Um_bongo said:

Just from a commercial POV, why would anyone put more/any R+D into the run-out bargain product in the range; other than to squeeze a few more dollars from the existing tooling that has already hit its break even point?

It makes no sense, especially as you’d be competing with your own leading edge technologies.

From your commercial POV, your argument would make sense if it’s for a smaller single company with a single product line and you have limited R&D resources struggling to compete for budgets with many other things.

From my commercial POV with William Demant being a bigger hearing health care conglomerate that already spans 3 different HA companies, I can see it entire possible that in their pursuit of coming up with an AI approach for their flagship Oticon company, they came across multiple implementations of it, and they finalize the DNN for the Oticon brand. But from an engineering point of view, they might have had multiple teams trying different AI approaches out, and the AI for Speech in Noise, while not chosen as the final solution for use with their Oticon brand, has merit to branch out and become another viable product that can stand on its own → hence the decision to license it to Philips.

If you recall, they had technical talents leaving Oticon to join Whisper. Then after Whisper folded in the HA industry, there’s more news of more technical talents leaving Oticon to form yet another new startup later on. This tells me that a big HA conglomerate like WD has the wherewithal to fund more R&D projects on the side than you think they can.

And to your point of why would they be dumb enough to spend extra R&D money for another product line that would just cannibalize the overall sales of their 3 existing companies by introducing yet another new lower cost product line into the market, I would say they’re not dumb with the Philips move because:

1. They already have a by-product AI for speech in noise developed and available in their quest to get to the DNN for Oticon, so that cost is already spent. Why not capitalize on that extra by-product as another brand new product line to recover the cost for that R&D, instead of just burying it off into oblivion? They would just have to figure out a way to not have it compete with their other 3 → hence Philips came into the picture.

2.a A real rebrand like what Phonak did into the KS8, KS9 and KS10 would be a self-cannibalizing move. Yeah, you get the market share of people who only want to pay less money, but it also eats into the sales of the premium Phonak brand. The same people who might have been willing to pay the premium price to get Phonak brand aids now simply just flock to Costco for the almost exact same thing for much cheaper.

2.b But a new-brand (NOT a rebrand) like Philips does not cause most of the people who are willing to pay premium for Oticon aids to flock to Costco to buy the Philips aids, because they’re not an exact rebrand like with Phonak. So now WD has presence in and covers all levels of the market, from the premium level with Oticon to the budget level with the Philips aid. So they’re not really competing with their own leading edge technologies like you think.

2.c People who want to spend $1500 for aids will most likely not be willing to buy $5000 Oticon aids anyway in the first place. So WD scoop up these people with Philips. People who already are on Oticon aids are the type who have already spent premium money for what they perceive as premium aids in Oticon already. They’re not likely to flock to Costco to buy Philips because the Philips aids are not the exact same thing as the Oticon aids. So a new-brand and NOT a rebrand strategy helps WD manage to keep this market separation, yet be able to scoop up all the market budget levels.

Volusiano, the “we” did not include you.

@Um_bongo said:

I think you’re probably underestimating how much Oticon is regarded as the Golden Goose and possibly overestimating how important the Phillips consumer brand is within the hearing industry: it will get run out product via Costco unless DeMant decides to reposition the whole of their top-end ranges.

Can you clarify Philips “will get run out product via Costco” mean? Are you saying that they will sell so well at Costco that they will run out and won’t have enough to sell?

Or are you saying that they won’t sell well at Costco and will get run out of Costco like Bernafon was run out of Costco because they didn’t sell well?

Regardless, I agree with you that Oticon is regarded as the Golden Goose by William Demant. But the fact still remains that WD already licensed their technology to Philips. The debate here is why WD spun off another product line if they already have their Golden Goose?

Why would WD scrape up bits and pieces of spare parts to try to sell to the low end market? Just so that they can salvage a few lousy spare parts from their lower yield bins so that they can recover the spare part/lower bin costs? Whatever saving they can get from doing this binning sale will hurt and impact the sale they will lose from being able to sell more of the better bin parts at a premium price. Furthermore, I don’t think the manufacturing cost would be so high that there would be a need to scrape up lower yield binning parts to sell them to recover the mfg cost. We’re talking about non-commodity low volume production here.

I would think that the Golden Goose would be hurt more if a lower carat golden goose is released and sold, because they’d still be considered a golden goose of sort. But if WD released a silver duck (sorry I can’t think of anything more apt to call it, but I’m implying the Philips aids here, of course), people who want the golden goose would not flock in to buy a silver duck. But people who would never pay for a golden goose may settle for the silver duck.

@tenkan said:

Yep, that’s it, but wait there’s more…

It’s not WD’s idea, it’s Phillips, Phillips wanted to do it, and they found a willing partner, Phillips could see that to make this viable they would need to sell through Costco, WD said no way are you gonna sell our Oticon…I mean our tech there, ok hold on we have an idea, we’ll pull Bernafon from Costco that was just a complete disaster and we’ll let you sell our/ your tech under your name…deal done.

Help me out because I may have missed something. What’s the evidence that the initiative came from Philips and not from Demant?

@Volusiano said:

For a previous comment that the Sonic XPressFit Pro and the Philips HearSuite softwares look just the same, I beg to differ.

@tenkan said:

They are so similar that you cannot say that it’s anything but from WD, nothing from Phillips but the name.
I think the Hearlink 9010 would be more like that Sonic 100, maybe the latest 9040 is more like a More after all but defeatured so as not to “burst Oticons bubble”
The day that Phillips make their own style, and design their own respective version of a HA which is “totally different” from the rest in every way, only then can “we” all say, this is a new kid on the block.

I don’t see much to indicate that the 9040 is like the More. While they both use AI, HearLink uses it in a more limited way than the More or Real do.

Actually the recent trend at Costco, where the Philips HearLink is being sold, has not been to sell knockoffs dummied down with fewer features but to sell the full featured flagship models themselves under a different brand name, e.g. Phonak Paradise as a Kirkland KS-10 and Signia Pure as a Rexton.

But certainly what you describe has happened in the OTC market as with Sony CRE-E10 and others.

I think Oticon sharing tech with Philips is a non issue. The real issue is Philips competing with Jabra and Rexton, and future Costco offerings. Each keeps leapfrogging the others every few months by introducing better products. I’m not married to any brand and will always buy what is best for me. I really don’t believe HAs sold by audiologists are better than those sold by Costco. I think private practice audiologists are better trained than Costco providers and may be better able to make special needs adjustments, but my needs are met by Costco, where I will in future continue to consider the best of the latest HAs.

Hi @daalias, I think you will find the largest hearing aid market in the world is probably China? With a population of around 1.3 Billion, its fair to say, they would have a fairly significant HOH population… I have in the past read several articles on Chinese Hearing Care, most Cities in China have around 6 or 7 large dispensaries, they have several large hearing aid manufacturers, where they make their own home-brew hearing aids, and TBH most don’t look much different from what we buy in the west…I would imagine “The main difference”, will be price… China being China, they are excellent copiers, and intellectual property, probably doesn’t mean a lot to them, probably they only see a problem & solution, much of the West’s hearing aid manufacturing, is outsourced right in their own back yard… So it is easy for them to reverse engineer, and make their own, then call it whatever? In fact, when I think about it, all they have to do is employ the software engineers & hearing aid engineers, whom are working on the outsourcing work, and they now have an instant result, and a new line in hearing aids… I don’t think they export their aids though? So any intellectual properties acquired, will probably not be seen outside China, but their R & D is most likely at the bare minimum end, and this is no doubt reflected on the price…Cheers Kev

@kevels55 said:

It would appear Phonak/Sonova are there in China @Volusiano… IMO, The Chinese would reverse engineer anything, they have the technology… I haven’t searched out any others though, but if Phonak is there, then there will be others?

Wow, that’s interesting that Phonak has plants in China, so I’m duly corrected then.

I still disagree with your statement that the Chinese can reverse engineer “anything”. In terms of semiconductor, they don’t have the know-how and technology to build the top tier smallest geometry chips like those used in 5G telecommunication. Right now only Taiwan, the US, South Korea and Japan have the factories to manufacture the top tier chips. In order to even get there, they would also need to procure special high tech lithography machines that can only bought from ASML which is headquartered in the Netherlands. The US has made sure that China is not going to get their hands on the most advanced ASML machineries needed to manufacture the Tier 1 chips, even if they can manage to steal the designs of those chips. The Chinese has been buying Tier 1 chips from abroad to use in their 5G devices, but they’re now running out of those chips to buy because US companies are not allowed to sell them to China anymore. Taiwan and Japan have been on the US bandwagon on this, and South Korea is heading that way as well.

Sure, they can make tier 3 and maybe even tier 2 chips, but not tier 1 chips. Granted, hearing aids are probably in the tier 2 chip category so if HA mfgs like Phonak and whoever else have plants in China, they’re probably obligated by the Chinese government to share those IPs with them. China wouldn’t even have to steal anything in that case.

Maybe Phonak doesn’t mind sharing their IPs with China as long as they can tap into the Chinese HA market even if it means selling HAs there for much cheaper. I guess it’s better to sell a lot for cheaper than to sell very little for more money to the Chinese market, in terms of the economy of scale.

China definitely has the population numbers, but the statistics show that the North America market accounts for over half the total sales of HA’s worldwide. Europe is second. China is further down the list below Japan.

Yeah @Volusiano, I have one of those Chinese 5g routers, that’s been hacked, to take 4 external antennas, 2 x 4G & 2 x 5G it is a pretty nifty piece of kit, works fairly well in poor reception areas, I have it set up at home as internet backup, in case the broadband fails, its probably faster than the 74mps, I get from the landline via FTTC? It will eventually live in my camper van, for live TV streaming on the move I just believe the Chinese will always find a way, they are very clever, and resourceful, their clones might not be exact, and maybe slightly inferior components, but they work, they do make some excellent quality stuff as well, their LI-on batteries I bought, are excellent quality, I have 1600AH, of lifepo4 12v batteries, around 21KWH… Enough to give you a bit of a kick Cheers Kev

Huawei has been selling their 5G phone models with 5G chips it stockpiled from before. Most likely your 5G router contains one of the US made or US designed 5G chips. Your 5G Chinese hacked router probably was sold when they still had plenty of 5G chips in their stockpile. But since 2019, the US and some European countries have started imposing restrictions in exporting 5G products and 5G-related mfg equipments to China. Eventually, the 5G chip stockpile China has will dwindle and they’ll have to figure out how to replace it.

Huawei has started selling its Mate 60 Pro cell phones for $699, but it’s not clear whether this model has its own 5G chips in it or not. Before this, they were only able to sell limited batches of their 5G models using the stockpiled chips.

Indeed the Chinese are the biggest Lithium-ion manufacturer in the world, not just for small devices but also for EVs, with CATL being the biggest one, I think. I have no doubt they can come up with their own brands of HAs. I haven’t seen any of those trying to reach the US market for much cheaper than the current market price, though. I wonder why?