Interviewer: Hartmut Quaschik - TNT Germany
Date: August 26th, 2010

Some Comments of Yours truly

I think it was in 1983, when I first encountered Naim products. I was not only hooked by the sound of Naim, but also by its anti-establishment design, their maybe even cultish products with good value for money produced in low volume. I bought Naim NAC 32.5, Hicap, NAP 110, Linn Kan, Linn LP12 with Linn Ittok. Over the years I changed my gear a lot, and even dived deep into DIY. Every now and then I borrowed some current Naim gear from dealers just to see what has changed since. And it has changed a lot. I found that I still like the old fashioned tube like vintage sound of the chrome bumper Naim of the 80ies. Consequently, some years ago, I bought NAC 32.5, Snaps, NAP 140/1 for my secondary hifi setup, and I still recognize and appreciate the strengths of this stuff. The later produced "olive" Naim gear was not up to my liking, it seemed to me that it showed up more resolution , but gave away that tube sound of the chrome bumper era. When I planned to visit Stonehenge in UK in Summer 2010, I thought, hmm, I could make a visit to Naim nearby, and see, what's up with Naim today.

I also got a factory tour. But since a factory tour has already been described on tnt-audio, this is just the interview.

Some History and Business Facts

Paul Stephenson joined Naim Audio in 1980. There were five people there, all in just in engineering. Basically Julian Vereker had a great idea that became a product that friends wanted to buy. It went from there. He didn’t have anybody in sales or marketing. Paul came from retail. He was the sales director until 2000, when Julian died. From then on he was managing director. He is now head of the company, share holder and director. He owns 16% of Naim shares and represents another 50% of Naim shares which had been Julian’s before and are now held in a fund. Other employees also hold shares, so Naim is in fact a company held by its employees. Turnover is likely to be around 15 million UKP this year, while Naim has 140 employees at present. Naim sells to more than 40 countries. Half of the business is export. Last year the turnover grew 20%, with 10% growth the year before. So even in these difficult times Naim has experienced good growth.

tnt-audio > Was it was a long way from single speaker demonstrations in the eighties to an internet forum?

Paul Stephenson > One of the things that happened [in the eighties] was that audiophile markets in countries like Germany, America and the UK found it easy to spread the word about how to set up systems carefully, fine tune cables, or how to identify things going wrong with an audio system. But, if you lived in the Philippines, Australia, Iceland, Malaysia or Finland, you lost out on this information which can now be shared on the internet. And level of people’s systems varied a lot, from really low to really high, so their experience was very varied. Now, with the internet, especially forums, there is global audiophile community, which is very good. It has days when it is not so good, but in general, for audiophiles and for hifi development, this has really benefitted the end user. I am not sure that the retailer always feels that way, because now we have a very empowered end user base that sometimes thinks they know more than the retailer. In some cases, this may even be true, because they are so passionate about the brand and the things they are doing; they work extremely hard to put things together. And they like places like the Naim forum. When it started, we were probably the first manufacturer forum to exist.

It is quite challenging for an audio manufacturer, because if something breaks, someone can put it on the forum and so you can have all these issues aired on the forum. The meaning of the forum for us, is the value Naim has always placed on being very open and straight with our customers: the retailers and distributors and those who buy our products. This was the same since day one. The forum was the right thing to do.

On the other side you have people who are not very used to forums, who intend to buy a hifi system and often go first to the print hifi magazines. These are decreasing. There are some good ones and some bad ones. And such customers are not necessarily able to go online to find the right answers in the beginning. A lot of the good writers, who once wrote for magazines, are now online. There is a devaluing of print going on and there are many opportunities for less strong audio sites. We will have to see whether online hifi journalism really starts to come together more strongly in the next few years, or becomes even more fragmented.

Looking back to the early nineties, when someone found themselves an apartment, they got a stereo almost before getting a bed, television or sofa. That was probably number one or two on people’s lists. Now it is probably number 122! There are many other ways people can spend their money. Equally, in the period after that, music also became more difficult to find. The internet wasn’t as strong as it is now. Record shops became fragmented, you found top-10 record shops rather than shops for collectors. So the mission for spreading the word about great music was getting harder, especially with the vinyl vs. CD debate. As you need great music to give someone good reasons to buy a great stereo, the difficulty finding music becoming an issue. All in all, hifi was becoming less fashionable. During this time, Naim went its own path.

Today, in 2010, we think that hifi can be in good shape. It is becoming fashionable again, as younger people and middle aged people realize, perhaps through the ipod generation or through the develeopment of the internet and internet speeds, that one can get access to much more music. That’s good. You don’t need a friend to come around and give you an album, and say “this is cool”. You can listen to an album, you can search it in the music forums, so you can feed your habit.

On the other side of things, the ipod generation for instance leased the opportunity to put music from one play stake into the other, and now you can even do that in lossless or fully uncompressed. The thought that hifi music was coming down to telephone quality seems to be disappearing – a few years ago people were really selling ringtones and calling them music! There is a real demand for high resolution audio again. This is possible beyond CD, with streaming, wireless technology, cheaper storage and a much more interested market. Therefore means hifi industries are a great place to be right now.

tnt-audio > Are your customers less located in the classical music sector than in the pop music sector?

Paul Stephenson > It is a cross section. A hifi doesn’t know what material is going to be played on it. We don’t tune our products to Jazz or classical, or things like that. We try to be faithful to the signal path. It is probably true that the generation we came through is probably more Jazz-, rock- oriented and acoustic-oriented. They are also probably more oriented to good quality recordings, whether these are classical or Jazz doesn’t matter. Classical music has taken a hard road the last years. It was predominantly listened to by older people because they had actually been to concerts and so could see that when you played something complex like a classical piece on a poor hifi it made no sense whatsoever. A concert gave them a good reference. The next generation heard very few classical concerts and their parents all had terrible hifis. So when they put Rachmaninov on, it sounded terrible, and they were unable to feel the passion of classical music. Again, a complicated string of events. This means that classical music is more difficult to find. It is about instant gratification. Classical music is a little bit like wine. You should leave it for ten years and then open and enjoy it.

tnt-audio > Is Naim developping its own iPod ampflifier?

Paul Stephenson > It is not so much an iPod amplifier. If we want to keep on selling great amplifiers and preamps we have to understand what’s going on with the source. A third of our business is still CD players. CD is still strong for Naim. But it is decreasing. CD sales are starting to fall and downloads are rising. We began a journey several years ago, looking at how people would use music in the future, how they would store it, how they would rip it, and how they would control it. understand this, we started work on our server technology six or seven years ago. There is a lot of high-frequency noise in this environment, because it is essentially a computer, with all the things which go with that. So we have looked at how to minimize the negative effects of all of that. Fortunately, because Naim has always considered mechanical effects in their designs, we were probably better equipped than some to understand what to look for: internal microphony, isolation and all of that kind of thing. We started on that journey and it is still a journey. We haven’t arrived. Analogue took a hundred years to develop and digital also took time. The next generation of streaming audio will take much more time as people like us to learn how to get the most from it.

tnt-audio > Something hyped today in technology might be obsolete tomorrow. How do you decide which way to go?

Paul Stephenson > Who cares? In the end we have to adapt and change to new technology. Consumer electronics moved from black and white television to colour television to plasma and so on.

tnt-audio > You have to move faster than ever. Technology changes took five to ten years in the sixties, but now, you have changes maybe every six months.

Paul Stephenson > If you looked at a lot of hifi companies in the eighties, very few included software in the product. Our business is now divided up into electronic engineers – both analogue and digital - , mechanical engineers, and also a software team. The issue we have is speed to market. We have an internal team of say ten software engineers, and then you can outsource a lot more. One of these things will be speed, as we try to take of the advantage of a new processor speeds, bandwidth, storages, all of these things are changing. But it is not too frightening.

Everybody first made servers that were custom installations. I think we jumped the barrier and made an audiophile product with performance that was better than a lot of people’s CD players. Because of our interest in this area, we started recruiting software people which lead us to streaming environments. We started this journey many years ago, and now we are one of the first coming out with a ‘uPNP’ (universal Plug and Play) player, the “unity” product. It is all-in-one, it has got internet radio, streaming and everything else, 24/96.

tnt-audio > No more multiple boxes then?

Paul Stephenson > I think for every person who wants one box, there are others who wonder, How do I make things better? We have launched UnitiQute, it is a half-sized box, we are shipping this week, this is almost like 21st century integrated Nait. It is 30 watts, but it is streaming device, and you will see in next week some other announcements which will go to more boxes, and lead to more audiophile stream platforms. There are lots of things happening from Naim, both TCP/IP, within a network, storage, moving music around, and also uPNP clients they can pick up these things. We have been able to do this from the basic feature set, but then it is up to Naim to try and make it better. Take the DAC we launched for example. Hjalmar Nilsson designed the DAC in about six months, and it took about two years to make it sound as good as we wanted it to. It is a converter, but we wanted to end up with one line of code for everything, because lines of code take processing power. Getting the processor not to work at all is the best thing or to bring it to a minimum, all the time reducing lines of code down to one line. We are learning to do software in a same way that a skilled an analog or audio engineer would be dealing with power transistors, capacitors, or signal path, aiming for performance.

tnt-audio > You are not doing TVs. You could be the B&O of the UK?

Paul Stephenson > We are not doing TVs. We buy those. I think B&O has done a fantastic job over the years, they spend a lot of time and money making products that are very desirable for people I don’t think we ever be B&O. We basically love what we do. We don’t want to work somewhere else. We are driven to get the very best music at our homes

tnt-audio > Have Naim price ranges changed a lot over the last 20-30 years?

Paul Stephenson > Digital technology forced the change. It is lot more expensive to get better systems now than it was with analogue only. Digital is more expensive than a cheap belt-drive turntable at entry level. If you put a Pioneer PL-12D (a 50 UKP belt drive turntable, it was pretty good) or Rega belt drive turntable. For a good sounding CD player, you had to pay much much more. That shift has happened. We are fanatical about sound quality. We say in Salisbury that we fight for every note, and not the the bank notes.

tnt-audio > Do you still stick to torodial transformers?

Paul Stephenson > Yes, but we have a mix. We have switch mode power supplies in some of the servers, and toroids in as well, for the analogue section. In the future they might not be allowed, there is a lot of legislation going on in relation to power consumption in standby mode. There is an ongoing research for circuits you could put in front of a toroid.

tnt-audio > How about RHOS in general, is it a problem for you?

Paul Stephenson > We have a flow solder process. Our boards are through-hole rather than surface-mount. We now have to use lead free solder. It was a mess for us: we had to find a lot of replacement components. We had to redesign track and circuit boards, and as we now had to heat them much higher we got distress levels, which affected performance. It was a huge job listening to solder. We had to select the right type of new unleaded solder. We had to find one that sounded right. We probably checked out forty or fifty types of different solder.

Because of stress, how we hold the board, and the special types of jigs that we build became an art to ensure reliability.

tnt-audio > Thank you very much, Mr Stephenson.