Private Equity Investment Positions Westone Labs To Drive Growth In Consumer Hearing Device Markets

Now that private equity firm CID Capital has made a major investment in Westone Laboratories, watch for the Colorado company turn on the burners with a further expansion of its hearing-assistance products into new consumer markets beyond the hearing-aid industry.

Not that long ago, Westone was little more than a staid maker of ugly but essential custom ear molds for hearing aids.  But in recent years the company has introduced a slew of new products including earpieces for professional musicians, custom earplugs for swimmers, hearing-protection technologies for military and industrial applications, assistive listening products for hard-of-hearing consumers, and more. If you’ve been to AudiologyNOW or one of the other big hearing-aid conventions, you’ve probably enjoyed Westone’s product demonstrations where you can hear live musicians perform as you listen through the same kinds of headphones and custom earpieces professionals use on stage.

Westone CEO Lynn Kehler says the private equity investment will enable the current management team “to rapidly accelerate new product development, aggressively expand distribution and pursue potential acquisition opportunities. We also have a unique opportunity to leverage our extensive hearing healthcare and professional audio music background to offer the same premium quality products and listening experience to the broader consumer earphone market.”

All of which is music to my ears, as I continue to look for examples of companies born in the hearing aid business that are willing to commit management energy and financial capital to delivering great technology and products to a much broader base of consumers. Westone was founded in 1959 and prospered under several generations of Morgan family leadership. But several years ago the family owners named Kehler CEO. A professional manager who had previously been CFO of Westone, Kehler led the expansion drive while seeking a way to provide liquidity for the family. According to the news release from Westone and CID Capital, the investment “will allow the Westone management team to continue to build the company with a new investment partner while allowing members of the family that founded Westone to diversify and pursue personal interests.”

An Indianapolis investment firm with deep Midwest roots, CID Capital takes majority positions in small firms and often helps family-owned companies transition to professional management while providing the financial backing management needs to invest in growth over the long term. While the parties didn’t disclose the size of the investment, the Westone deal appears to be a great marriage of an investor with deep pockets and staying power with a management team committed to a long-term strategy to create new markets with new products and technologies.

Rather than trying to go public or being acquired by a much larger company, staying independent with the backing of an equity partner is a great strategy for success in the hearing-technology business. More innovation is needed and markets need to be created and given time to build, and patient capital is just what the doctor would prescribe for a management team that’s on a roll and only in need of some financial backing to move ahead with its long-term strategy.

All too often a private equity investment foreshadows major negative changes. When the equity firm finances its investment with debt to be repaid through the company’s current cash flow, management often needs to cut overhead dramatically, selling off lower-profit lines of business, and milking the cash-cow profit lines to pay off the debt. With short-term increases in profit margins, the company may increase in value, and the equity firm can make a quick killing by taking the company public or selling off what’s left. But if the company fails to increase in value quickly, the venture can lose market share and gradually waste away. In either case, lines of business with great long-term prospects but low current profits are often simply shuttered and employees with irreplaceable experience cast aside.

But CID Capital appears to be anything but a Wall Street slash-and-burn private equity player. It’s nice to see a private equity deal that rewards family owners for their years of hard work, leaves a strong current management team in place, and provides incentives for a good company to make an even bigger mark on a business that is positioned to drive positive change for an entire industry. Especially when it’s a company doing interesting new things in the hearing assistance business. Let’s keep an eye on Westone Laboratories.

CES Preview: Will 2012 Be The Year Of The Personal Sound Amplification Product (PSAP)?

As hearing-aid technologies go mainstream, more traditional niche manufacturers are making a leap and attending the Consumer Electronics Show (CES), the monster trade show held in Las Vegas every January that displays the wares of thousands of consumer brands. In 2012, I’ll be looking for examples of new Personal Sound Amplification Products (PSAPs), which are just like hearing aids, but sold over the counter without a prescription.

In January 2011 we saw a range of hearing-related companies at the show, including VOXX International (formerly Audiovox) subsidiaries RCA and Acoustic Research, which introduced their own new PSAPs. Hamilton CapTel and TV Ears also got together at CES 2011 to offer a range of assistive listening devices for hard-of-hearing consumers. Traditional hearing-aid manufacturers Starkey Laboratories and Beltone earned CES Innovation Honors for their new products. And Etymotic Research won a 2011 CES Innovation award for new high-tech ear plugs that protect soldiers’ hearing in war zones.

At the January 2012 CES show I am betting we will see more PSAPs. It’s simply too easy a market to enter for mainstream consumer electronics companies. And even if the PSAP remains a niche or specialty product, I expect to see more of them in the big consumer electronics retail chains in 2012, with more news like the October 26 announcement by RCA that its Symphonix PSAP will be available in more than 2,000 Radio Shack stores. So I’d love to hear from any readers who hear about other PSAPs that will be introduced or demonstrated at CES 2012.

Why The Hearing Aid Industry Ignores Black Friday

Even as I get tired of all the hype about Black Friday, I wonder why the hearing aid industry is conspicuous by its absence on the biggest shopping day of the year in the U.S. Today is the big day, the day after the Thanksgiving holiday when shoppers flock to the malls as retailers cut their prices and offer the best price-cutting and one-day sales events of the year.

But while my email inbox is full of offers from every retailer and manufacturer I’ve had contact with in 2011, I haven’t heard a peep from the many hearing aid manufacturers and resellers that send me sales pitches on other days of the year.

But on reflection I realize it should be no surprise. Why? Because manufacturers only reduce prices and put their products on sale when demand is weak and there’s enough competition in their market to make them worry. A little price incentive, especially in the holiday selling season, can be a great way to win a point or two of market share in a hotly contested market.

But the hearing aid industry is more like an oligopoly. Each of the five or six major manufacturers has a comfortable market share, and price comparison shopping is a rarity. Instead, sales channels are limited mainly to audiologists and hearing-aid dispensers, each of whom often only carries one manufacturer’s product line. People shopping for hearing aids usually get a referral to a good audiologist, and if they engage and start the process of buying a hearing aid, they often simply stop shopping around.

Lack of price competition or active consumer product comparisons means the price reduction curve that we see in other industries, especially during slow economic times, is a lot less pronounced in the hearing aid business. Customers who can afford to buy hearing aids still pay many thousands of dollars, while those who can’t afford them spend what money they have looking for Black Friday deals on other less expensive goods.

I’m wondering if Black Friday in 2012 will be any different for the hearing aid industry. In 2011 we’ve seen a number of “over the counter” hearing aid manufacturers enter the market, including UnitedHealth Group insurance company’s hi HealthInnovations subsidiary. These vendors are bypassing the traditional audiology sales channel and selling direct to consumers over the internet. They are trying to reach the tens of millions of Americans with mild hearing loss that can be treated with open-fit hearing aids providing a modest degree of amplification. The new products are less expensive and easy to purchase.

Hearing aid industry groups and professional audiology groups are up in arms about the new competitors, saying that without a full hearing exam and professional fitting, hearing aids can often do more harm than good. But U.S. regulators, who several years ago gave a green light on the internet sale of Personal Sound Amplification Products (PSAPs) directly to consumers, may not be inclined to intervene.

So, don’t be surprised if on Black Friday 2012, your email inbox is full of offers not only from your favorite department stores, but also with offers from some new competitors in the staid old hearing aid industry.

Oticon’s New ConnectLine Microphone Completes End-To-End Connection Between Hearing Aids And Your Conversation Partner

Oticon’s ConnectLine communication devices have made it easier for users of hearing aids to listen to their Apple iPods and personal MP3 players, their TVs, and their Bluetooth mobile phones for a while now. But with yesterday’s introduction of the Oticon ConnectLine personal microphone, you’ll finally be able to hear your dinner companion as well, even in a noisy restaurant.

The new wireless Oticon ConnectLine Microphone clips to your conversation partner’s lapel and picks up his or her voice while filtering out unwanted background sounds. It transmits the audio directly to the ConnectLine Streamer, which you wear on a loop around your neck, and the streamer transmits the unadulterated audio signals directly into your Oticon Agil hearing aids. It can also be adjusted to transmit at frequencies most compatible with the listener’s hearing-loss profile and hearing aids.

Ever since the big hearing aid makers began incorporating communication receivers directly into hearing aids, there’s been a not-so-quiet revolution in people’s ability to connect to more of the sounds of the modern world. But strangely enough, it’s taken some time for the major manufacturers to come up with workable assistive-listening solutions for the most common complaint of hearing-aid wearers–comprehension of speech in noisy surroundings. The ConnectLine Microphone is one approach to the speech-in-noise problem that is small and easy enough to actually be useful in the real world. When you add to the Oticon ConnectLine solutions for your TV, phone and personal listening system, you end up with a complete, end-to-end listening and comprehension system. Read more

TV Ears Aims At Sweet Spot Of Assistive Listening Device (ALD) Market By Bundling TV Amplifier With Captioned Phone and Hearing Aids

George Dennis, the entrepreneur who founded TV Ears in 1998, has plans to address hearing-assistance needs well beyond the company’s initial target market of consumers needing help hearing the TV. This month TV Ears announced its “3D” strategy in which it will bundle different sets of assistive listing devices (ALDs) — including the TV Ears wireless TV amplifier, the Hamilton CapTel i800 captioned telephone, either two hearing aids or two personal sound amplifiers (PSAPs), LACE listening training software, and a Dri-Dock hearing aid dryer — starting at the low-low price of $995.

You’ve probably seen ads for TV Ears, the simple wireless headset that provides nicely amplified audio from your television set. The rig looks a little funny, with the receive hanging below your chin from a set of foam ear buds, but it works. It’s maintained domestic harmony in countless households where the TV no longer has to be turned to maximum volume to compensate for Mom’s or Dad’s hearing loss. And, in an assistive listening device market where more sophisticated transmitters and receivers can run into the many hundreds or even thousands of dollars, TV Ears products start at a very affordable $99.95 USD.

TV Ears has been a big success, with more than a million sold. But that’s only the start. Dennis’s initial vision for TV Ears was to provide a “gateway” for consumers with mild hearing loss, knowing they would be more likely to migrate eventually to additional solutions if they discovered the benefits of hearing assistance with an easy-to-use product that meets a very specific need. Now Dennis has widened the gateway by reselling a product that addresses perhaps the second-biggest complaint of people with mild hearing loss — problems with the phone. At this year’s Consumer Electronics Show (CES), TV Ears announced a deal with Hamilton CapTel to resell Hamilton’s i800 Captioned Telephone. At the same time, TV Ears has expanded its product set by offering personal sound amplifiers along with open-fit and receiver-in-the-hear hearing aids. Read more

Hamilton CapTel Offers 800i Captioned Telephone With Free TV Ears Thrown In For Only $99

Want to save $600 and get two of the hottest assistive listening devices (ALDs) available? Hamilton Relay’s Hamilton CapTel business unit is making a limited-time offer for its CapTel 800i captioned telephone, bundled with a TV Ears system, for only $99 combined. Hamilton CapTel has been special-offering its $595-list-price 800i captioned telephone system for $99 for a while, and now it is throwing in the highly popular wireless television amplifier from TV Ears for free.

All you have to do is go to the HamiltonCaptel web site’s special-offer landing page, grab the coupon/promo code, click through to distributor Weitbrecht Communications’ (WCI) fulfillment page, put the 800i in your shopping cart, then make sure to enter the coupon code in the “Redeem a discount coupon” space on the shopping cart page — the TV Ears product, which usually retails for $99.95, will appear as a second item in your basket with a discounted price of $0. It takes a few steps, and I don’t know how long the special offer will be available, but if you or anyone you know would benefit from either or both products, it’s a great deal.

Hamilton CapTel and TV Ears got together at the Consumer Electronics Show, where TV Ears returned the compliment by announcing it will bundle the 800i phone with the TV Ears system and a variety of personal sound amplifer products (PSAPs) and entry-level hearing aids. (More on that announcement later). The two companies make a welcome fit for hard-of-hearing consumers looking for cost-effective help with their hearing. TV Ears serves the huge market of people with mild hearing loss, positioning their easy-to-use TV-amplification headset as a “gateway” for those who might later migrate to more powerful assistive listening devices and/or hearing aids.

Hamilton CapTel has been a leader in delivering captioned telephone solutions to consumers, and the 800i is a great product for anyone who has trouble understanding phone conversations. The 800i plugs into a standard Internet connection, which enables you to initiate a free WebCapTel call, and the unit’s LCD displays lets a real-time transcript of the words of the person on the other end of the call while you conduct a regular conversation with the handset over a normal phone line. While Hamilton CapTel usually serves customers with more severe hearing loss, while TV Ears is for people with mild hearing loss, you can envision the same person using both. The 800i product makes the WebCapTel service easy to use, so that people with moderate hearing loss who only have occasional problems with the phone are more likely to use it; and the TV Ears product has enough of a volume boost to be of help even for many regular hearing-aid users with moderate hearing loss.

I plan on trialing both products and will let you know how they work.

Product Review: Amplicom PowerTel 500 Cordless Phone Combines Land-Line Clarity With Wireless Convenience

I have been using the Amplicom PowerTel 500 cordless telephone for a month, and it’s the first cordless handset I’ve tried that works well enough with my hearing aids to combine the superior clarity of a land-line phone with the portable convenience of my wireless cellular phone. It also combines amplification and sound-shaping features for hearing-impaired users with all the top-end features anyone needs on an office or home-business phone, such as caller ID, multiple handsets that communicate internally, conference calling, and an extensive contact database with one-button dialing.

The new phone meets the Telecommunications Industry Association’s TIA-1083 hearing-aid compatibility standard and is among the few amplified phones to offer DECT 6.0 technology, the low-interference frequency that is standard in Europe but only recently being widely adopted in North America. The PowerTel 500 is a cordless handset with hands-free speakerphone, caller ID, and a large two-line illuminated display. It provides amplified volume of up to 50 dB and features a sound-shaping equalizer with five frequency settings. Read more

Amplicom Enters North American Market With PowerTel 500 Amplified Phone For Consumers Who Need Hearing Assistance

Amplicom, the German supplier of amplified telephones and other assistive listening devices (ALDs) for hard-of-hearing consumers, has entered the North American market with first shipments of its family of PowerTel corded and cordless amplified phones. Amplicom USA, based in New York, said the new phones meet the Telecommunications Industry Association’s TIA-1083 hearing-aid compatibility standard and are among the few amplified phones to offer DECT 6.0 technology, the interference-free frequency that is standard in Europe but only recently being widely adopted in North America.

The initial entry in the product line, the PowerTel 500, is a cordless handset with hands-free speakerphone, caller ID, and a large two-line illuminated display. It provides amplified volume of up to 50 dB and offers five frequency settings. Featuring Amplicom’s yourSOUND technology, the PowerTel unit has settings on the PowerTel unit that can be adjusted and set for multiple hearing profiles, enabling each member of the household can switch to his or her own preferred volume and frequency.

Suggested retail for the PowerTel 500 is $139.95. Amplicom also said it will soon start shipping the PowerTel 501, an expandable handset that works with all cordless base PowerTel phones, for $89.95, as well as a series of combination telephone and answering machines. It enters a competitive but by no means crowded market for amplified phones, including other vendors such as Clarity Products and ClearSounds.

Phonak Dynamic Soundfield Technology Turns The Classroom Into A Giant Hearing Aid

Soundfield classroom amplification systems have improved the education and lives of thousands of schoolchildren who otherwise would miss valuable instruction simply because they cannot hear their teachers well enough to understand what they are teaching. Now Phonak has put its vast experience designing hearing aids to use with a next-generation soundfield system featuring a 12-speaker array that reduces echoing and reverberation and automatically adjusts frequency and volume levels to achieve optimum signal-to-noise ratios in changing listening environments.  The new Phonak Dynamic Soundfield system essentially turns the entire classroom into a giant hearing aid that can dramatically improve comprehension and learning. Read more

ReSound Alera Hearing Aids Provide Wireless Connectivity To TV And Mobile Phones

GN ReSound’s new flagship family of Alera hearing aids will provide wireless connectivity directly with mobile phones and television sets equipped with ReSound’s new Unite assistive listening device (ALD) accessories.

Like other new wireless ALD accessories from Widex and other hearing-aid manufacturers, the ReSound Unite accessories eliminate the need for transmission through the hearing aid’s telecoil from a neckloop attached to the transmitter. And because the new ReSound Alera hearing aids communicate with the Unite accessories at 2.4 gigahertz, they eliminate the interference and delays sometimes experienced with slower wireless transmission speeds used by other manufacturers. Read more

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