If You Were A Major Hearing Aid Company And Got A Half-Billion Dollar Windfall, What Would You Do With It?

If you were one of the world’s largest hearing-aid companies and suddenly received a half-billion dollar windfall, what would you do with it? That’s exactly the position GN Store Nord finds itself in today.

The parent of GN ReSound hearing aids and GN Netcom headsets will get 550 million Euros (approximately $530 million US) after prevailing in a long-standing civil dispute with Poland’s largest telecommunications company. In the Bloomberg News summary of the settlement, GN Store Nord executives indicated they will use the money primarily to make further investments in its ReSound hearing aid business, including potential acquisitions.

That amount of new money unleashed on a global industry that is less than $20 billion in total sales could have a major impact. But if GN ReSound just acquires another hearing-aid company, it won’t be the game-changer everyone is waiting for in a global industry that’s been stuck with less than five percent annual growth for the past decade. Here are some other areas where serious investment could get the hearing aid industry growing faster:

1. Develop More Affordable Hearing Aids: Most of the recent innovation by the global market leaders in the hearing aid business has been in the high end of the market, providing expensive features such as wireless communication to their highest paying customers. It would be great to see one of the five global leaders come up with a high-quality hearing aid for entry level users that retails for less than $1,000. Component prices are low enough to get there, but such a low price point will also require innovation and investment in the retail channel to speed up and lower the cost of fitting the hearing aids while maintaining high levels of customer service.
2. Streamline the Fitting Process: Making it faster and easier for audiologists and dispensers to fit hearing aids will enable them to serve more customers and offer lower prices, making up a lower profit margin with a higher volume of sales. Sonova’s Sona hearing aid brand is an attempt to lower stocking costs with an upgradeable product platform to accelerate the fitting process for customers with mild hearing loss, but so far it hasn’t had a huge impact on the overall market. Others are working on faster, easier and less invasive hearing tests that would provide better results than today’s lengthy procedure while lowering costs and making it easier to attract more hearing-aid users, especially at the entry level of the market. The industry could use a lot more investment in those kinds of experiments. But until they result in higher sales volumes, these experiments require long-term investment.
3. Integrate Seamlessly With Third-Party Peripherals: The major recent investments by the top hearing aid companies in wireless communication with peripherals to hook up your hearing aids with your Bluetooth phone or your TV audio have not yet delivered affordable solutions. Many of the wireless communications schemes are proprietary, locking the user into one manufacturer’s brand of hearing aids and commanding premium prices. More compatibility with industry standards and more integration with third-party peripherals and assistive listening devices will expand the market by serving more customers at more affordable prices. But it requires an investment in innovations that will lower costs, not just provide new or higher performance.

Those are only three areas where even a fraction of a half-billion-dollar investment could be a game changer for the hearing aid industry. Unfortunately, all those investments require a long-term focus and staying power, because results won’t be obvious overnight. So don’t be surprised if we see the kind of short-term investment activity that gets immediate results and keeps shareholders happy instead. A couple of quick acquisitions of smaller hearing aid companies could reduce overall back office costs, enlarge share of market, and improve profits in short order.

But if acquisitions and other short-term investments don’t result in new products, new thinking, or new ways of reaching and serving new market segments–especially the millions of entry-level consumers with mild untreated hearing loss–then we’ll see more of the same in the hearing aid industry. Big players will continue to get bigger by serving the high end of the market. Only by taking the risk to invest in new products and services that could broaden the market with more affordable solutions will we see a step increase in growth rates in the global hearing aid industry.

ReSound Alera Success Drives GN Store Nord Hearing Aid Sales To 9% Global Growth And 23% Growth In U.S.

ReSound’s Alera hearing aids have put the Denmark company back on a strong growth track, with parent GN Store Nord reporting its hearing aid business revenues grew nine percent worldwide in the first fiscal quarter of 2011, with growth in the healthy North American market growing 23 percent. ReSound Alera high-end hearing aids feature like wireless connectivity, sophisticated sound processing software, and other advanced features. And in February 2011 ReSound announced availability of its new innovative “Remote Microphone” form factor for the Alera hearing aids, with the microphone sitting in the ear’s cymba concha and the speaker and sound-processing chip sitting deep within the ear canal.

“In Q1, we saw encouraging topline growth driven by ReSound Alera™ and the corresponding Beltone True™ family, including the wireless accessories,” said GN ReSound CEO Lars Viksmoen. “Organic revenue growth reached 9% mainly as a result of the first wave of form factors launched in 2010. During Q1, we launched the second wave of form factors and based on the experience so far we are adjusting the revenue guidance for 2011 upwards.”

The announcement came close to top competitor Sonova’s preliminary year-end fiscal announcement that its Phonak and Unitron hearing-aid sales grew more than 10 percent in its 2010-2011 fiscal year.

While William Demant and GN ReSound Fought Over Otix, Sonova Widened Its Hearing-Aid Industry Market Lead

As GN ReSound and William Demant battled over who would win the battle to acquire Otix Global this fall, hearing-aid industry leader Sonova stuck to its knitting and on Nov. 16 claimed it has widened its market share lead. But at the same time, all three of the publicly traded hearing-aid manufacturers hinted they have turned the corner after several years of anemic growth in the global recession.

Sonova, parent of Phonak and other hearing-aid brands, reported more than eight percent organic growth in the first six months of its fiscal year in addition to revenue gains from the acquisitions of cochlear implant maker Advanced Bionics and InSound Medical, developer of the “invisible” Lyric hearing aid. With the growth in the global hearing aid market projected at no more than five percent in 2010, Sonova’s growth, powered by a slew of successful new products introduced over the past two years, earned it a substantial increase in market share. However, in the same report, the holding company lowered its earnings forecast for the remainder of the year, disappointing investors looking for earnings growth combined with faster revenue growth in the industry. Read more

Bidding War Breaks Out For Otix Global As William Demant And GN ReSound Vie For Market Share In Consolidating Hearing Aid Industry

A bidding war has broken out for Otix Global, maker of Sonic Innovations hearing aids and one of the world’s seven largest hearing-aid manufacturers, with William Demant Holding today matching GN ReSound’s $58 million (USD) acquisition bid. GN ReSound last week had topped William Demant’s initial $50 million bid to acquire the struggling U.S.-based company. Today’s $58 million, $10-per-share matching offer by William Demant, parent of global hearing-aid brands Oticon and Bernafon, demonstrates it remains intent on acquiring the Sonic Innovation brand to increase its share of the global hearing aid market. There was no immediate response from GN ReSound parent GN Store Nord on whether it will keep the bidding war going by responding with another higher bid. Read more

GN ReSound Expects To Increase Its Share Of The Global Hearing Aid Market After A Slow Two Years, But Industry Growth Remains Anemic

More evidence of a turnaround in worldwide sales of hearing aids came with GN ReSound’s announcement of improved financial results today, but overall growth in the industry remains anemic. GN ReSound, one of the six largest global hearing aid makers, announced flat organic growth in the second quarter of 2010 over the same period in 2009, after sales declines in the previous five quarters. And the Denmark company made an optimistic forecast for the remainder of the year, predicting that it will increase its share of the global hearing aid market in the second half of 2010.

“We expect to grow above the market in the second half of 2010,” said Lars Viksmoen, CEO of GN ReSound, pointing to the successful introductions of new high-end hearing aid families in late 2009 and the first half of 2010. “This expectation is building on the successful introduction of the Surround Sound by ReSound-featured products–ReSound Live and dot2 by ReSound in late 2009–combined with the global launch of ReSound Alera.” Read more

Sebotek Patent Infringement Suit Challenges Big Hearing Aid Companies

Sebotek’s patent infringement suit against several of the world’s largest hearing-aid manufacturers is a David-and-Goliath challenge to protect its intellectual property. It also throws a big element of uncertainty into a significant and fast-growing segment of the market for open-fit behind-the-ear (BTE) hearing aids. Read more

And Then There Were Six: GN Store Nord Puts GN ReSound On The Block

I wrote about the “seven sisters” of the global hearing aid industry a while ago, but now it appears there will be six. Consolidation among the largest manufacturers continues as GN Store Nord considers selling GN ReSound, the world’s third-largest hearing-aid brand, to one of the other majors. Read more

GN Acquisition Of Interton Accelerates Hearing-Aid Industry Consolidation

The big are getting bigger in the hearing-aid industry, with GN Store Nord, parent of the GN ReSound Group, acquiring German hearing-instrument developer Interton for DKK 350-million ($56 million USD). Read more

Jabra’s New Headset Is Hard-Of-Hearing Friendly

Jabra has always set trends for great design and cutting-edge consumer technology with its telephone headsets and earpieces, and now it is aiming its marketing guns directly at hard-of-hearing consumers with its announcement of the new Jabra 650 telecoil-compatible corded headset. Read more