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CONTENTS |
September 2017
THE DISRUPTORS ISSUE 04
PUBLISHER’S NOTE
06
SHORT BITS
The coolest new products from the business of digital. By Christine Persaud
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DISRUPTORS | Welcome to the 21st Century Disruptors
This generation’s tech disruptors have turned entire industries on their heads, changing the way we do everything from communicate, to consume entertainment, shop, and travel. In this special feature, we highlight seven influential companies, and how others can, and are, thriving in the face of the disruption they’ve caused. By Christine Persaud
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Airbnb By Vawn Himmelsbach Spotify + Apple By Gordon Brockhouse Netflix By Christine Persaud Uber By Christine Persaud Google By Frank Lenk Amazon By Frank Lenk The Future of Tech Disruption By Christine Persaud
TALKING SHOP
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TAVES gears up for its biggest Toronto show yet; Staub scores another hole-in-one with its annual A4K Charity Golf Tournament; Cineplex takes entertainment to the next level; and more in this month’s column.
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HANDS-ON REVIEW | Passion Play: Totem Acoustic Signature One
Totem’s new two-way monitor tracks large and subtle dynamic swings beautifully, creates a huge soundfield with precise imaging, and unravels different strands of complex music. By Gordon Brockhouse
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TURNING THIRTY | An Interview With Totem Acoustic’s Vince Bruzzese
This month, Totem Acoustic celebrates its 30th anniversary. In this interview, Founder and CEO Vince Bruzzese talks about his unique approach to speaker design, and his company’s latest products.
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By Gordon Brockhouse
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HANDS-ON REVIEW | Shanling M2s Digital Audio Player
This digital audio player packs impressive features in a small, made in China package that won’t break the bank. By David Susilo
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TELEVISION OR WORK OF ART? IT’S BOTH
Samsung’s The Frame 4K Smart LED TV has a clever Art Mode, customizable frames, and app store that transform the television into a work of art when it’s “off.” By Christine Persaud
66 September 2017
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PUBLISHER’S NOTE
DREAM BIG AND YOU MIGHT BECOME A DISRUPTOR I WONDER what the typical dream job might be in the future. For most of my adult life, I have had this dream of owning a hotel. Nothing big: maybe 12 rooms. It would have an inviting restaurant and bar, and our common space would be the epicentre for community gatherings. The décor would steer toward mid-century modern, and we would be known for our attention to detail and outstanding customer service. Oh, I’m such a romantic! Has Airbnb made that dream seem ripe for failure from the start? Airbnb currently represents over three million property listings around the globe. To put that in perspective, Starwood Hotels and Resorts, one of the largest hotel operators in the world, has about 400,000 hotel rooms under its wing. That’s just slightly more than 10% of the inventory offered by Airbnb. Interestingly, while Starwood owns its rooms, Airbnb owns no real estate. Yet Airbnb has turned itself into a $30 billion company, roughly the same valuation as Marriott International, exclusively by running the booking and payment app, service, and technology. How can my 12 rooms compete against that? Perhaps your dream was to own a cute little bookshop somewhere in the country. You have saved up for your retirement and hope that there are like-minded people who still wish to browse through a shop and get recommendations from the bookworm owner. Ha! That sounds cute. But with Amazon now reaching as far as the Arctic Circle, good luck! Amazon currently has 304 million active customers globally, albeit buying far more than just books. Then again, the company is also opening up physical bookstores. So the dream may still have some legs. Maybe your family has run a local taxi company and your dream has been to take over the business once Pop retires. Beck Taxi, founded in Toronto in 1967, has about 2,000 cabs operating on Toronto streets. Compare that to Uber, which reports having over 40 million active users around the globe, and handles the booking and payment technology. Beck has been toiling the streets of Toronto for 50 years, and here comes Uber, which has grown to become a $60 billion company in less than a decade. Are you seeing a trend here? Established businesses are being disrupted by technology and appbased businesses at an alarming (and exciting) rate. In the last decade, books, newspapers, hotels, taxis, retail, music and so many other areas of commerce have seen a complete “180” in how business is conducted. Welcome to our disruptors issue. We dedicate this issue to some of the companies that saw a window of opportunity to change established practices and have capitalized handsomely. By 2022, Juniper Research predicts that total sharing economy revenue will surpass US$40.2 billion. Wow! And to think, the five most valuable companies in the world (Apple, Alphabet (Google), Microsoft, Amazon and Facebook) are all in the tech sector. Where did the utilities, oil, and banking companies go? Never mind. I am not giving up on my dream for a boutique hotel. All I need are 12 like-minded individuals to stay over every night for 365 nights. That means, I just need to attract 5,000 people annually in order to be successful. Compare that to Airbnb, which has facilitated over 200 million guest stays to date. For me to be at full capacity in my dream hotel every night of every year, it would take 40,000 years to match Airbnb’s guest numbers. The optimist in me says I can do it! Maybe the message in this issue is to never stop dreaming. With the right idea executed at the right time, you too may become a disruptor. Though you might have to stop dreaming of hotels and start dreaming of apps! Enjoy the issue, John Thomson jthomson@wifihifi.ca 4
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PUBLISHER / EDITORIAL DIRECTOR John Thomson Cell: 416-726-3667 jthomson@wifihifi.ca @wifihifimag EDITOR-IN-CHIEF Christine Persaud cpersaud@wifihifi.ca @ChristineTechCA EDITOR-AT-LARGE Gordon Brockhouse gbrockhouse@wifihifi.ca CREATIVE DIRECTOR David Topping CONTRIBUTORS Vawn Himmelsbach, Ted Kritsonis, Frank Lenk, Steve Makris, David Susilo DIRECTOR OF DIGITAL CONTENT James Campbell jcampbell@wifihifi.ca DIRECTOR OF SPECIAL EVENTS Cathy Thomson cthomson@wifihifi.ca Melsa Media Inc. 194 Robinson Street Oakville, Ontario L6J 1G3 Advertising Inquiries: John Thomson jthomson@wifihifi.ca
LET’S STAY IN TOUCH! Website: www.wifihifi.ca Twitter: twitter.com/wifihifimag Facebook: facebook.com/wifihifimag Instagram: instagram.com/wifihifi Store: www.wifihifistore.com
Copyright 2017. WiFi HiFi is a registered brand of Melsa Media Inc. and is published ten times each year. All rights reserved. The contents of this publication may not be reproduced in whole or in part without the written consent of the publisher. The views expressed by advertisers are not necessarily those held by the publisher.
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SHORT BITS
The coolest new products from the business of digital.
BY CHRISTINE PERSAUD
NOSTALGIC GAMING
PHONE AND E-READER IN ONE The InkCase i7 Plus by Oaxis is a fully waterproof protective case for your iPhone 7 that combines device protection with an e-ink screen on its backside that can be used for reading e-Books, as well as displaying information from widgets, like weather, to-do lists, and appointments. You can also use the screen to display customized photos. It communicates with your phone via Bluetooth, and is lighter and thinner than a Kindle. A campaign for the case went live on Kickstarter in June with a $28,000 funding goal, which it quickly surpassed. US$70. Inkcase.com
Nintendo is launching a follow-up to its Super Nintendo Entertainment System called the Super NES Classic Edition. The miniature gaming console is an homage to the original NES that launched in 1991 and introduced some of the most iconic video game titles, including Super Mario World, The Legend of Zelda: A Link to the Past, Super Mario Kart, Super Metroid, and F-ZERO. In addition to 21 classic games pre-installed, the new system will come with the intergalactic adventure game Star Fox 2, the sequel to the original Star Fox game that was created during the ‘90s but was never actually released. It will be unlocked once players complete the first level of Star Fox. The re-imagined console can be plugged into any HDTV via the included HDMI cable. It will have the same look and feel as the original, just in a much smaller package. MSRP US$80 for the console, cables, and two wired controllers; September 29. Nintendo.com
VINTAGE POISON The new wireless speaker from Lofree, called Poison, boasts a classic, vintage aesthetic that can be likened to an old 1950s radio, combined with modern digital technology. The speaker’s Bass Enhancement System uses an ultra large diaphragm in the back to pump out powerful and deep bass while producing clear mids and trebles from the front. With 20-Watt amplifiers (2 x 10 watt) processing audio output, it also comes with a built-in Nuvoton DSP to produce “richer and full-bodied sounding content and perceived low bass.” Adding to the throwback design is a physical rotating dial for channel scanning. It comes in multiple colours. Speaker.lofree.co
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SHORT BITS
MOUNT ON THE WALLY
GO BAMBOO
Savant’s (Evolution Home Entertainment) Wally line of wall-mounted dedicated touch screens can be used to control smart home devices, entertainment gear, and scenes. They have been designed to be mounted in-wall, and blend seamlessly into any décor. Access things like climate, lighting, entertainment, and Savant Scenes, directly from the high-resolution touch panel using technology from Savant’s Pro Remote. A presence sensor activates the screen automatically as a person approaches. The first Wally product to be available is a single gang 5.5” touch screen; a smaller 2.9” and larger 8” versions will follow later in the year. Wally fits in a traditional single gang enclosure and is low voltage powered using Power over Ethernet (POE 802.3af). White or black. Savant.com
Add some style to your home with a Kanto YU4 or YU6 powered speaker with an attractive bamboo cabinet. The bamboo finish is already available in Kanto’s desktop speakers, and the company says it has always “caught people’s attention.” The YU4 and YU6 speakers have RCA line-level inputs with switchable phono preamp for analog sources, like a turntable, two optical inputs for TVs and digital source components, and Bluetooth connectivity featuring Qualcomm aptX technology. Audibly, the YU4 has a 4” Kevlar woofer and 1” silk dome for 70W total RMS power; and the YU6 100W total RMS driving 5.25” Kevlar woofers and 1” silk domes. Both have a subwoofer output. The bamboo joins the existing matte and gloss finish options. The YU4 is $390 and YU6 $600. Kantoliving.com
SWIMMING WITH DRONES Blueye Robotics’ Blueye Pioneer drone can dive up to 150 metres – eight times deeper than the average scuba enthusiast. Its HD wide-angle video camera uses technologies that work in low-light conditions and communicate truecolour images, overcoming the problem of how colours change below 16 feet underwater. Compact at 15 lbs., it has three robust thrusters, can travel 2.5 metres/second (5 knots), and perform in rough currents and low temperatures thanks to its hydrodynamic balancing design. Live video travels through a thin cable to a surface buoy and wirelessly to the user, who can stay dry and safe on a nearby vessel or onshore. There are LED lights below the camera, and fittings for an extra payload, with replaceable batteries that last about two hours. Operate it from a smartphone, tablet or PC. Currently in beta, production is scheduled for January 2018; US$3,500. Blueyerobotics.com 8
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®
“Ok Google, Play Rock Music in the Living Room”
TX-NR777 7.2-Ch Network A/V Receiver
Onkyo and Google Home make it easy to stream and control your audio experience using Chromecast built-in. Find Chromecast built-in in all 2017 Onkyo network receivers and wireless speakers. onkyo.ca ©2017 Onkyo U.S.A. Corporation. All rights reserved. All other logos, trademarks and registered trademarks are the property of their respective holders. Works with compatible iPhone®, iPad®, Android phone and tablet, Mac® and Windows® laptop, and Chromebook devices. Google Home and Chromecast are trademarks of Google Inc.
SHORT BITS
FLEXIBLE MOBILE SUPPORT
YOUR MOST ESSENTIAL PHONE Andy Rubin, co-founder of the Android platform, has developed a device he calls the Essential Phone. It comes with typical premiumdevice features, including an edge-to-edge full display, dual camera system, and 128GB of memory. Crafted of titanium and ceramic, it will be part of a modular ecosystem of accessories, including a 4K 360-degree camera that Essential claims to be the “world’s smallest.” The camera attachment clicks directly onto the phone and allows users to create immersive videos and stills. Telus, $290 on a 2-year plan, $1,050 outright. Essential.com
Satechi has developed the R1 Aluminum Foldable Stand that can be used to support laptops, tablets, smartphones, and other mobile devices. Position the device in a variety of ways on the flexible stand to create the optimal viewing experience for watching videos, gaming, video chatting, or working on a tablet with a Bluetooth keyboard. It has a 270-degree mount hinge and 180-degree base hinge, so you can adjust it to a preferred height and angle to help avoid neck strain. Made of aluminum, supporting grips finished in rubber won’t scratch the device, and helps avoid slipping. It can easily fold to fit in a briefcase or backpack. Silver, gold, space grey, rose gold; US$40. Satechi.net
MAKE YOUR SYSTEM WIRELESS
ELITE SPORT HEADPHONES
Bluesound (Lenbrook Canada) now offers the RT100 Wireless Speaker Accessory, which uses point-to-point transmission, allowing users to wirelessly pair any subwoofer with the Bluesound Pulse Soundbar or any other Bluesound speaker. A full-range transmitter and receiver, the RT100 can also be used to add wireless transmission capabilities to any existing stereo. It can stream music to or from any component with a USB or analog input. Use one to pair a stereo system with a Bluesound Pulse Subwoofer; or multiple units to connect the stereo and speakers without cables. $149 Bluesound.com
Jabra (Affinity Electronics) has updated its Elite Sport wireless earbuds with a new version that offers up to 50% more battery life and improved audio fidelity. The new earbuds can run for up to 4.5 hours per charge compared to three hours in the previous-generation model. Use the included charging case, and get up to 13.5 hours of use. Use Jabra’s free Sport Life app to personalize the sound through an equalizer. Like its predecessor, this version also has a heart rate monitor, four mics, and several fittings, including Comply Foam. Black, lime green/grey, $350. Jabra.ca
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SHORT BITS
SERIOUS GAMING
IRONMAN HEADPHONES The Pioneer SE-S3M Ironman Sports Earphones are the first product under a new multi-year licensing agreement between Ironman, a Wanda Sports Holdings company, and Pioneer and Onkyo U.S.A. Corporation. The fitness ‘phones are ultra lightweight, and feature full-range, 10mm dynamic drivers, gold-plated 3.5mm stereo miniplug, and three sized ear tips for the perfect fit. The hooks are designed of flexible material that conforms to your ear to prevent chafing, and the unit is sweat and water-resistant, making them ideal for even rigorous physical activities. Aqua, red, black, blue/black, white; $30. Pioneerelectronics.com
EXTRAS FOR YOUR SOUND SoundXtra’s (Erikson Consumer) line of mounts and stands for Bose SoundTouch speakers include floor and desk stands as well as wall mounts for the ST10 and ST20 speakers; a floor stand and desk stand for the ST30; and TV and cantilever wall mounts and a TV stand for the ST300 soundbar. Each is precision made in the U.K. with premium materials. The line also includes both short and long length power cables. The mounts are easy to install and adjust, and include features like tilt and swivel functionality, and cable management. They come in different finishes to match the speakers and room decor. Pricing ranges from $55 up to $550. Soundxtra.com
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Acer’s Predator Z35P gaming monitor is a 35” 21:9 UltraWide WQHD 1800r curved display (3,440 x 1,440 at 100Hz using DisplayPort and up to 3,440 x 1,440 at 50Hz leveraging HDMI) with 4ms response time, 2,500:1 native contrast ratio, 300 cd/m2 brightness, and two built-in 9W speakers for 18W sound, eliminating the need for external speakers. Acer True Harmony fine-tunes and optimizes the frequency. Tilt the stand from -4 to +35 degrees, swivel -20 to 20 degrees and adjust height up to 5”; viewing angles are up to 178-degrees horizontally and vertically. Also find Acer VisionCare with flicker-less, blue light filter; ComfyView and low dimming technologies that help prevent eye fatigue during long gaming periods; and Predator GameView for precise colour adjustments, setting up aim points for hip-fire accuracy, and adjusting dark boost levels for spotting enemies. Save custom settings in three profiles. MSRP $1,500 Acer.ca
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SHORT BITS
HIGH-END TUNES INVOKE SMART HOME CONTROL While it’s unclear when this device will arrive in Canada, it’s another contender in the voice-controlled smart home speaker space. The HK Invoke from Harman Kardon responds to voice via Microsoft’s Cortana. Summon it to play back music, manage calendars and activities, set reminders, check traffic, deliver the news, and control a smart home, including activating lights or adjusting the thermostat. Invoke also offers Skype integration so you can make calls to cell phones, landlines, and other Skype-enabled devices. And, of course, tried and trusted Harman Kardon sound. Fall, pricing TBA. Harmankardon.com
Kick wireless home sound up a notch with the Bryston BryFi high-end tabletop wireless stereo music system, which houses two Bryston Mini A three-way speaker systems, each with a 6.5” woofer, 3.5” midrange and 1” tweeter, driven by a built-in 2x75W amplifier. Based on the Raspberry Pi platform, it connects via 2.4GHz Wi-Fi and Ethernet, and has four USB 2.0 ports, and two 3.5mm analog stereo input jacks. AirPlay compatible, it also supports UPnP for streaming from NAS drives, Android devices and Windows PCs. There’s also a 3.5mm subwoofer output jack. An optional battery pack is available for outdoor use, so you can take the musical enjoyment to the backyard as well. Control playback from iOS and Android devices. Additionally, BryFi can host its own wireless network so you can use it without a network router. $1,495 Bryston.com
IN-CAR ENTERTAINMENT Pioneer’s NEX series single-DIN AVH-3300NEX in-dash multimedia receiver supports Apple CarPlay, Android Auto, and Bluetooth, adding full smartphone connectivity to older cars. It has a motorized 7” touchscreen, and can control content from the Spotify app on iPhone using onscreen controls, or create Pandora stations from the dashboard. When a compatible iOS or Android smartphone is connected to the unit’s USB port, you can control playback of music stored on the device, including high-res FLAC files to 192kHz/24 bits at CD resolution. The App Radio Mode++ feature adds support for the popular Waze traffic and navigation application. It’s back-up camera ready, with configurable width and distance reference lines, has dual camera inputs, and comes with a remote control for adjusting volume and selecting sources. MSRP $900 Pioneerelectronics.ca 14
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Kanto is thrilled to announce that it will be the exclusive audio sponsor of Record Store Day Canada 2018! Held on April 21st , the event will bring together vinyl enthusiasts from all walks of life to celebrate the unique culture of independently owned record stores. Join in on the fun at any of the 300+ participating stores in cities across Canada! Visit recordstoredaycanada.ca WR Č´QG D SDUWLFLSDWLQJ UHFRUG VWRUH QHDU \RX
kantoaudio.com
recordstoredaycanada.ca
SHORT BITS
APP OF THE MONTH: Bring! COVR YOUR HOME Get full, whole-home Wi-Fi coverage with the D-Link Covr AC3900 system, which includes a router that creates an optimized Wi-Fi “PowerZone” to handle demanding activities, along with an extender that handles the outer edges of coverage. The system can provide up to 6,000 square feet of Wi-Fi coverage, while still maintaining the power, speed, and advanced features needed to handle bandwidthintensive activities like 4K streaming and gaming on multiple devices. Set-up is simple through the free D-Link Wi-Fi app or Web-based setup wizard. MSRP $400 Dlink.ca
I’ve been stuck in the stone ages, writing out my weekly grocery lists. Recently, a friend told me about Bring! Use the app to add items by selecting them from a categorized list, manually typing them in, or via voice thanks to an Alexa Skill. When you get each item, tap the image icon and it moves from the “need to get” list to “recently used” so you can easily add back frequently purchased items like milk, eggs, and bread. Along with basics like bacon or strawberries, you can add customized items, like specific brands – the image icon will appear as a corresponding letter of the alphabet. Share the list with the entire family, and everyone can add or remove items as needed/purchased. In addition to your weekly grocery list, create special lists, like summer BBQ, or Bobby’s birthday party. Getbring.com
WHAT TO BINGE WATCH THIS MONTH: The Handmaid’s Tale
Photo: George Kraychyk / Hulu
Riveting right from the get-go, this Hulu original series, streaming on CraveTV, features a stellar cast portraying a disturbingly terrifying storyline. Based on the Margaret Atwood novel of the same name, it’s set in a dystopian, totalitarian society called Gilead that emerged once the U.S. government is overthrown. Plagued with issues of infertility, women who are fertile forcibly become handmaids, tasked with bearing children for powerful couples. The story centres on Offred (Elisabeth Moss), a handmaid struggling to deal with this new world that subjugates women. Also starring is Joseph Fiennes (American Horror Story), Yvonne Strahovski (Dexter), Alexis Bledel (Gilmore Girls), and Samira Wiley (Orange is the New Black). Unlike the book, which was written in the ‘80s, the series takes place in modern-day society, frequently showing flashbacks of Offred’s preGilead life, and how Christian theonomy rapidly took over. Set aside a good amount of time, as you’ll want to binge all the way through this eye-opening series, which has been renewed for a second season. Cravetv.ca
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Welcome to
the 21st Century
DISRUPTORS
In the 21st Century, plenty of industries are, or have been, ripe for disruption. And forward-thinking individuals and companies are taking pride in recognizing that and flipping traditional industry on its head. Similar to entrepreneurial brands that came before them, like Microsoft and HewlettPackard, many of these start-ups began small, by a team of college kids, or ambitious folks working from their garages. Today, they’ve all become massive forces to be reckoned with in a number of industries. In this feature, we highlight seven companies – Airbnb, Amazon, Apple, Google, Netflix, Spotify, and Uber – that have disrupted the way we do business, communicate with one another, travel, consume entertainment, and shop. But more importantly, we look at how smaller companies have leveraged the success of these disruptive technologies to better their own businesses, and have shifted along with the 18
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changing times rather than rolling over and claiming defeat. Beck Taxi’s persistence has made the innovative Toronto cab company successful in competing with the likes of Uber. AV and mobile retailers across Canada are taking advantage of the popularity of Netflix to sell new categories of product, like streaming sticks and smart TVs. Independent shops like Trutone Electronics and chains like Canada Computers are using Google and Amazon to their benefit instead of focusing on how these disruptive online companies can take away sales. The companies that see disruption as motivation rather than disturbance are the ones that will emerge, and have emerged, successful. These profiles also remind us that no idea is a bad idea, no matter how small or unusual it might sound. How many people doubted Jeff Bezos when he decided to sell books online in the ‘90s? And would you have believed in a
concept whereby customers could use an app to book and pay for rooms in other peoples’ homes instead of hotels? There will always be pushback when an idea or innovation disrupts the status quo, along with kinks to work out, and lessons to learn along the way. The first instinct of “traditional” companies is to dwell on the negatives. Apple and Spotify contributed to the demise of physical music media, and music media retailing. Netflix is eating away at cable/satellite TV providers’ bottom lines, and wreaking havoc on the network television business model. Google’s search algorithms reward e-tailers, and retailers with deep pockets, by bumping them up on search results pages. We’ve heard it all. But change is inevitable. And while disruptive, as you’ll read in the upcoming profiles, disruption should also be recognized for helping stagnant industries wake up, smell the coffee, and change with the times. — Christine Persaud
Photo: John Thomson
Disruption. It’s a word we hear often in the tech industry, relating to categories like music, television, and retail; innovations like virtual reality and artificial intelligence; and start-ups that purport to be the “Uber of” just about everything. But tech disruption came long before today’s generation, dating back to the introduction of the Internet, the television, the cassette tape, and even decades before when the motor vehicle disrupted the horse and carriage business.
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DISRUPTORS
Airbnb
BY VAWN HIMMELSBACH BOOKING A TRIP? You’re likely to scan various hotel offerings and then check Airbnb. The shortterm rental company has flipped the hospitality industry on its head, providing an accessible option to rent a room, home, or apartment from a local, anywhere in the world, at a range of price points – from $50 to more than $1,000 per night. And now, Airbnb is expanding its business to include local tours and experiences. “Unlike the traditional hospitality industry, Airbnb is a people-to-people platform...that provides economic empowerment by bringing real benefits to those who share their homes, local communities and travellers alike,” Aaron Zifkin, Regional Director of the Americas operations at Airbnb tells WiFi HiFi.
History of Airbnb Airbnb got its start in 2007 when founders Joe Gebbia and Brian Chesky, both 27 at the time and struggling to pay their rent, came up with the idea of renting out air mattresses, and providing breakfast, in their San Francisco apartment during a conference when the city’s hotels were fully booked. They recruited Nathan Blecharczyk, a former roommate and computer science graduate, to develop the Website. The company officially launched as Air Bed and Breakfast in 2008, but faced a series of rejections until they finally received VC funding in 2009. And, of course, they shortened the name to Airbnb. Locals can list a spare room or property on the Airbnb Website and rent it out to travellers by the day, week or month. Travelers can then
book a stay in someone’s home, anywhere in the world, from the site or app. Airbnb handles the money and provides 24/7 customer support, as well as insurance for the host. “As we grew, we started adding amenities,” says Zifkin, noting that the customer service support centre operates 24/7, and is “staffed with live agents who work with hosts and guests to resolve any issues. With our two-way review system,” he continues, “we allow everyone on our platform to provide feedback and reviews so those on Airbnb can get to know their guests and hosts.” In less than a decade, Airbnb has built up 3 million listings in 65,000 cities and 191+ countries. The company says it has reached 200 million guest stays since its founding, and facilitated as many stays last year as it generated between 2008 to 2015 combined, showcasing the company’s fast-paced growth. The top three destinations booked on Airbnb are the U.S., France and Italy; Canada ranks in the top 10 globally. According to Airbnb’s numbers, it has an established Canadian footprint of 60,000+ listings across the country, with more than 2,400,000 inbound guest arrivals in Canada in the past year. The average length of stay per guest in Canada is 3.7 days. “In the modern economy, supply and demand forces will impact the price of a hotel room or an Airbnb listing, and while price fluctuation is natural, the hotel industry has had the power to raise rates and price gouge consumers at their own will,” says Zifkin. “Airbnb gives consumers more An Airbnb listing from Japan
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affordable accommodation options, and provides an elastic supply during large events. Ultimately, our platform has given consumers more options when they travel.” Airbnb’s transparency, and ease of booking, has differentiated it from the typical hotel experience where, for example, it’s still not always possible for families to book rooms side-by-side. And that’s forcing the industry to make some much-needed changes.
Value of Airbnb Airbnb has managed to distinguish itself in the hospitality industry through data, which it uses to refine its technology platform and match the right guests to the right listings/hosts. The platform continues to evolve with Airbnb Trips (launched in November 2016), which rolled out in Toronto in March and Vancouver in July. “Our vision is to make travel easy and magical by immersing travellers in local communities and providing access to unique and authentic experiences, such as Sake A to Z in Toronto and North Shore Running in Vancouver,” says Zifkin. “Like our core Homes business, Trips is powered by people, which allows us to unlock cultures and places through the people that live there.” This isn’t just limited to vacationers; even business travellers are embracing the Airbnb experience. More than 10% of all travel that happens on Airbnb is for business, with more than 250,000 companies using Airbnb for that purpose, according to Zifkin. The company has responded with Business Travel Ready listings, which offer amenities tailored for business travellers. “A recent trend we’ve seen is that business travel is becoming less about being a road warrior and more about mixing business with leisure,” says Zifkin. “Around 60 per cent of business Airbnb guest meets host
DISRUPTORS : AIRBNB
to visit a community for a big event, during a popular weekend or a holiday. While some price fluctuation can be attributed to basic supply and demand, there have been examples of hotels engaging in price-gouging. Airbnb has the potential to provide travellers with an alternative to high hotel rates, increase supply, and provide more choice.” Moxy Hotel, Marriott International’s lifestyle brand
Responding to the Disruption trips booked on Airbnb in the last year included a Saturday or Sunday night because business travellers are looking for opportunities to mix work travel with the chance to explore a city.”
Challenges on the Road to Success The platform has taken off, but the road to success hasn’t been without a few potholes. In 2012, Airbnb began offering a $1 million ‘Host Guarantee’ insurance coverage policy after receiving complaints from hosts about guests throwing parties and trashing their place. Due to housing regulations, some cities started to fine or evict hosts who were renting on Airbnb (New York threatened to ban short-term rentals in 2014), kicking off a slew of ongoing regulation headaches for the company. Airbnb is now attempting to work with regulators to collect local hotel taxes. There’s also some criticism that Airbnb is pricing renters out of certain markets (in Barcelona, for example), since properties are being used as short-term rentals for tourists. New research from McGill University suggests that a small number of large commercial property owners account for the lion’s share of Airbnb revenues in Montreal, Vancouver, and Toronto, and are eating up the local supply of housing. For its part, Airbnb claims the data was manipulated to misrepresent the profile of hosts. “Roughly three-quarters of our listings are outside the main hotel districts,” says Zifkin, “giving millions of everyday people the chance to travel to cities and neighbourhoods they might otherwise miss, all while bringing economic and tourism benefits to communities that may not have benefited from them before. Airbnb also provides hosts the ability to meet people and share their cities.” Travel now accounts for 10% of global GDP, Zifkin adds. “We believe there are ample opportunities for everyone in this landscape. What Airbnb offers travellers is a new, more affordable option. Travellers have become accustomed to paying high rates for hotel rooms when trying
In addition to affordable, short-term accommodations, Airbnb is also disrupting the hospitality industry by offering unique, interesting experiences. And hoteliers are responding. Hotel chains are attempting to make their brands more interesting, offering features such as mobile check-in or customized ‘experiences’ for guests. They’re also investing in soft brands, such as unique or quirky properties aimed at niche audiences, often at a lower price point, but with standardized service and booking tools, such as Hilton’s Tapestry Collection or Marriott’s Autograph Collection. Some of these brands are meant to appeal to Millennial travellers who want less service, but more technology. Hyatt’s new Hyatt Centric, for example, is piloting room service options, such as the ability to order food from GrubHub and charge it to the room.
Marriott Innovates With its acquisition of Starwood, Marriott International now has 30 brands and 6,100 hotels in 124 countries, as well as two experiential platforms (MR Moments and SPG Moments). One brand it’s rolling out is Moxy, which offers compact, low-cost hotel rooms, accessed with a smartphone app. The brand offers more communal spaces for guests, 24x7 food and drinks, high-speed Wi-Fi, and plenty of connectivity options, as well as extras like an artist-in-residency program and a cool Instagram feed. Moxy Hotels also collaborated with the company’s Content Studio to develop a YouTube Web series hosted by comedian Taryn Southern of Taryn TV. Called Do Not Disturb, it aired weekly on MoxyHotels.com and through the Moxy YouTube channel to serve as a virtual extension of the brand. “As a global company, one of our top priorities is innovation in order to build positive customer experiences and strengthen our customer relationships,” says Don Cleary, President of Marriott International, Canada. “Some of the innovations we’ve led in loyalty in recent past include offering our Marriott Rewards and SPG members a slew of benefits such as free Wi-Fi, exclusive
room rates, and the ability to use points to pay for experiences like private wine tastings, celebrity meet and greets, and even exclusive concert and sports packages.” The company also launched a redesigned Marriott mobile app in January, which allows guests to communicate directly with hotels about their preferences before and during a stay, and to use their smartphone as a room key at more than 500 of its properties. In 2014, Marriott began offering mobile check-in/check-out and mobile room ready alerts; to date, more than 12 million guests have taken advantage of that feature, according to the company. A collaboration with Netflix is also meant to build on the customer experience. “Because consumers are choosing to take their streaming content with them when they travel,” says Cleary, “Marriott is making it a priority for them to easily access and view their preferred content via their Netflix accounts in their guest rooms.” This August, Marriott confirmed a joint venture with Alibaba Group Holding Ltd. that will serve Chinese consumers traveling abroad and domestically. Through the Fliggy storefront, Alibaba’s travel service platform, Chinese travelers can gain access to information and promotions for Marriott hotels, providing a seamless, integrated and personalized experience. Marriott’s strategic efforts to gain traction in a changing market are getting noticed. Forbes recently named the company among 2017’s World’s Most Innovative Companies, joining the ranks of others like Tesla, Amazon, and Netflix.
Bottom Line In an interview with Fortune, Airbnb co-founder Chesky said the short-term rental company serves a different segment of travellers than hotels: the average Airbnb stay is 2.5 times longer than the average hotel stay. But there’s no doubt its business model has disrupted the traditional hotel business, offering another option to short- and long-term travellers, and it’s even wooing business travellers. That’s forced the hospitality industry, an industry that has traditionally been slow to evolve and adopt new technologies, to improve the guest experience, from offering niche products to experiential services. And hotels are placing more emphasis on traditional strengths, such as amenities, safety and standardized service. Hotels aren’t disappearing. But they’re evolving, thanks to Airbnb. And that adds up to more choice, and better choices, for travellers. September 2017
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DISRUPTORS
Spotify + Apple
BY GORDON BROCKHOUSE
with credit card info) of customers to whom it could pitch the service; a ready-made IT infrastructure loaded with music files; and control of the iOS and macOS platforms into which it could embed Apple Music functionality. Spotify had to build its infrastructure, client software and customer base from scratch. Both companies had to negotiate agreements with rights-holders. But Apple has the clout that comes with owning the world’s biggest music store.
Carnage In Retail
IS TURNABOUT FAIR PLAY? In 2003, Apple turned the music business on its ear with the launch of the iTunes Store. For the first time ever, music fans could legally buy just the songs they wanted online, instead of having to purchase an entire album on CD. Until then, their only other option was peer-to-peer music-sharing services. We all know what happened next. CD sales plunged, and conventional music stores fell like bricks (and mortar). By 2010, Apple’s iTunes store was the world’s largest music retailer. But even as Apple was attaining its dominant position, a Swedish upstart was getting set to shake up the music business yet again. This time around, it’s Apple who’s getting disrupted. Founded in 2006, Spotify launched its musicstreaming service in 2009 in Europe. The American launch came in mid-2011; Canada followed in September 2014. The service is now available in 60 markets. As of July 2017, Spotify had 140 million active users, 60 million of whom are paid subscribers. The appeal of streaming is easy to understand. It gives music fans access to a far vaster library than they can carry on a device or store on a computer. If you don’t have to buy music to hear it, you can experiment. Spotify has some appealing features that enrich that discovery process, such as personalized playlists with new music by users’ favourite artists, and playlists that mix users’ favourite tracks with new songs. Services like Spotify also have social components that let users follow the music their friends are listening to. 22
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Big Numbers Not surprisingly, streaming has taken a bite out of download sales, an area that Apple dominates. According to the International Federation of the Phonograph Industry (IFPI), global revenue from download sales fell by 20.5% in 2016, while global revenue from streaming grew 60.4%. In Canada, the trade value of download sales fell 14.8% in 2016 to $134 million, while the trade value of streaming grew 156.4% to $170 million, according to Music Canada (formerly the Canadian Recording Industry Association). Don’t shed too many tears for Apple though. In mid-2015, Apple launched its own streaming service in 100 countries. As of June 2017, Apple Music had 27 million paid subscribers. Apple continues to be one of the world’s most profitable companies. For the quarter ended August 1, 2017, the company reported net profit of US$8.7 billion on revenue of US$52.9 billion, and cash holdings of US$261.5 billion. Meanwhile, Spotify is hemorrhaging cash. The company’s revenues grew from €1.93 billion in 2015 to €2.93 billion in 2016. But in the same period, its net loss increased from €231.4 million to €539.2 million. Spotify cites product development, international expansion and new personnel as reasons for the increased losses. According to published reports, Spotify plans to go public next year, but wants to polish up its balance sheet first. Apple had some big advantages over Spotify (and other startups) when it came to launching a streaming service: a huge database (complete
The term “disruption” could have been coined for the music business. The 1980s, ’90s and early 2000s were a golden age for record labels and music stores. Following the introduction of the CD in 1983, hordes of consumers went digital. Not only did they buy new titles, after drinking the perfect-sound-forever Kool-Aid, they replaced many of their LPs with shiny new CDs. Then the Internet happened. The first big disruptor was the Napster file-sharing service, which specialized in MP3 music files. It operated from 1999 until 2001, and at its peak had 80 million registered users. Napster shut down the service after it was successfully sued for copyright infringement. The Canadian music chain Sam the Record Man cited file-sharing as one factor leading to its bankruptcy in 2001. A dozen Toronto locations, including the flagship Yonge Street store, reopened in 2002 under new management.
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DISRUPTORS : SPOTIFY + APPLE
Douglas Putman President, Sunrise Records
The following year, Apple’s iTunes store legitimized music downloads, and the disruption accelerated. The Canadian iTunes store opened in December 2004. The next year, the trade value of Canadian CD sales fell 4.7%, from $600 million to $570 million; and they’ve been falling ever since. The same year, revenue from downloads grew 468.3% to $12.5 million. Their trajectories crossed in 2013, when the trade value of CD sales fell 18.7% to $152 million, while downloads grew 3.9% to $179.5 million. Streaming was already become a force, with trade value exceeding $27 million (all data from Music Canada). As noted above, the trade value of streaming overtook downloads in Canada last year. Couple that with Amazon’s huge share of CD sales (its music download service isn’t available in Canada), and what you have is carnage in the record business – and not just in Canada. California-based Tower Records declared bankruptcy and closed its last store, at 1961 Broadway in New York, on December 22, 2006. In 2007, Sam the Record Man, which at its peak had 140 locations, closed its Yonge Street store. That iconic
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store had been a Mecca for Canadian musicians and music-lovers for almost six decades. A more recent casualty is HMV Canada. In January of this year, its parent company filed for receivership, and announced plans to close all 102 of its stores.
Let’s Get Physical But the record store is far from dead. In October 2014, Douglas Putman, a young entrepreneur based in Ancaster, ON, bought a distressed retail chain, Sunrise Records, and expanded from five to nine stores. In March of this year, Sunrise Records acquired the leases for 70 former HMV locations and converted them to Sunrise stores. At the same time, Putman invited 1,340 ex-HMV employees to apply for 700 positions at Sunrise. The chain now has 80 locations across Canada. With so many casualties littering the landscape, what led Putman to make this leap of faith? “I just saw a very dedicated fan base, coupled with the uptick in vinyl,” he replies. “I believe this will be a strong enough business to continue for many years. We have a few things going for us: vinyl sales are surging, and the market for retail space is very soft, so rents are more attractive. If you can control your major expenses, you can do really well.” Putman believes that streaming is good for companies like Sunrise Records. “For retail, streaming is not as big a disruptor as downloads were,” he elaborates. “Streaming is a great way to discover music, then you come to the store to buy the product. On a Saturday in our stores, you’ll see people in their 60s, and people in their 20s and 30s. It’s not just vinyl. In every store, people are buying CDs. They just want that physical product. I think people inherently like to collect and own.” Oles Protsidym believes the desire to collect extends to the virtual world. Protsidym is CEO of Montreal-based Pro Studio Masters, a high-res
music download service. While streaming has clearly impacted mainstream download sites like the iTunes Store and Amazon Music, specialty sites like Pro Studio Masters continue to grow. The key is sound quality, Protsidym says. “The audiophile segment is our major market,” he explains. “It’s a completely different quality level than Spotify. I believe the rental model is a great discovery tool. But you still want your favourite music in the best quality on your shelf – or virtual shelf.”
Jake Be Nimble Toronto entertainer Jake Hiebert (a.k.a. Big Rude Jake) also sees the desire to collect and own. Like many musicians, he’s been impacted by a shifting market for recorded music. Although he’s a wonderful performer and songwriter (If you like retro styles like jump and swing, check out his album Quicksand), Hiebert doesn’t have a record deal. And he says royalty distributions from SOCAN (the Society of Composers, Authors and Music Publishers of Canada), which cover streaming and airplay, are “paltry.” But CD sales really help pay the bills. “It’s not through record stores,” Hiebert says. “It’s back-ofstage. You put on a bang-up show, and people want a souvenir. They want an actual CD with a nice picture of the band. Without CD sales, I wouldn’t have a hope and prayer.” In 2014, one of Hiebert’s bands, Big Rude Jake and the Jump City Diplomats, toured France. Before the tour, they recorded a CD with a RadioCanada announcer specifically for the French market. “We sold out by the third show,” Hiebert says, “and needed to send home for more. “As economic realities change, you have to be nimble,” he adds. “You have to change your plan or get out of the way.” Sounds like good advice for any business facing disruption.
DISRUPTORS
Netflix
BY CHRISTINE PERSAUD In 2007, Netflix began offering a pay-one-price, unlimited viewing streaming service that would change the face of entertainment as we know it. Netflix continued its upward trajectory by forging partnerships with gaming console, Blu-ray player, set-top box, and smart TV manufacturers, making its service seamlessly accessible through a multitude of devices. In 2010, the same year Netflix launched in Canada, it also jumped on the mobile bandwagon and debuted apps that allow members to watch favourite TV series and movies on smartphones and tablets anywhere with a Wi-Fi or cellular connection. It catered to the growing desire to access content when, where, and how you want it – a concept that alternative video services like YouTube were quickly picking up on.
History of Netflix
Netflix’s Value
In 1997, Netflix offered movie rentals, then launched a Website in 1998. By 1999, it had shifted to a subscription model, offering members unlimited rentals for a single monthly price. The decision in 2000 to leverage customer ratings to predict future content choices demonstrated the company’s keen sense for consumers’ growing desires for customization and personalization. While many blame Netflix for the demise of stalwarts in the video rental space like Blockbuster and Jumbo Video (in fact, Blockbuster had even offered to acquire Netflix in its early days), let’s not forget that Netflix had its own competition with which to contend, like on-demand cable TV, pay-per-view, and digital downloads through services like iTunes.
Today, with several tiers of service, high-definition content, Dolby Atmos-enabled fare, and a roster of popular and award-winning original series like Stranger Things, Orange is the New Black, and 13 Reasons Why, Netflix has turned the television business on its head. It’s as much a content producer rivalling big networks as it is a competitor for traditional linear cable/satellite TV providers. The company has helped usher in an entirely new category of streaming TV providers and content producers – most notably Hulu, Amazon Prime Video, and CraveTV – and drove several networks to experiment by offering their own streaming subscription alternatives to grab a piece of the shifting pie.
Photo courtesy of Netflix
IT’S HARD TO BELIEVE that Netflix launched in Canada less than a decade ago in 2010, and went worldwide just last year. Yet in that short span of time, the company has managed to become a massive force in the television space, both as a television and movie distribution medium and content producer. Today, Netflix has more than 100 million subscribers in over 190 countries enjoying upwards of 125 million hours of television shows, movies, and documentaries, including a rapidly growing list of original series. Netflix is a contender on the awards circuit, and has become a viable player in content production. And to think, Netflix got its start by developing an innovative way to bring the business of video rentals into the 21st century.
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Stranger Things (Netflix)
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Netflix’s star is rising. This year, Netflix garnered a record 93 Emmy Award nominations for its original content, almost double last year, and behind only HBO’s impressive 110. Netflix is producing more than 600 hours of content, and plans to spend US$6 billion to add more this year, compared to Amazon’s estimated US$4 billion and Hulu’s reported US$2.5 billion. In an interview with GQ back in 2013, Chief Content Officer Ted Sarandos said the company’s goal was to “become HBO faster than HBO can become us.” Morgan Stanley suggests that the value of Netflix content has more than doubled over the last two years, with its library worth about US$12 billion in net assets for the first quarter of 2017, compared to US$5.7 billion in Q1 2015. In 2015, original content accounted for less than 5.1% of Netflix’s net assets, whereas today, it’s about 14%, with an estimated 126 original series and films released in 2016. If you were to have invested US$5,000 in Netflix when it went public in May 2002, those shares would have risen in value over 16,000%, and be worth more than US$800,000 today. Netflix has made aggressive investments in order to secure its position: the company, according to Morgan Stanley, is expected to have negative cash flow of US$2 billion this year to accommodate its continued investment in original content, which CEO and founder Reed Hastings has said he’s confident will yield better long-term results than exclusive investments in streaming rights. But media outlets like the Los Angeles Times wonder if Netflix can continue its cycle of “burning through” cash: the streaming service cancelled popular original series like The Get Down and Sense8, reportedly because they were too expensive to produce. The LA Times pegged
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Netflix’s debt at US$20.54 billion, though the streaming company told Vibe that its total gross debt is actually US$4.8 billion, and market value US$75 billion. In early August, Netflix continued its diverse investments with the acquisition of comic book publisher Millarworld, the company behind stories like Kick-Ass and Kingsman.
Responding to the Disruption Like the transportation business, it’s no surprise that Netflix’s streaming concept caught on. Not only because of the convenience and attractive pricing, but because the cable television business was plagued with customer distaste for some time. And while attention these days has shifted to Netflix’s disruption in the content production space, the streaming site continues to impact the cable/satellite TV space’s bottom line. The Canadian Radio-television Telecommunications Commission (CRTC) reports that revenue for satellite companies decreased by 5.2% from $2.4 billion in 2014 to $2.3 billion in 2015, while IPTV services were growing by double digits. In Canada, customers had long been screaming for a way to catch their favourite programming without having to pay high monthly cable subscription rates for plans that included channels they never watch. Netflix was initially deemed a supplementary service with a diverse back catalogue of popular series. But it has now become a compelling enough option to convince customers to cancel cable/satellite TV packages altogether – a practice known as cord-cutting. Sports, live events, and the ability to watch favourite series as they air have been the saving grace for traditional and premium network TV. But as more quality content lands on or originates from Netflix, cord-cutting is becoming a sweeter deal. Many believe streaming will remain complementary to traditional linear TV. At the 2016 Canadian Telecom Summit in Toronto, David Purdy, Chief International Growth Officer at Vice Media, said he believed subscription services would begin to look more like cable offerings. Vice, which predominantly targets Millennials, even launched its own linear TV channel, Viceland, in order to reach advertisers they couldn’t with a digital presence. In response to the growing streaming medium, cable and satellite TV packaging changed, with Pick and Pay options added to appease the CRTC and entice customers to come back on board. But that did little to quell customer dissent. Providers continue to struggle balancing customer desires with presumed revenue losses from cord-cutters, and 28
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Photo courtesy of Bell Media
DISRUPTORS : NETFLIX
Letterkenny (CraveTV)
optimum profitability. In Canada, companies like Bell and Rogers can offset declines in linear TV subscriptions with other thriving services like broadband Internet and cellular networks, as well as content properties. But some have done more than that.
Bell Craves its Own Disruption Traditional cable and satellite TV companies are working with Netflix rather than against it. Use Bell Fibe TV, for example, to access a Netflix account directly through the set-top box’s apps menu – no smart TV or streaming device needed. Rogers introduced shomi in 2014, a joint venture streaming TV service with Shaw. But it closed up shop two years later, and began offering discounted Netflix subscriptions to customers of its many media services as an incentive, hoping for a winwin proposition. David Asch, Senior Vice President and General Manager of shomi said at the time that the business was more challenging than they expected, and that the “business climate and online video marketplace have changed markedly in the last few years.” Amazon Prime Video launched in Canada in 2016, offering a selection of content to Canadians, including popular original series like Goliath and Sneaky Pete, as well as award-winning film Manchester By The Sea. And homegrown Bell has done well with its CraveTV service, which reportedly has more than one-million subscribers to date. In addition to original content, and snagging rights to a vast library of hot series like Seinfeld, Doctor Who, and all 50 years worth of Bond films, what has helped Bell succeed where shomi could not is that the company owns The Movie Network (TMN), which in turn owns HBO Canada. This gives CraveTV access to exclusive Canadian streaming rights for HBO’s entire off-library and high-profile back catalogue, including series like True Detective, The Wire, The Sopranos, and Twin Peaks. Bell also inked deals to get several Showtime
series, and has joined forces with Netflix competitors stateside like Hulu to offer up hot new titles, like the Hulu original The Handmaid’s Tale – the entire series aired on the specialty Bell channel Bravo in Canada, and the first season was made available for streaming on CraveTV in late July. Bell followed in Netflix’s footsteps by developing its own original programming as well, differentiating with series that appeal to Great White North sensibilities, like What Would Sal Do?, Russell Peters is the Indian Detective, and its most popular original, Letterkenny. Consider that Bell technically accounts for 234 Emmy nominations this year, including HBO series, essentially blowing those seemingly massive Netflix figures out of the water. Initially available only to Bell TV subscribers, CraveTV is now accessible to any Canadian with Internet access, as well as through several linear TV service providers, including Telus Optik TV, Eastlink, and Sasktel. For $7.99/mo., you can access the service, just like Netflix, through mobile apps, computers, Windows 8.1, Apple TV, Chromecast, and soon gaming consoles. Bell also partnered with the biggest TV manufacturer, Samsung, to offer CraveTV through some of its smart TVs. There’s a useful lesson that can apply to other businesses: if you can’t beat ‘em, join ‘em. Yes, Bell’s deep pockets puts the company in a position to take Netflix on in a way that smaller firms could only dream of doing. But recognizing Netflix’s success, implementing new strategies, and developing a model of its own, despite how it might detract attention from Bell’s core business, was the right move.
Bottom Line A shift to streaming television was inevitable. Netflix struck at the right time, and in an industry that was in dire need of change. And while customer distaste for companies like Bell is what, ironically, helped drive Netflix’s success in Canada in the first place, CraveTV suggests that disruption can lead to innovation. Beyond Bell, it’s worth noting that Netflix has been a boon for other businesses. It has inspired new categories of product, from streaming sticks to smart TVs. Internet and cellular providers are reaping the benefits of the consumer’s need for the increased data streaming requires. And retailers are enjoying the opportunity to sell new high-margin accessories, and piggybacking on the success of Netflix to help sell all of the gear one can use to enjoy streaming content, like bigscreen TVs, surround sound speakers, and 4K smartphones and tablets.
DISRUPTORS
Uber
BY CHRISTINE PERSAUD PICTURE THIS SCENE: a young woman is standing on a street corner in the wee hours of the morning after a night out at the bar with her friends. She’s anxiously waiting for a lit up taxi to approach so she can thrust out her hand and hail it in hopes that the driver doesn’t think she’s too intoxicated and keeps going. Once she hops inside, she tiredly gives him her address while using the flashlight on her phone to search inside her purse for enough money to cover the anticipated fee plus tip. Shoot, she only has a $20 bill, which means waiting for the surly driver to slowly and annoyingly count out his toonies and loonies to provide change. This was the perception of taxi companies until Uber reared its head, less than a decade ago, and disrupted the concept of paid transportation as we know it.
How Uber Came About, and How it Works On a cold and snowy night in 2008, Canadianborn Garrett Camp and his friends were having trouble ordering an affordable cab. And that’s when the light bulb clicked, and the idea for Uber was hatched. UberCab, as it was first known, officcially launched in beta in May 2 2010, with the help of CEO and
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advisor Travis Kalanick, and the company began offering black luxury cars in San Francisco in 2011, at a 1.5 time rate over traditional taxis. The concept of Uber is simple: download the app, set up an account, enter your credit card information, then input your desired destination, summon a driver, and wait. Hop in the car, enjoy your ride, then hop out. No money exchanges hands, no awkward hailing on the street, or phone calls to order a pickup. Uber has since expanded to include several tiered services, including cars and independent taxi drivers who are part of the network, many alongside other brokerages with which they’re working. Then, Uber launched its controversial UberX option, whereby vetted but untrained aspiring drivers use their own vehicles to pick up and drop off passengers on their own schedule, often for supplementary income or as a parttime job during retirement. Today, Uber operates in 632 cities around the world, and counting. In Canada, that includes Hamilton, ON, Quebec City, Calgary, Kingston, ON, Kitchener-Waterloo, London, ON, Toronto, Montreal, Edmonton, Niagara region, Windsor, ON, Ottawa, and Gatineau, QC. And the company has made billions of connections between drivers and passengers worldwide.
Uber has been lauded for reinventing the way we get around, particularly in busy, urban downtown areas like Toronto. Innovative features introduced along the way, like ride sharing, integration with transit stops, saved places, and the ability to request a ride for a loved one, have enhanced the experience. Uber has also gotten involved in ventures like food and package delivery, taking the company beyond just a simple, modern ride-hailing service.
Controversies Of course no disruption occurs without controversy, and Uber has been rife with it from the very beginning. From protests by taxi companies that claim Uber does not follow the same rules and regulations, to questions of liability and classifications of drivers (are they employees or independent contractors?), not to mention the safety aspects of passengers getting into strangers’ cars with UberX, it has been a rocky road. Pile on top of that employee complaints of alleged harassment and misconduct, and drivers who were reportedly irked about the absence of benefits and wage guarantees, and it recently culminated in Kalanick stepping down from his post as CEO. In mid-August, it was confirmed that Ryan Graves, the company’s senior vice president of global operations and its first-ever employee, would be leaving the company by mid-September, though he remains on the board of directors. At the time of this writing in mid-August, Uber still had not yet appointed a new CEO, and many other executive positions remained vacant. Nonetheless, Uber has been a force to be reckoned with. In May, the company celebrated reaching a milestone: it has now facilitated more than five billion trips around the world. Since Kalanick’s departure, the company has begun to look at ways to improve relationships with its drivers, implementing a plan it calls “180 Days of Change” to make things “more flexible and less stressful” for drivers. Some of the recent changes include allowing passengers to tip drivers, and paying the driver if the rider cancels after two minutes, or makes him wait more than two minutes. Uber has also added 24/7 phone support for drivers and delivery partners in Canada and the U.S. It’s part of a massive overhaul to revamp the company’s image. However, other adjustments will have a negative impact on employees: Uber is shuttering its XChange Leading subsidiary in the U.S., which financed leases and rentals for drivers with poor or no credit, potentially affecting up to 500 of its total 15,000 person workforce.
DISRUPTORS : UBER
Responding to the Disruption Meanwhile in Toronto, family-run taxi company Beck has taken Uber head on, and risen to the occasion. Celebrating 50 years in business, Beck operates as a taxi brokerage, which means it does not own its fleet of cars. Rather, each of its independently-owned cabs and drivers pay the company for dispatch and marketing. Beck has more than 2,000 cabs on the roads of the massive Ontarian city, and Operations Manager Kristine Hubbard tells WiFi HiFi that they’ve never been busier. Today, they’re dispatching about 30,000 trips daily, and 10 million rides per year, not including drivers that respond to passengers flagging them down on the road. This makes Beck the largest fleet under a single banner of a single company. Beck had a few advantages right from the get-go. The business, which was founded by Hubbard’s grandfather Jim Beck in 1968, actually launched its simple taxi ordering app before Uber arrived in the city in 2012, and it took off, being used by people thousands of times almost right off the bat. When Uber entered the Toronto market claiming that it was a different kind of service, offering an app to connect passengers with riders without hiring the drivers or owning the taxis, Hubbard cried foul, noting Beck had been doing just that for years. “All of these rules that had applied to us for so many years,” she says, “how is it that this company is getting away with not having to abide by any of them?” But that’s when Hubbard had to make a choice: complain or compete. And while there’s no denying that Beck, and every other “traditional” cab company has, and continues to do, plenty of the former, Hubbard wanted to focus on the latter. So Beck continued operations, focusing on its people, including drivers and passengers. And while Hubbard doesn’t always agree with governmental regulations regarding taxi companies, she says it’s important to work within the rules that are provided. When it comes to meter rates, for example, they were set by the city, and are based on fair wages. “How do you tell a taxi driver that he has to replace his vehicle every five years,” she asks, “but then suggest that anyone can discount how much money he’s going to make any time he wants?” Using the banner of innovation and convenience, she continues, has actually turned back the clock of important worker protection and safety regulations. “And the City of Toronto,” she
marketing purposes, too. That said, there are so many other things to care about, she emphasizes. A personal connection is critical to any business, including the transportation space. Part of Uber’s 180-day plan suggests that the company is now trying to pay closer attention to this, at least between management and employees/ drivers. Despite the rise of technology, Beck still gets most of its inquiries by phone, says Hubbard, even by young customers who otherwise use apps on a daily basis.
The Human Connection Will Thrive Despite More Disruption to Come
Kristine Hubbard, Operations Manager, Beck Taxi
adds, “is applauding themselves as heroes for having done it.” Nonetheless, Beck soldiered on, recognizing what it does well, and determining what it could do better. That included offering mandatory training for drivers through a Taxi Driving Training Program at Centennial College, complete with in-car defensive driving certification. Beck also wanted to make sure cars were safe for customers, and upgraded its dispatch technologies to allow for a seamless experience for both workers and passengers. Beck’s end-to-end dispatch software, which was designed in-house, works among the customer/driver apps and the hardware. An in-house development team is tasked with continuously improving it. “I lost 10 years off my life,” jokes Hubbard, who refers to the software as the company’s central nervous system, “but it is out there and it has been in operation for 10 years now.” Hubbard recognizes that an app is essential these days, not only to effectively complete with companies like Uber, but also for customer convenience. So Beck continuously adds new and compelling features to its app. Of late, that includes parcel deliveries and future scheduled rides. And she sees the value of having an app for
It’s not just Uber with which companies like Beck have to contend: self-driving cars may mark the next wave in disruption, for both Uber and traditional cab companies. But Hubbard notes that there are still people, like the elderly, disabled, young children, or those with cognitive disabilities, who rely on, or at least desire to have, an actual human connection when they hail a ride. That’s why Beck offers options like on-demand wheelchair accessible services. And, citing a recent article she came across, Hubbard jokingly adds “who would clean up the puke in the back of a self-driven car after a late-night pickup if someone got sick?” Further, there’s something to be said for drivers who know a city’s routes, traffic patterns, and back roads in and out, better than any app or algorithm can. You can’t put a price on having a driver who can be confident and aggressive enough to get you to where you need to be in a timely fashion, without putting you in danger – even if he is a bit surly for the 15-minute trip. When you’re talking about cities like New York, downtown Las Vegas, and even downtown Toronto or Montreal, that criterion is critical. Focusing on what you can offer that even the tech-savviest of new options can’t is what will trigger an appreciation in the customer’s mind, no matter what you’re selling. There’s an art to being a taxi driver. That said, traditional taxi companies and ventures like Uber and Lyft can and will co-exist. And both will likely be around for some time – until a company comes up with the self-driving, self-cleaning car, that is. Even then, who will manage and monitor these vehicles? “We’re part of our community,” says Hubbard, “part of our city. Technology is exciting, but people are really at the core of our business. “The reality is,” she continues, in reference to Uber and its disruptive nature, “they are doing their thing, and we’re doing ours.” September 2017
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DISRUPTORS
BY FRANK LENK
GOOGLE IS PERHAPS the most remarkable company to emerge from the digital age. It sells few tangible products, and innovates in diverse ways that would be largely incomprehensible to the average consumer. Google’s Chrome is the most popular Web browser, and Google’s Android operating system dominates the mobile world. The word “Google” used as a verb has literally become synonymous with “search.” And yet, it’s doubtful that many consumers could correctly identify the company’s most disruptive innovations, or its main source of revenue. In fact, Google’s most disruptive innovation, the spark of genius that made it a global powerhouse, was not search as such. It was a way to effectively monetize searches. And, by extension, to monetize the entire Internet.
History of Google Google’s founders, Larry Page and Sergey Brin, were Ph.D. students at Stanford University in California when they came up with a better way of ranking search results. Instead of assessing a site’s content directly, Google’s PageRank system rates the site’s importance by counting the number of sites that link to it. Like so many other innovations, the Google search engine launched in a basement. It came online in 1997, and the company incorporated in 1998. Early capital came from a number of inves32
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tors, including Amazon.com founder Jeff Bezos. The initial public offering didn’t come until 2004, and then quickly raised US$23 billion. Since then, Google’s interests have widened at an amazing pace. Today the company offers not only search, but also maps of the entire planet, online productivity software (Google Docs), e-mail (Gmail), social networking (Google+), video sharing (YouTube), the leading mobile operating system (Android) and Pixel smartphones, the leading Web browser (Chrome), the separate Chrome OS aimed at low-cost computing applications, low-cost virtual reality systems (Cardboard, Daydream View), and much, much more. In 2015 the organization was restructured, with Google itself becoming the main subsidiary of an umbrella company, Alphabet Inc. This
allowed forward-looking projects to be more easily spun off as companies. For example, Waymo is the self-driving car company. Verily Life Sciences is in biotechnology. And Nest, of course, is in home automation. Google’s recent moves into virtual reality are typical of its ‘bread cast upon the waters’ approach. The Google Cardboard headset was offered as a free, downloadable design that could be assembled by enthusiasts or manufactured by entrepreneurs. At other times, Google has similarly given away 3D design software (Sketchup), Photoshop add-ons for photographers (Nik Collection), image editing and organizing software (Picasa), and more. Even the Android operating system remains free and, to a significant degree, open source. The company’s most recent annual report cites Google’s original founders’ letter: “Google is not a conventional company. We do not intend to become one,” it promised, adding that the company intended to make “smaller bets in areas that might seem very speculative or even strange when compared to our current businesses.” Despite all that activity, Google hasn’t changed what it ‘does for a living.’ It sells advertising. Google’s revenue for fiscal 2016 was just over US$90 billion, up by 20% over the previous year. Of that total, US$89.5 billion came from the Google Segment: advertising on such core businesses as search, YouTube, Google Play, et cetera. Total ad revenues were listed as just over $79 billion. A mere $0.8 billion came from Google’s Other Bets segment: Nest, Waymo, and R&D work. Google Segment “aggregate paid clicks” increased by 32% in 2016, and Google Properties paid clicks by 40%. So it’s clearly a booming business. In short, Google essentially gives away most of what it creates, and subsists almost entirely on ad revenue from its search engine and other online services.
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DISRUPTORS : GOOGLE Google’s Disruption Google was a latecomer to search, and offered no vast innovation to the end user. It had a lean interface, to be sure. And it had a superior approach to ranking pages. But more importantly, it brought a clever new way of monetizing search. Brin and Page were well aware of the risks inherent in tying search to advertising revenue, as documented in their seminal Stanford University paper, The Anatomy of a Large-Scale Hypertextual Web Search Engine. In a section titled “Advertising and Mixed Motives,” they noted that an ad-driven search site would have an incentive to downgrade hits that might be disadvantageous to its customers, or to upgrade paying advertisers to the top of the results. The ad system they developed for Google was designed to avoid such pitfalls. Paid results are separated from normal search results, and clearly marked “sponsored link.” These links are in turn not arbitrarily displayed for cash, but are instead triggered by relevant search queries. The Google page may also offer extra information, in a sidebar. This might include unbiased extras such as company profiles, or news items related to the user’s query. But relevant paid ads are always clearly marked as such. And the advertiser pays only if their ad comes up and the user finds it useful enough to click on. The net result is that Google’s search results remain untainted, and its page remains uncluttered. This AdWords system has been expanded to work with both the Google Search Network and the Google Display Network, dovetailing with Google’s AdSense and DoubleClick ad distribution services. Other services have been added as well. Google Analytics is used by many sites to gather statistics on user traffic. Google Tag Manager gathers more-detailed stats on user behaviour. Most of this is invisible to the average consumer. Searches bring the results they were looking for. On other sites, it takes some extra browser plugins to reveal that content might be loading not just from the site’s own servers, but from DoubleClick’s servers as well.
Responses to the Disruption While Google does very nicely in advertising, it doesn’t lack for competition. The online ad ecosystem encompasses hundreds of companies large and small. However, when it comes to search itself, Google stands alone. Other search engines may give similarly useful results, but users gravitate overwhelmingly to Google. 36
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Google co-founders Larry Page (left) and Sergey Brin
According to StatCounter.com, Google has about 92% of the search traffic worldwide. The U.S. market is slightly more competitive, with Google holding just 87%. In Canada, it’s over 90%. NetMarketShare gives Google over 96% of mobile searches. The two main alternatives to Google are Yahoo and Microsoft’s Bing. Neither seems likely to gain market share any time soon. Bing, for example, has been given a head start as the default in Windows, and integrated into Microsoft services such as Cortana. Even so, it has achieved only about 6.2% share of U.S. searches, barely ahead of Yahoo’s 5.6%. Worldwide, Bing is at 2.6%, compared to 2.2% for Yahoo. This situation has raised some hackles in Europe, where Google holds a commanding 91% share, and the only significant non-U.S.-based search option is Russia’s Yandex, at just under 2%. Not surprisingly, the European Union isn’t enamoured of having essential infrastructure controlled by a foreign entity. In 2005, France began a project to create its own Quaero search engine, oriented particu-
larly to finding photos and videos. Germany collaborated at first, then proposed its own text-oriented Theseus search project. Neither initiative went very far. At this point, the EU has found no proper remedy for the situation. However, European courts have voided the long-standing agreement that allowed Google and other companies to freely siphon European data back to the U.S. Google’s annual report admits that the potential replacement, Privacy Shield, remains a source of uncertainty for the company. But by far the biggest gap in Google’s search dominance is China, where StatCounter shows Baidu with 77% share, followed by two other Chinese engines at around 8% each, and Google far behind with just 1.7%. It seems unlikely that Google will make huge gains any time soon – and equally unlikely that Baidu will make much headway outside of China. It’s also worth noting that the tiny independent search service DuckDuckGo, which acts mainly as an anonymizing front-end to Yahoo search, now shows a respectable 0.6% share of U.S. searches. That’s a staggering number, given that it’s driven mainly by word of mouth recommendation and mounting public concerns over privacy. Still, despite its fearsome size, smaller companies can leverage Google to compete, through the scalable pricing of its AdWords program. For example, Mississauga, ON-based retailer Trutone Electronics Inc. has used ads on Google search for several years, according to Online Manager Luis DaSilva. “It gives us the ability to get into the customer’s face right away,” he quips, and it’s a lot more efficient than “putting a lot of time and effort into SEO” (search engine optimization). Together with Google Analytics, Trutone is able to track results and get a verified return on its ad investment. DaSilva does caution that this can take some effort. “It can get really, really complex,” he says, and the cost can rise considerably, depending on the type of campaign. But it’s a powerful opportunity that Google has created for smaller companies to get big exposure.
Bottom Line Google has been a paradoxical entity right from the start, and today, it remains uniquely amorphous and inscrutable. It’s like some new digital proto-life-form, still shapeless but evolving rapidly. In contrast to some of the other companies we’ve looked at this month, Google’s biggest disruptions may still lie ahead.
DISRUPTORS
Amazon
BY FRANK LENK THERE’S A RUNNING GAG in the 1993 film Demolition Man that seems more prescient with each passing year. In the future, explains Sandra Bullock, all restaurants are Taco Bell. It’s a ludicrous worst-case scenario. But it’s not nearly so ludicrous to wonder if, sometime soon, all retailers might be Amazon. The Internet would have been disruptive to retailing no matter what. But this one company, Amazon, has seemed bent on making it as disruptive as possible. Starting as just an online bookstore, Amazon has expanded relentlessly, and shows no sign of moderating its ambitions as it nears its 25th year, and its founder remains the second world’s richest person (and was briefly the first). How did Amazon rise to dominate the way we buy things? And how much further is the transformation of retailing likely to go?
History of Amazon Amazon.com was founded in 1994 by Jeff Bezos, literally in the garage of his house in a suburb of Seattle. Bezos was no crackpot inventor: he’d left a million-dollar job on Wall Street specifically to start a business that could ride the coming boom in Internet commerce. Amazon’s initial funding included Bezos’ own nest egg, as well as a few hundred thousand dollars from various investors, eventually totaling about a million dollars. When the company went public in 1997, it raised US$54 million in a single day. That same year, Amazon expanded beyond books to include movies and music.
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It wasn’t all plain sailing. In 1998, Amazon opened sites in the UK and Germany, but it had yet to turn a profit. In 2000, Amazon actually lost US$1.4 billion, and announced layoffs and the closing of several facilities. But Q4 of that year was the company’s first profitable quarter. Today, Amazon is one of the largest retail organizations in the world. Is it the biggest? That depends on how you look at it. In 2015, many observers announced that Amazon had passed Walmart to become “the world’s biggest retailer.” What they meant was that Amazon surpassed the market capitalization of Walmart. In fact, Walmart reports 2016 “net sales” of about US$480 billion (not far short of half a trillion dollars), whereas Amazon lists a more modest US$95 billion “net product sales.” Other reports have stated categorically that China’s Alibaba Group does a larger volume of business than Amazon and Walmart combined. However, Alibaba and Amazon don’t report exactly the same financial metrics, and don’t really do business in similar ways. It’s true that Alibaba does have a huge business-to-consumer retail component (Taobao Mall). But two of its biggest operating units focused on consumer-to-consumer (Taobao) and business-to-business (Alibaba.com) transactions. So its overall ‘sales volume’ isn’t going to correlate well against Amazon’s. It would probably be reasonable to say that Alibaba Group as a whole is larger (on various metrics) than Amazon. And that Alibaba is Amazon’s nearest challenger in online retail-
Jeff Bezos, founder of Amazon.com
ing. But Amazon remains the company to beat. Especially when you consider that Amazon is very much a global operation, whereas Alibaba still does most of its business in China. One trait that Amazon and Alibaba do share is rapid growth. Amazon’s 2016 product revenue was up by almost 20% compared to 2015, and grew by a similar amount the year before. Alibaba’s take was up by 45% in 2017 versus 2016. By comparison, Walmart’s more traditional retail business has grown by no better than low single digits for the past several years. “We’re now living in a new period of disruption, largely driven by rapid technological advances,” admitted President and CEO Doug McMillon in his 2016 letter to shareholders, adding “That change is likely to accelerate even further.”
Amazon’s Disruption It’s already hard to remember when Amazon was ‘merely’ the world’s largest bookstore. Today, Amazon is the go-to source for just about anything. Which leaves all other retailers scrambling to find a renewed raison d’etre. Amazon’s success can be explained by several factors. First, and not to be underestimated, was its timing. Bezos jumped into online retailing at precisely the right moment, and drove his operation mercilessly to stay ahead of subsequent waves of competitors. Bezos reputedly had his early staff working 60-hour weeks, sleeping in their cars and doing late shifts at the fulfillment centres. Keeping Amazon on top has been its “obsessive” commitment to customer service. Amazon’s sites offer effortless purchase, at unbeatable prices, of products that are rarely, if ever, ‘out of stock,’ always arrive precisely on time, and in case of dissatisfaction, can be returned without a quibble. Finally, Amazon has fully exploited its ability to work with primary suppliers, thereby offer-
DISRUPTORS : AMAZON
ing effectively unlimited inventory and turning a profit on items that sell in vanishingly small quantities. All online retailers exploit this capability, described by Chris Anderson in his book The Long Tail. But Amazon did it earlier and on a more massive scale. Amazon continues to evolve and build on these strengths. Scott Galloway, a professor of marketing at New York University, reports that an amazing 52% of American households now have an Amazon Prime membership. He adds that Amazon is sweetening the subscription deal by investing about US$4.5 billion this year in video content production – more than either ABC or NBC, almost double HBO, and not far short of the US$6 billion being laid out by Netflix. Amazon Prime subscriptions include, in addition to free delivery on select items and other perks, access to the Amazon Prime Video streaming video service. However, while Amazon has certainly presided over the decline of traditional retailing, it probably can’t take all the credit. To a large degree, retail had set itself up for a fall. For example, Galloway notes that between 1970 and 2015, the number of malls in the U.S. grew more than twice as fast as the population. So it may not be entirely Amazon’s doing that, between 2010 and 2013, mall visits declined by 50%. Galloway also points out that only about half of U.S. households today have an income over $50K/year. But he fails to draw the obvious conclusion: that these are very tough times, and likely to favour Amazon’s efficiency and value over such incidental pleasures as personal service and luxurious physical premises. And even while delivering a fairly dire view, Galloway cites forecasts showing Walmart will open 95 new outlets worldwide between 2016 and 2020. And acknowledges that even Amazon is likely to expand bricks-and-mortar operations, possibly by allowing product pickup at its fulfillment centres.
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Could it be that we’re seeing not the end of traditional retailing, but the (admittedly painful) end of a long period of stagnation and complacency?
Responses to the Disruption True, Amazon looms over retailing like an impending catastrophe. And yet, on a historical scale, it is just possible that the worst impact of online retailing, including that of the 500-pound Amazon gorilla, has already been felt. This may be seen most clearly in Amazon’s original business segment. Today, Toronto remains home to numerous ‘boutique’ bookstores as well as multiple local chains such as Book City and BMV. Canada’s largest bookseller, Indigo, is also in strong health. It’s had to do some rethinking, but revenue in Fiscal 2017 (ended April 1) was just over $1 billion, following healthy growth over the past several years. Indigo did close a few stores in fiscal 2015 and 2016, but none in 2017. It retains a total of 89 superstores under both the Chapters and Indigo names, plus 123 “small format” stores. The company reports that it has just begun “a major three-year initiative” to renovate its entire store network. It has also initiated a “buy online, ship to store” program, which Amazon is obviously in no position to match at this point. Last year, Indigo opened a new type of store at CF Sherway Gardens, in Toronto, which “reflects Indigo’s transformation from a bookstore to a cultural department store for booklovers,” according to the company’s annual report. “It is a digital and physical place inspired by and filled with books, ideas, and beautifully designed products.” In electronics, the Canada Computers & Electronics chain of about 30 stores across Canada is doing similarly well, and even expanding beyond its original strength in specialized computer gear to an increased presence in consumer electronics. “Many consumers still remain very tactile/ auditory,” says President and CEO Gordon Chan.
“Products that require customers to experience before purchasing are areas where we excel.” And yet, while maintaining multiple outlets in Ottawa and the Toronto area, Canada Computers has also fully embraced the Internet. Its comprehensive Website is in some ways superior to Amazon’s. For example, it lets shoppers easily filter product searches based on technical specs like LCD monitor panel type (IPS or TN) that are often not specified at all on other sites. Chan says of the company’s omnichannel model: “Both sides of the business are important.” “We believe there will always be a place for retailers in the market,” adds Chan. “However, they will have to remain quick and nimble to provide value add to the consumer to survive.” Amazon itself has also enabled a new ecosystem of smaller vendors, allowing them to use its site as a digital storefront. Mississauga, ON’s Trutone Electronics sees selling on Amazon as a very natural way to increase its exposure, without compromising its own retail identity.
Bottom Line Embracing new possibilities is how Amazon ensures its own continued growth. A perfect example of that is the company’s recent enhanced focus on the groceries space with its US$13.7 billion acquisition of Whole Foods Market, Inc., which is sure to cause even more disruption. The company continually re-invests in forward-looking projects such as delivery by drone, food retailing without checkouts, or renewable energy for all its facilities. It converts almost none of its earnings into mere profit, and instead, as Galloway puts it, rewards shareholders with “vision and growth.” Many retailers have adapted to the impacts of online retailing, but that’s just the beginning. Ultimately, the future will belong to companies that are, like Amazon, able to adapt continuously to the new pace of change. Amazon’s biggest impact has been to make complacency obsolete.
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DISRUPTORS
The Future of Tech Disruption
TECHNOLOGY has been disrupting many verticals, not just the ones noted in the previous pages: construction, communication (Facebook, anyone?), the list goes on. Two of the most notable areas, however, are financial services and health care. Financial tech, or fintech, is promising to do for the exchange of monetary funds what Uber has done for transportation, and Airbnb for lodging rentals. Start-ups are eliminating the banks as unnecessary middlemen, and offering ways for transacting online using simple, cost-effective accounts. It started when companies like PayPal, working with the banks and credit card companies, made it easy for people to transfer funds or pay for items online from a connected digital account. Later, Bitcoin reared its head and made us question the concept of a central repository for money altogether. The fintech space has grown beyond PayPal and Bitcoin. Statista projected that spending on new fintech technologies in North America would reach US$19.99 billion by this year. Stripe is one of the most recognizable FinTech start-ups. Using Stripe, just about anyone can set up a business online, and, with a few clicks, accept money from customers. With a bank, that process could take weeks, and require signing a ton of forms. Customers aren’t dinged any fees, and buyers simply pay a small percentage of each transaction to Stripe. The goal of the company is to “make money as easy to send as e-mail – for everyone, anywhere, on any device.” Transferwise, another notable fintech company, is a peer-to-peer money transfer service that Canadians can use to send funds to friends or family in any of 60 countries and 35 currencies, at rates that are up to five times cheaper than the bank: each transaction carries a 1.2% fee. The initiative is backed by successful entrepreneurs Sir Richard Branson and Peter Thiel, the latter of whom also founded PayPal, and was the first outside investor in Facebook; as well as Vikram Pandit, former CEO of CitiGroup. Change in the financial services industry is inevitable, and the Canadian Payments Association (CPA) is dealing with the disruption by doing what it should – embracing it. The CPA’s Vision for the Canadian Payments Ecosystem, derived following consultations with more than 100 finan42
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Photo courtesy of Stripe
BY CHRISTINE PERSAUD
cial institutions, business, consumer groups, and governments, identifies eight key needs to move forward. Put simply, it calls for faster, easier payments (including cross-border) using a flexible, adaptable, and transparent platform that fosters competition. The most interesting bullet point: “rules and regulations should focus on services provided, instead of the type of institution that provides them.” “While Canada’s payment systems have long been recognized for safety, security and reliability, we know that change and investment are required to position them for the future,” says Gerry Gaetz, President and CEO of the CPA. “The global economy is being reshaped by digital technology, evolving user demands, new market entrants and changing regulatory oversight. The CPA, in conjunction with the financial services industry, stakeholders and users, has embarked on a modernization initiative to address this in support of Canada’s financial system and economy.” Traditional banks and credit card companies are moving with the times as well. Major banks offer feature-rich apps that allow customers to do things like manage accounts, transfer funds, pay for items in stores, and virtually deposit cheques. There’s still a ways to go before the physical wallet is discarded, and banks as we know them cease to exist. But the industry is headed toward change as start-ups work to shake up the status quo. Meanwhile, disruptive technologies in the health care space range from artificial intelligence (AI) and virtual reality (VR) used to educate medical students and aid patients, to electronic health records (EHRs) for modernizing medical record-keeping. But they also include much less
sophisticated tech, like connected scales, trackers, and smart beds that provide information to medical professionals about their patients so they can detect, monitor, and react to issues quickly and more effectively. According to CB Insights, there was US$2.4 billion in funding for digital health in Q1 2017. And while there are still many critical hurdles to overcome in this space, including tight regulation, staff buy-in, and privacy concerns, health care is ripe for disruption. And we can expect much more of it to come over the next few years.
Bottom Line Disruption will continue in every industry we’ve covered, and beyond, particularly as the “sharing” economy grabs a tighter hold. Just before going to press, Uber sent out a test fleet of self-driving cars in Toronto (though only in manual mode and with a driver behind the wheel.) Traditional linear TV networks like CBS and Disney have plans for their own streaming TV services; the latter confirmed it would be ending its relationship with Netflix in 2019. Amazon’s purchase of Whole Food Markets, along with a growing number of meal delivery apps and services, means that the grocery industry should brace itself for some major change to come, too. One could argue that this isn’t really about disruption. What we really should call it is progression. And progress breeds innovation. As difficult as it is to contend with progress as it’s happening, without it, we might still be chatting in Morse Code via telegraph, watching films on VHS, and playing tunes on CD as we travel around town in a horse and buggy.
TALKING SHOP What’s happening in Canadian consumer tech retail. TAVES GEARS UP FOR ITS BIGGEST YEAR YET This year marks the 7th annual TAVES Show, and it’s shaping up to be the biggest yet, cementing the event’s position on the trade show circuit in Canada. The inaugural show in 2011, then known as the Toronto Audio Video Entertainment Show, focused on hifi audio and home theatre. But over the past three years, the event, which is open to the public, has expanded to include burgeoning technology categories like virtual reality (VR) augmented reality (AI), artificial intelligence (AI), robotics, and 3D printing. This has not only broadened the show’s reach, but, more specifically, helped attract a much younger audience. “When we launched the show,” says Suave Kajko, co-founder, in reference to himself and partner and co-founder Simon Au, “it organically became a hifi and home theatre show.” This was, in large part, due to the fact that both men have contacts on that side of the industry – Kajko as owner and publisher of Canada HiFi magazine (now called Novo), and Au as a distributor/importer for hifi brands under his company Audiyo, Inc. “All of those companies jumped on board quickly because there was a demand for this type of show.” In the fourth year, once the pair got a better feel for the trade show industry, they began adding different technology elements to the mix, evolving TAVES into a more all-encompassing consumer technology show.
Broadening Focus, Attracting a Younger Audience The Holy Grail for any hifi company is being able to introduce their products to the younger generation, and Kajko says the addition of hot new technology categories has helped TAVES do just that for its exhibitors. Attendee demographics have shifted from predominantly males over the age of 47, to people aged around 37. Last year, that included about 24% females. “The initial draw [of the younger generation] might be something like VR or 3D printing,” says Kajko. “But they’re arriving at the show and now exploring all of the wonderful brands that exist in the hifi and home theatre spaces. By speaking to our exhibitors in the hifi space, we know this is something that’s working tremendously well. Forward-thinking companies like Totem 44
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Acoustic, Erikson Consumer, and Bryston have been reaping the benefits of being able to communicate with younger audiences at our show.” Other elements of the show, like technology seminars and workshops for adults and kids, has helped attract more families, and that’s something TAVES will be expanding on this year. Parents can drop their kids off at a 1-3-hour workshop on topics like robotics, coding, and 3D printing, then explore other technologies on the show floor.
TAVES 2017 Moves to Bigger Digs This year, TAVES, which will take place October 13-15, is marking its growth by moving to a larger venue, the Toronto Congress Centre. TAVES has partnered with the Toronto RV Show, which will be taking place in the Congress Centre over the same three-day period, allowing attendees to seamlessly float between the two events. For the first time, TAVES also forged strategic partnerships within the local technology community, including the City of Toronto, to cross-promote the event. In its first year, about 2,500 people came out to TAVES. Last year, the show welcomed just over 7,600 guests. “Between the relationships with the Toronto RV Show and the technology partnerships we’ve made over the last few months,” says Kajko, “I‘m confident we can easily break the 10,000 mark this year.” Kajko expects about a 60/40 split between traditional hifi and home theatre exhibitors, with dedicated audio and home theatre demo rooms, including converted conference rooms, and technology exhibitors in the main hall, along with some custom-built hifi rooms. Brands in the former category will include JVC, Kenwood, Epson, Samsung, Bryston, Erikson Consumer (JBL and others), Kevro (Monitor Audio and others), and Canadian company Totem Acoustic, which is marking its 30th year in business in 2017. On the technology side will be small but innovative companies like PinchVR, Virtualia, Multi Touch Digital, Mimetics, Robot Playtime, a Torontobased company that has developed software for kids to program robots, and Makerkids. This year will be the first time technology companies use the event as a launchpad for new products. One Kajko is particularly excited about is Panacia Nova Inc., which will be introducing its consumer
Over the last seven years, TAVES, which will move to the Toronto Congress Centre for 2017, has grown from a hifi audio and home theatre event, to a consumer electronics show featuring a wider selection of products, like VR and 3D printing. These changes have helped attract a younger audience, as well as more families: parents can sign their kids up for a workshop while they roam the show floor.
medical wearable device to the market for the first time. “It’s potentially going to be our biggest launch at the show this year,” he enthuses. “There are some really innovative and brilliant companies in the technology space in Canada,” notes Kajko, who works with show exhibitors to ensure that their booths and demo rooms are fun, entertaining, and engaging as possible to stand out from what you might find at a traditional trade show. “We want people to come to the show and be able to experience things by trying them.” This year, some of the gear attendees will be able to try out include VR, personal transportation devices (complete with professionals demonstrating cool tricks), and a drone flying area. TAVES will also continue with its TAVES Talks Tech series, featuring a mix of entertaining and informative panels and speakers discussing topics ranging from robotics and AI, to autonomous driving. “These elements are very important because...we’re enabling people to participate in the conversation and connect with the technology community in a more personal manner.” Trade events like CES are essential to attend for some businesses. But, as Kajko notes, such big events have become overwhelming, and it’s difficult for smaller companies to break through the noise. “One of the things we’re proud about with TAVES,” he says, “is that if a company brings a really innovative product to the show, they will get the attention they deserve.” —Christine Persaud
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TALKING SHOP STAUB HOLDS FOURTH ANNUAL ATHLETICS FOR KIDS CHARITY GOLF TOURNEY Along with Staub as founding sponsor and organizer, several others participated as sponsors, including newcomers this year, Integra, which was a Gold Sponsor, and Matrix Video (MVCC), a Calgary-based commercial dealer that served as a Hole Sponsor. Also sponsoring was Automotive Data Solutions Inc., Firstech LLC, and SnapAV (Gold Sponsors); Ice Cable Systems, Cole International, Atlona, Lutron, URC, ZLC Financial, and Victory Square (Hole Sponsors); and BFL Canada Insurance Services Inc., Simply Structured, and RBC (Hole-inOne Sponsors). Sonos sponsored the day’s lunch, and Ledcor the water. WiFi HiFi was the Putting Challenge Sponsor, while Staub sponsored the 19th Hole, and Sunlinks Marketing the golf shirts. “I’m proud of the money we have helped raise through this event over the past four years,” says Scott Trotter, President of Staub Electronics and Tournament Director. “We’ve built an event that is more than just a golf tournament and that includes a lot of fun activities, on-course food
(L-r) Staub CEO and founder Dave Mason and President Scott Trotter are joined by Jason Kaminski, Director of Sales at Compustar, and Michael Daerendinger of RBC Commercial Finance.
NETFLIX has begun rolling out support for the Dolby Atmos immersive sound format, starting with its original film Okja. Dolby Atmos is also available for BLAME! and Death Note. Bright will be added in December, and Wheelman some time this year. Many of the titles will also be available in 4K and HDR. Netflix says it expects its Dolby Atmos-enabled roster of titles to grow over time. Dolby Atmos streaming is currently supported on Microsoft’s Xbox One and Xbox One S, as well as 2017 model LG OLED TVs.
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Manny Sobral (far right), former Canadian Olympic Boxer and long-time supporter of A4K, is joined by some of the kids the organization has helped put into organized sports.
and beverage, and exciting prizes. We sold out again this year, which I believe speaks to the quality of our event. Golfers continue to tell us it’s the best tournament they attend each year. We are also fortunate to have great vendor partners and sponsors who understand this is our major charitable event of the year. Without their support, the event really wouldn’t exist. The charity is near and dear to Trotter’s heart. “As a child,” he says, “my family was fortunate enough to always have the means to put my sister and me in sports. Sports has taught me many great life lessons and helped shaped who I am today. Without sports and the many great coaches I had during my youth, I wouldn’t be who I am today. For that reason, I love that A4K helps those that might not have the means to pay for sports get involved, and is reducing the number of children being sidelined due to financial barriers.” With the average grant to A4K being around $210, Staub estimates that its annual golf tournament has helped put 900 B.C. kids into organized sports. —CP
Photo courtesy of Netflix
Staub Electronics held its fourth annual Athletics for Kids Charity Golf invitational at the Quilchena Golf and Country Club in Richmond, BC on July 31. The event raised another $50,000 for the A4K charity, which helps financially disadvantaged youth in B.C. gain access to organized sports. This brings Staub’s total contribution to the organization to more than $200,000 over the past four years. About 40 industry members attended, playing Texas Scramble once again. The entrance fee remained the same at $250, which included a golf shirt, golf cart, lunch, and access to a reception following the day’s activities. There were several contests, including a Straight Drive Contest for a $255 gift certificate to Drive 365 Fitness, and the Men’s and Women’s KP Contest for an Apple Watch. Prizing for men’s and women’s long drive and the Putting Challenge was a Sonos Play:1 speaker. A silent auction was also held, along with a prize for the lowest group score.
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TALKING SHOP CINEPLEX DELVES DEEPER INTO ENTERTAINMENT WITH THE REC ROOM, TOPGOLF Cineplex is diversifying far beyond movie theatres by offering a new suite of venues that cater to various entertainment desires, including The Rec Room and Topgolf. The Rec Room is a hot spot for “eats and entertainment,” and the latest location officially opened in Toronto this summer, at 255 Bremner Boulevard, across from the CN Tower, Ripley’s Aquarium, and Rogers Centre. The venue, owned by Cineplex, offers dining, live entertainment, and amusement gaming, including a virtual reality (VR) experience called The Void. Half of the over 40,000-square-foot complex is devoted to dining and live entertainment, and the other half to amusement games and attractions. There’s also a large outdoor patio that features city skyline views. On the entertainment side are attractions like The Yard, which contains more than 90 amusement games. Credits and points are earned and tracked on RFID bracelets and can be redeemed at The Trophy Case redemption store for a wide array of prizes, like retro candy, drones, whisky stones, and portable speakers. In The Void, guests can enjoy interactive sets, virtual reality, real-time effects and gear. The space launched with Ghostbusters: Dimension, which turned guests into Ghostbusters, transporting them to New York City to track and trap ghosts while engaging all the senses with sights, sounds, smells and motions. Additionally, there’s a race car simulator, shuffleboard, billiards, air hockey, and ping pong. Live entertainment will include musical acts, bands, and comedians. There’s also a dance floor and an auditorium with a large high-definition
screen for watching the big game. Using the Gameboard app, visitors can also play games, and interact and participate in a fantasy league while inside the complex. In addition to redemption opportunities and promotions throughout The Rec Room, guests can also earn SCENE points on food and fun. Restaurants include Three10, an upscale casual area playfully named after Canada’s three territories and 10 provinces; The Shed, which offers quick-service, wood-fired pizza; a custom donut bar; and, of course, a poutinerie. Multiple bars are also located throughout the venue, offering six draught wines and over 24 draught beers, including one from the neighbouring Steam Whistle Brewing. The space can be customized for different occasions, including private meetings, corporate events, and holiday parties, accommodating up to 1,000 guests. Cineplex plans to open 10-15 new locations of The Rec Room over the coming years, each ranging in size from 40,000-60,000 square feet and customized to the individual community. Locations are now open in Toronto and South Edmonton, with plans announced for complexes in London and Mississauga, ON, Calgary, and Vancouver, as well as an additional location in Edmonton at West Edmonton Mall. Meanwhile, Cineplex has also inked an exclusive partnership that will bring Topgolf sports entertainment venues to Canada. The joint venture will see the opening of multiple Topgolf venues in markets across the country during the next several years. At Topgolf, people of all ages and skill levels, including non-golfers, can enjoy point-scoring
Left: The Rec Room is an entertainment destination providing gaming, video, dining, and more. But the most enticing part of the newest Toronto location is The Void, an engaging virtual reality experience where patrons can enjoy interactive sets and real-time effects. Right: Popular throughout the U.S., Cineplex is bringing Topgolf to Canada as another entertainment venue with dining, music, TVs, and golf hitting bays.
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golf game play using micro-chipped balls that score themselves, along with food and music. When you hit the ball, you’ll see the accuracy and distance of the shot on a TV screen above the hitting bay. Topgolf locations are typically three-level, 65,000-square-foot venues that feature a chefdriven menu, top-shelf drinks, big screen TVs and music in climate-controlled hitting bays. Year-round programming includes events for kids and families, social leagues, groups, golf tournaments and instruction. Cineplex will manage the venue’s day-to-day operations, working closely with Topgolf. With 33 successful venues already operating in the U.S. and U.K., Topgolf and Cineplex are planning potential locations in large urban centres across Canada. Financial terms of the partnership were not disclosed. —CP
Home furnishings, appliances, electronics, and mattresses retailer TEPPERMAN’S has expanded its 100,000-square-foot distribution hub in London, adding another 47,000 square feet of warehousing space to help accommodate future growth in the southwestern Ontario market. Construction is scheduled to be completed by fall 2017 by the Fortis Group, which recently finished the White Oaks Mall renovation earlier this year. Tepperman’s, in business since 1925, has a combined 250,000 square feet of showroom space in Windsor, Chatham, Sarnia, Kitchener, and London.
(L-r) Gina Delicata, Vice President, Marketing & Merchandising; Andrew Tepperman, President; Bill Tepperman, Chairman; Noah Tepperman, Treasurer; Mike Horrobin, Vice President & CFO; and Masoud Negad, Vice President & COO.
TALKING SHOP
WHO WENT WHERE? The Rep Firm Canada Ltd. has appointed Allan Drakes as its Account Manager for the hi-fi and mobile audio channels. Drakes has spent the last 17 years in the consumer and professional electronics industries, from working as a DJ in Montreal night clubs, to selling consumer electronics gear, and installing car audio sound systems. He began his career as a salesman with Centre HiFi, Dumoulin, and The Brick, then moved on to technical support for Clarion Canada in 2006. He then became the primary technical support agent for Erikson Consumer’s Mobile, Home, and Multimedia divisions. In 2013, he became a Quebec sales representative for Lenbrook Group of Companies, representing NAD, PSB, Bluesound, Tivoli and BeoPlay. adrakes@therepfirm.ca, (514) 268-6272.
Norm Ross, most recently director of sales and marketing for Mitek USA, has joined McKays Electronics Experts as Director of Business Development, responsible for leading the South Vancouver Island operations, and working with the C.A.R.I.D. (Commercial and Residential Installation Department) division. Ross has extensive experience in the 12V and custom installation industries. He will be based out of the Victoria Store, and will lead that team in its day-to-day operations, while working closely with the growing CARID division.
Chris Morris joins Bluebird Music as Brand Manager, responsible for providing knowledge, expertise, ideas and support to Bluebird’s network of dealers in both Canada and the U.S. He has more than a decade of experience in audio, sales, training and support. He began his career in IT as a Certified Trainer at Apple, eventually becoming responsible for training Apple trainers as well. He has also worked at an audio store, and for hi-fi distributor The Sound Organization. Most recently, Morris was head of global technical support for Auralic. He will be working out of Denver, CO. (720) 382-6828, chris@bluebirdmusic.com.
MartinLogan, Paradigm Electronics Inc., and Anthem, has appointed Rob Sinclair to Director of International Business and Market Development, EMEA, APAC and Latin America. He will work closely with the international sales team to continue to expand and develop global focus and presence for the three brands. Sinclair was formerly director of export sales with the B&W Group for the last 20 years. Prior to that, he held the position of international sales manager with Celestion (a Gold Peak Company). 50
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Lenbrook International has appointed three individuals to serve in vice president roles as part of its leadership succession plan. June Ip (centre) is now Vice President, Marketing for Lenbrook International, where she will lead all Lenbrook’s brand and distribution marketing initiatives. David Cain (right), who will relocate to Toronto from London, will become Vice President, Sales and Commerce with overall responsibility for global sales and distribution, product management and customer service across the brands. He has served as Bluesound’s director of sales, key markets. Taking on the newly-created role of Vice President, Channel Development will be Agata Mossop (left). She will also provide brand management for “non-Lenbrook owned” audio distribution in North America, currently consisting of Bang & Olufsen PLAY and Tivoli Audio. Additionally, Chief Brand Officer John Banks and Lenbrook Americas President & CEO, Dean Miller will be transitioning from full-time operational positions to become members of Lenbrook’s International Board, where they will carry on in strategic planning and relationship building roles.
Coquitlam, BC-based Audio Video Limited (AVU) has appointed Shane Evans as Vice President, Merchandising and Marketing. Evans brings with him extensive knowledge and experience in the appliance and consumer electronics markets, as both a salesperson and business owner. He has been actively involved with Audio Video Unlimited as a partner store since 2005. Evans will be moving his family from the Calgary area to the lower mainland.
Gaëtan Lavoie joins the SFM CI Division’s sales team in the province of Quebec, taking over territory management for the province, responsible for supporting each of SFM’s CI brands. (514) 895-6220, gaetan.lavoie@sfm.ca.
TALKING SHOP
Kevro International has appointed two new reps: Jerome Fragman (left) in South West Ontario, and Tony Hinson in Manitoba and Saskatchewan. Hinson has been in the AV industry since 1986, working in retail, purchasing and management. He has been a Rep in Western Canada for the last 20 years. Starting in Quebec with Atlantique Image and Son 38 years ago, Fragman then moved into management with Marche L’Electronique and La Boutique before moving to Toronto 19 years ago to manage Mount Pleasant Stereo. For the last several years, he has been a Rep in Ontario supporting many brands. Fragman can be reached at (416) 997-5589, audiojerome@netzero.net; and Hinson at (403) 560-3126, tony.hinson@gmail.com.
Occupying the newly-created position of Director of Sales, Advanced Solutions, at D&H Canada is Roy Rivers. In this role, Rivers is responsible for driving profitable growth for the company in Canada, and fostering executive relationships with major manufacturer partners. He brings more than 35 years of experience in the technology channel, in business operations, services, and marketing, VAR sales, distribution, and retail sales. He has previously held director positions in channel sales and business development at companies including Avnet and IBM.
Gentec International has appointed Paul Bélair to the newly-created position of Regional Sales Manager in Quebec for the Electronics, 12 Volt and Audio divisions. Bélair brings over 25 years of experience in the industry, having spent the past 16 years representing some of the largest names in the industry, including Alpine, Shure, Nest, Monster and more. He will also work closely with Sherpa Group as they continue as the Gentec regional distributor and representatives for the Pro-Ject brand. As founder of the BC-based distribution company, Grant Daoust will now also serve as CEO of Trends Electronics. Daoust recently served as vice president of sales for the distributor. 1-877-946-9255, ext.110; grant@trendsinc.com
Fortin Electronics Systems, manufacturer of remote car starters and bypass modules, has added Jean-Paul Raymond to its team as Sales Manager. Raymond previously managed the installation shop at the company’s retail store back in the ‘90s. Since then, he has been working in the 12V industry with companies including Alpine, Astroflex, and Directed. jp.raymond@fortin.ca.
WHO’S DOING WHAT? Batavia, IL-based AV distribution and electronic accessory products manufacturer Vanco International LLC, has acquired the Beale Street Audio line of Sonic Vortex powered architectural speakers. The line features high performance residential audio solutions, and 70/100v in-ceiling speakers for commercial applications, plus single and multiroom amplifiers, and subwoofer amplifiers. Beale Street Audio speakers will continue to feature the patented Sonic Vortex technology created and engineered by Beale Street Audio co-founder Jim Murray, who will be available for consulting with Vanco International. Vanco will continue selling the speakers under the Beale Street name, but bring its manufacturing, distribution, service, and support to the products.
Barrie, ON-based LEI Electronics Inc. has been appointed exclusive Canadian distributor for SunnyCam video smart glasses. The British company makes video eyewear that can capture video outdoors through a pinhole camera. There are three models in the line: the Activ Edition, Sport Edition, and Xtreme Edition, all of which can capture 1,080p HD video at 30 frames-per-second in MP4/H.264 format, offer vibration alerts, and come in impact-resistant housings with a flexible frame for the Activ and Sport editions. Pricing ranges from $230-$280.
Cesium has inked an exclusive distribution agreement with Everki, offering the company’s line of laptop backpacks, wheeled laptop bags, briefcases and messengers designed for mobile professionals. Many include a technology compartment for a laptop and tablet, checkpoint-friendly designs, and features like a hard shell sunglasses case; and all come with a limited lifetime warranty.
Sony has appointed two companies to distribute its audio and video products: Staub Electronics will handle audio and video products for the custom integration channel in Western Canada; and Gentec International for Ontario and business-to-business sales nationwide. The partnership with Gentec is an expanded one, adding Sony audio and video products for the custom integrator channel to the mix. Gentec has been working with Sony since 2002, and currently distributes Sony products in a number of categories, including e-commerce and mobile entertainment.
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TALKING SHOP
Cesium has been appointed a Canadian distributor for Urban Armor Gear (UAG) rugged protective cases and shields for mobile devices. Some of the best-selling models in the line for Cesium include the Metropolis case for the 5th generation iPad, the Outback case for the Samsung A5, and the Plasma case for the Huawei P10.
U.K.-based Onelan, which makes enterprise-grade technology solutions for digital visual communication, including applications such as digital signage, wayfinding, data visualisation and meeting room booking display, has appointed Stampede to serve as a North American distributor. Onelan’s latest developments for corporate and education markets include Reserva Room Signage that integrates directly with existing calendar and timetabling applications, and features options to choose between one or more of 13 different languages.
Headphones manufacturer Audeze has appointed Erikson Consumer as its exclusive distributor for products and services in Canada. The appointment was made in an effort to increase the company’s “presence in the very important Canadian market,” says Mark Cohen, CSO of Audeze.
Lenbrook Americas has appointed Richmond, BC-based Sound Developments to distribute NAD and Bluesound products to the CI channel in Canada. This appointment marks the second CI distributor relationship Lenbrook has made, having recently also appointed a distributor for the New York City market. The company will continue to trade with specialty retailers and other channels, including online and lifestyle, on a direct basis. 1-800-949-3344, barry@sounddevelopments.com.
Bluebird Music has been appointed exclusive North American distributor for Sonoma Acoustics, a start-up founded by key members of the SACD project. The Sonoma Acoustics Model One electrostatic headphone system was specifically developed and optimized to reproduce high-quality, high-resolution recordings. It uses a patented High-Precision Electrostatic Laminate Transducer, and processes signals using custom 64-bit precision arithmetic. The Model One is finished with lightweight, durable, and soft Cabretta sheepskin leather and includes lightweight magnesium ear-cups. It comes with amp/DAC and all connecting cables, and retails in Canada for $6,495.
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Tri-Cell Enterprises Inc. has been appointed the exclusive Canadian distributor for Mitchell and Johnson’s patented Electrostatz range of hybrid electrostatic headphones. The Electrostatz portable electrostatic headphones do not require an additional power source, and start at only $300.
Logitech has acquired Astro Gaming, a leading console gaming brand known predominantly for its headsets for professional gamers and enthusiasts. The combined companies create the number-one maker of headsets, mice, keyboards and streaming webcams for PC and console gamers. The acquisition price is US$85 million in cash, and Logitech says the move will help the company expand into the console gaming market, and “accelerate long-term growth of our gaming business.”
GCI Distribution is now the exclusive distributor of AVProConnect’s line of connectivity solutions and the Murideo line of AV troubleshooting and testing equipment. GCI will provide service to consultants, dealers, integrators and resellers, supported by the company’s sales team across Canada. AVProConnect builds and engineers its product in its own factory, and offers control drivers for Crestron, Control4, RTI, and other top brands. Murideo HDMI test and troubleshooting equipment includes calibration, troubleshooting, and testing tools built specifically for the AV integrator. 1-877-614-3336; info@gcidistribution.com.
London-based game studio Sensible Object has appointed Erikson Consumer as distributor for its full line of Beasts of Balance gaming accessories in Canada, a game of skill and strategy that uses technology to create a form of augmented reality with smart objects. Players stack Artefacts into towers, and interact with a world on a connected digital device. Beasts of Balance began as a crowd-funded project on Kickstarter in 2016 that successfully raised over US$275,000. A second Kickstarter campaign aimed at creating an expansion pack of characters far exceeded its initial goal of US$50,000. The game will retail for $140, and works with the free Beasts of Balance app.
Savant, distributed in Canada by Evolution Home Entertainment, has acquired Artison, an audio products manufacturer. The acquisition of the Minden, NV-based company will allow Savant to leverage Artison’s key patents and audio engineering expertise; and expand Savant’s Pro Audio offering, allowing integrators to deliver audio over IP solutions.
original Totem Model 1, which premiered at the Montreal Audio Show in 1989, two years after the company was founded.
Inside and Out
HANDS-ON REVIEW
Passion Play: Totem Acoustic Signature One
In My Room
BY GORDON BROCKHOUSE
DURING A TOUR of an American audio R&D facility a few years ago, I had an interesting exchange with a senior engineer. As part of a Q&A session, he asked the visiting journalists what they expected from their music systems. When it was my turn to respond, I replied, “Emotion.” Our host nodded thoughtfully, then remarked that emotion isn’t a very useful target for an audio engineer. It’s impossible to quantify: too 56
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Like its predecessor, the Signature One is a twoway bass-reflex stand-mounted speaker, but with 6.5” rather than 5.25” woofer. The new woofer employs a powerful neodymium magnet and large 3” voice coil. The underhung design, whereby the entire voice coil is always within the magnetic gap, gives the speaker greater “dynamic potential,” the company says. The driver can handle 600W transients without distress. The woofer is crossed over at 2.5kHz to a 1” aluminum-titanium dome tweeter manufactured for Totem by SEAS. The tweeter has its own rear chamber to reduce resonances and provide isolation. The second-order (12dB/octave) crossover employs large air-core inductors, premium Orange Drop bypass capacitor in the woofer section and ClarityCap capacitor in the tweeter sections, and low-tolerance resistors, the goal being perfect phase consistency on all axes. The rear-ported enclosure is built using a combination of modern CNC and old-world joining techniques. The single-piece monocoque design maximizes structural rigidity. The cabinet is made from 0.75” MDF, whose density varies from inside to out to minimize resonances. Internal surfaces are veneered and treated with borosilicate, to dissipate spurious energy inside the enclosure. Specified impedance is a constant 8Ω through the audio band, allowing for flexibility in the choice of amplifier. The Signature One can be placed as close as 1’ from the front wall, and is said to provide flat in-room bass response down to 45Hz. That’s an astonishing claim for a compact monitor speaker, and was fully borne out in my listening tests.
loosey-goosey. Flat frequency response through a wide listening window, in-room power response that matches on-axis response: those are concepts that designers can sink their teeth into. I recalled this discussion during my review of Totem Acoustic’s new Signature One loudspeaker, created for the Montreal company’s 30th anniversary. Retailing in Canada for $3,000 per pair, the Signature One is an update of the
I heard a prototype of the Signature One at CES 2017, and was blown away by the huge, coherent spatial presentation. So I was mightily pleased when Totem agreed to provide a review sample during the Montreal Audio Fest back in March. The Signature Ones arrived at my Toronto home in mid-June. My review sample had a beautiful mahogany veneer finish; other options include black ash veneer and multi-coat white satin. My 15x11’ listening room imposes real constraints on speaker and listener position. Along one of the long walls is a 42”-high built-in cabi-
net, which has a sloping roofline behind it. That’s where the speakers sit. My primary listening position is in the middle of the long wall opposite, which also has a sloping roofline. To isolate the speakers from the slightly lively cabinet, I placed them on isoAcoustics Aperta desktop stands and toed them in slightly. More unusually, I inverted them, with the tweeters on the bottom. Even so, the tweeters were a few inches higher than ear level. With my room layout, this orientation produced smoother response and more realistic imaging. The back of the speaker was 16” from the front wall. The rest of my system consists of a Simaudio Moon Neo 340i integrated amp with built-in DAC and phono stage, Mac mini running Audirvana 3.0 software for digital playback, and Pro-Ject 2Xperience SB turntable and Ortofon Quintet Bronze MC cartridge for analog playback. The system also includes Wireworld cabling and a Torus TOT power conditioner.
First Impressions Before shipping, Totem had broken in the review pair for five days. Lionel Goodfield, who handles PR for Totem, suggested another five days of break-in time before serious listening. Right off the bat, I was bowled over by how fast, articulate and dynamic the Signature One sounds. This is an incredibly involving speaker that pulls you into the music. However, I noticed some upper midrange peakiness. Whenever a pianist hit a loud E5 or F5 (659 and 698Hz respectively), the sound was
almost piercing if I had the volume turned up. (I don’t claim to have perfect pitch. But a few times when I noticed this peak, I hit pause, put on a set of headphones connected to my iPad, and tickled the ivories on a virtual piano in a keyboard app. E5 and F5 matched the offending notes.) The issue did not disappear following break-in. It was most obvious with piano, not surprising given that instrument’s long sustain time and (sometimes) sharp attack. But it was also audible with female vocals, saxophones and other content with long sustain time. Moving the Signature Ones closer together and pointing them straight into the room, rather than toeing them in, alleviated this problem somewhat, but did not eliminate it. This is what Totem suggests for the less expensive Sky monitor, and it seems to work well with the Signature One. When I interviewed Totem CEO and Head Designer Vince Bruzzese in early August (see “Turning Thirty”), he suggested that the midrange peak was room activated. The speaker may have such a peak, he said, but in most situations, it will be innocuous. Bruzzese opined that in my case, it was exacerbated by a reflection problem in my attic room, with its sloping rooflines behind the speakers and listening chair. Reducing that peak “just for a passing disturbance” would “kill the magic” in the Signature One, he said. There’s no doubt that the Signature One is a more revealing, more exciting speaker than the KEF LS50 monitors I’ve had in my system for the past four years; but it’s also less forgiving and more demanding of ancillary equipment.
In Allen Toussaint’s rendition of “Rosetta” from his final album American Tunes, Toussaint’s sharp piano attacks were produced dramatically and effortlessly. Equally important, the Signature Ones also highlighted his subtle shading on this classic Earl Hines number.
PROS Superb macro and micro dynamics Big coherent spatial presentation, with very precise imaging Surprising bass output for a standmounted speaker
CONS Some midband peakiness (but may be room-related)
Design: Two-way rear-ported bookshelf speaker with 6.5” woofer and 1” aluminum/magnesium dome tweeter Finishes: Mahogany veneer, black ash veneer, white satin Price: CDN$3,000 per pair
Comparing these two speakers is a bit like choosing between two very appealing girlfriends. One is sweet, affectionate and pretty. She treats you like a king, and your family and friends adore her. The other is exotic, talented, adventurous and super-intelligent. She keeps you on your toes; but occasionally there’s some unexpected drama. Almost always, it blows over quickly.
A Lot to Like The Signature One’s virtues are so compelling that I found it easy to look beyond that peak, whatever its cause. Highs and lows: Let’s start at the bottom. The Signature One reproduced Charlie Haden’s string bass tunefully and impactfully in his duet album from the 1990 Montreal Jazz Festival with guitarist Jim Hall (Impulse!, 24/96 download), losing only a little definition and output at the lower limit of the instrument, which is 41Hz. Organ pedal points and subterranean EDM synth lines may lie below this speaker’s comfort zone, but just about everything else is fair game. Not only are bass instruments convincing, the speaker’s low-frequency capabilities make the whole musical presentation weightier. Treble is also excellent: smooth and extended. Cymbals shimmer without sounding splashy. Dynamics: This little speaker can get loud in a hurry, creating a real sense of immediacy. Combined with the Signature One’s bass capabilities, what you have is a stand-mounter with September 2017
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On “Dr. Ra and Mr. Va” by the Enrico Rava Quintet, the Signature Ones created a soundstage that extended beyond, behind and above the speaker plane. Imaging of Rava’s trumpet, and all the other instruments, was very precise.
real cojones. It also tracks small dynamic changes superbly, creating a marvelous tactile quality. The Signature One’s superb macro and micro dynamics were on full display in Allen Toussaint’s rendition of “Rosetta” from his final album American Tunes (Nonesuch, 24/96 download). Toussaint’s sharp piano attacks were produced dramatically and effortlessly, without artificial emphasis. Equally important, the Signature Ones also highlighted his subtle shading on this classic Earl Hines number. Resolution: Little musical flourishes that I hardly noticed before would come to the front of my consciousness, without detracting from the main melodic line. For example, in Alfred Brendel’s 2002 recording of Mozart’s Jeunehomme Concerto (Philips, DSD rip from SACD), the pianist executes little right-hand trills in a call-and-response dialog with the orchestra during the final movement. It was always there, but the Signature Ones made me pay attention to it. Sticking with Mozart (sort of), but at the opposite end of the dynamic scale, the Signature Ones did a great job unravelling the dense dialog between Leopold and Wolfgang Mozart (wonderfully sung by baritone Andrew Slater and contralto Hilary Summers) and the Michael Nyman Band’s intense accompaniment in “Oh My Dear Papa” on Michael Nyman’s Mozart 252 (Argo, ALAC rip from CD). Released in 2008, this great album was created to celebrate the composer’s 250th birthday (it was two years late). Soundstage: The Signature Ones can produce a wonderfully expansive stereo image. On “Dr. Ra and Mr. Va” from The Words and the Days by the Enrico Rava Quintet (ECM, ALAC rip from CD), the soundstage extended beyond, behind and above the speaker plane. At the same time, Rava’s trumpet, Andrea Pozza’s piano and 58
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Gianluca Petrella’s trombone occupied precise locations in the stereo image. Timing: This speaker excels at conveying rhythm and swing, getting you bodily involved in the music. Put on a jaunty track like “John Henry” on Woman Child, the debut album of the supremely talented jazz singer Cécile McLorin Salvant (Mack Avenue Records, LP), and you can’t resist tapping your toes, snapping your fingers or playing air drums. Put on a symphony, and you want to conduct. This extends to ensemble: the Signature Ones really help you appreciate the interplay between musicians.
Passion is No Ordinary Word What all this translates to is emotion. More than any speaker I’ve heard in my home, the Signature Ones put me in touch with the emotional content of the music: the raw pagan energy in “Oasis” by Keith Jarrett’s European quartet on Nude Ants,
Hearing Cécile McLorin Salvant’s rollicking version of “John Henry” through Totem’s Signature Ones, it’s impossible to resist tapping your toes, snapping your fingers or playing air drums.
a 1979 live concert at the Village Vanguard; the agonized yearning of Robert Plant singing “Babe I’m Gonna Leave You” on the first Led Zeppelin album; the ecstatic rapture in Renée Fleming’s 1996 recording of Richard Strauss’ Four Last Songs; the wit and humour in Carla Bley’s 2007 jazz combo album The Lost Chords Find Paolo Fresu. Emotion may be impossible to measure in a loudspeaker; but it’s not hard to account for. A speaker that can unravel different strands of music, track large and subtle dynamic shifts, create a big soundstage with precise imaging – that kind of speaker can convey touch, technique, ensemble and expression. Those are the tools musicians use to create emotion. All those qualities are present in Jean-Efflam Bavouzet’s stunning 2013 recording of Prokofiev’s Second Piano Concerto with the BBC Philharmonic under Gianandrea Noseda (Chandos, 24/96 download). On the Signature Ones, the mysterious opening was hugely expansive, and the piano had fantastic weight. The swelling of the orchestra as the first movement built was superb, creating tension and drama. While there was some peakiness when piano, violins or flutes traversed troublesome frequencies, any distraction was short-lived. Orchestral and piano crescendos were tremendously exciting, with different strands in the score beautifully differentiated. The Signature Ones articulated Bavouzet’s expressive runs wonderfully, conveying the wit and fairytale dreaminess in the score. After the big climax at the end, I wanted to stand and applaud. This is a great loudspeaker. From the foregoing, it should come as no surprise that I have purchased the review sample.
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TURNING THIRTY:
An interview with Totem Acoustic’s
Vince Bruzzese BY GORDON BROCKHOUSE
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Gordon Brockhouse: Over the years, I’ve visited a lot of speaker companies. Frequently, they show me their anechoic chamber and IEC listening rooms. You have a very different methodology and philosophy. Vince Bruzzese: Several years ago, we built a small chamber next door with two-foot cement walls. It was very disturbing for me to go in there to test a speaker. It’s not natural for us to live in a non-reverb world. It would have hindered my interpretation on how music is produced by a speaker, so we decided to scrap it. For listening, we just use a corner of my office, and other rooms in the building. This is the way to maximize the spatial imaging of a speaker. This is the way to deliver the intensity of a musical performance.
Photos: John Thomson
THIS SEPTEMBER, Montreal-based Totem Acoustic celebrates its 30th anniversary. When Vince Bruzzese founded the company in 1987, he was teaching high-school math and physics. A lifelong music-lover and audiophile, Bruzzese was dissatisfied with the speakers he had owned, so set out to create his own. His first commercially released product was the Totem Model 1, a two-way monitor. Following its launch at the Montreal Audio Show in 1989, the Model 1 quickly earned a reputation for speed, dynamics, imaging and tonal accuracy. Totem has just introduced the Signature One, a thorough reworking of the original Model 1. Bruzzese has been busy on other projects as well. At TAVES in Toronto last November, Totem showed the Sky twoway monitor, which retails in Canada for $1,850 per pair. Shipments began in the spring, and the product is getting great reviews. The Signature One (reviewed in this issue) was announced at CES 2017; shipments have just begun. At the Montreal Audio Fest in March, Totem showed two floor-standers: the Sky Tower and the Tribe Tower, the latter using the company’s Torrent drivers. Bruzzese is also working on a new version of the Mite twoway monitor, which will ship late this year for $950 per pair. In early August, WiFi HiFi Publisher John Thomson and I visited Totem’s headquarters to talk to Bruzzese about his new products, and about his unique approach to speaker design. Joining us were Lucy Lentini, Totem’s Vice President of Sales and Marketing (also Bruzzese’s muse and shield), and Lionel Goodfield, Totem’s new Director of PR. What follows is a heavily abbreviated version of our discussion.
SUPPLY SIDE
There’s a hidden message in every recording. It’s my job as a speaker designer to extract that message. You’re not going to do this by shifting response by a half or quarter decibel here and there. It’s about harmonics, and how they’re dispersed throughout the room. The room cannot fight the harmonic energy coming out of a speaker. That’s why we test our speakers in real room environments. Our goal is simplicity and musicality, and very accurate phase response across all axes. I’m a tallish person. If I sit up and walk around, I don’t want to be disturbed. That’s why we listen to our speakers for months on end while we’re evaluating parts. It takes a couple of years to bring out a speaker. I’ve been working on the Signature One for a couple of years. GB: How did the Signature One come about? VB: As soon as we let the original Model 1 go out to pasture, Lucy said we have to start thinking about our 30th anniversary. We needed something that would create the same excitement as the launch of the original Model One back in 1989. It took me a while to realize that a speaker of the same size will not work in today’s world. We wanted to make it an 8Ω speaker. If we’re going to make a larger speaker with 8Ω impedance through the audio band, I looked at our Forest model. The Forest always had a great volume, and it’s a big powerful speaker. The Signature One uses the same woofer and tweeter as the Forest, but selected in slightly different patterns. The tweeter is our tried-and-
true SEAS unit. We’re on our fifth generation. We build half of it here. SEAS was the first company to build a driver specifically for Totem. That was 28 years ago. GB: Why was constant 8Ω impedance so important? VB: With the disparity in electronics that exists today, you’re better off producing an 8Ω speaker. We’re reaching out to a greater variety of people, and some of them may want to pair the speaker with a small integrated amp. If we make it an 8Ω speaker, it has a higher chance of achieving its potential. GB: I was blown away by the Signature One’s dynamics. Is that because it’s letting the amplifier do its job more easily? VB: The amplifier isn’t choking. That tweeterwoofer combination is dynamite. But you wouldn’t believe how a small change creates the ease of flow. It’s doubly hard to extract that type of dynamics out of a small speaker, but we needed a slightly larger volume. GB: You’ve been working on a lot of speakers during the past couple of years. Do ideas crosspollinate from one product to another? VB: One model can show you the faults in other models. As I was developing the Signature One, the Sky was there to motivate me. The Sky said, “Look at me, I can play with anything. Put me close to a wall and I’m going to bomb
everything of this planet.” The Signature One takes that to an audiophile level, and puts you right in that recording where you hear everything. It has that quietness in space. The space between instruments in the stereo image is dead quiet, so the speaker portrays things you thought were not possible. GB: For an article in our last issue, I spoke with an engineer from Bell Media about a Dolby Atmos project he worked on. One of the things he likes about object-oriented surround is the way it can separate different elements in a musical performance. That’s what struck me about the Signature One. On some recordings, the presentation had an Atmos-like immersive quality. Instead of portraying a group of musicians in an amorphous image, it shows the musicians in well-defined locations, so you get the same kind of spatial unmasking that you get with an elaborate multi-channel system. VB: Absolutely. That’s what we’re trying to get in stereo. People who make recordings put an enormous amount of effort into them. Whether I’m listening to an FM broadcast, CD or digital download, it’s got to excite me. Whether it’s a 1959 recording of John Coltrane, or Hendrix, or Monteverdi, I want to be put there. We suffer the consequences for this. It’s expensive to build a box the way we do. It’s expensive to use £20 and £30 capacitors. We do it because that’s our principle, our reason for existence. We’ll use a metal-encapsulated paper-oil capacitor just to get the correct phasing. We’re able to get a clarity from that SEAS tweeter that we could not have obtained five or six years ago. GB: How do you choose parts? Is it just trial and error? September 2017
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SUPPLY SIDE
VB: I just put them on the speaker itself, and then when I find a certain resistor that give it a little more, that’s what I use. A lot of people think a resistor just changes the level of the tweeter. No, it changes the Q factor of the whole system [i.e. the way the system stores and releases energy]. Is this measureable? We’ve had people who make test instruments here trying to sell us measurement systems with microphones surrounding the speaker. On one occasion, I did a two-minute demonstration of one of our speakers to one of these people, and asked, “Do you think we really need this system?” She said no. We achieve what we’re trying to achieve from listening.
they’re just not rhythmically inclined. One thing about our speakers, rhythm rules after phase. They’re the same thing. If the phase is beautiful, the rhythm will be just there.
GB: Are there tradeoffs in speaker design between amplitude and phase response?
VB: Correct. It’s better to have less bass, but with control, and not try to extract the maximum at 50Hz. At 50Hz, it’s no better than the Sky. At 30Hz, it is, and it keeps those pulses going; but you need good equipment. That’s why it’s an audiophile product.
VB: I’d say that phase response is the most important. As soon as the phase response is perfect, you’re reaching almost perfect amplitude response. Then it comes down to driver choices. GB: Something that struck me about the Signature One is how rhythmic it is. VB: I’ve heard speakers where I couldn’t even recognize the music they’re playing, because 62
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GB: The bass from the Signature One is really impressive for a small speaker. VB: For the Sky, we claim 3dB down at 48Hz, but in a room it can go deeper than that. With the Signature One, if you have the muscle behind it, in a real room environment, it will have information down to 20Hz, but it will be 10dB down. GB: And it doesn’t get ugly.
GB: Tell me what it means to manufacture in Canada. VB: We purposely manufacture here in Canada. I was given an education here; and as a teacher, I contributed to others’ education. I think the
education process is critical, and so is having good jobs. All final assembly is done here. Our Torrent drivers are machined in Trois-Rivières, because that’s a lower production cost area for us. They’re assembled next door in a little factory we have just for Torrent. The other drivers are tested and assembled here. Crossovers used to be assembled here, but we had problems with fumes from the solder permeating the office area. So we set up two employees who used to build our crossovers in their own business, and they supply our crossovers. We have the same overhead but not the fumes. Cabinetry is outsourced to three different companies. We tried doing cabinetry in-house at the beginning. But CSST [Quebec’s workplace safety agency] charges 12.8% on every salary if we have a woodshop in the building. We helped fund some of these subassembly suppliers, lending them the money to buy machinery. It would have been easy for us to build cabinets overseas. It would be more profitable, but it takes away from what we’re doing. We’re feeding at least 60 families here in Quebec. These families are paying taxes. We take these steps, which are very carefully thought-out, so we can contribute to this society.
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So where does Shanling lie? I’d place the company firmly in the fourth category: good product, good build quality, and a brand that hails straight from China. The company has been around since 1988 when it produced its first Hi-Fi stereo power amplifier. Today, Shanling, which is distributed in Canada by XLO Distribution, offers a wide range of products, including SACD/CD players, high fidelity solid-state and vacuum tube amplifiers, advanced mini music centres, tuners, audio/video amplifiers, and more. I’ve been familiar with Shanling products for several years now. My first Shanling product was a CD transport I bought around four years ago from eBay. It was a great transport for its price, and it was built well. I only refer to it in the past tense because I’ve since handed it off to my father. I’ve also tried Shanling power tube amps, integrated tube amps and DACs. They all perform great, and well beyond their asking prices. So when I was given the opportunity to review Shanling’s shiny new M2s Digital Audio Player, which sells at an MSRP of $269, I quickly jumped at the chance.
Build Quality
HANDS-ON REVIEW
Shanling M2s Digital Audio Player The Little Engine That Could BY DAVID SUSILO
“MADE-IN-CHINA.” It’s the phrase that too many people equate with low quality. But it’s actually a misnomer. There are several “levels” of “Madein-China” products, at least in the audio/video industry. I count four main ones. The scariest includes the low-budget, low-quality products with knockoff-sounding names like Sohy and Soke. These items often live up to the 64
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bad reputation: under-performing, and badly built. You’re lucky if they last a full year, and they usually don’t come with a warranty. The next is the one when famous brands slap their name on something just to hit a low price point. The better ones are products made by a major brands’ factories (or highly reputable third-party ones like Foxconn) located in China.
Unlike the previous generations of Shanling digital audio players, the Shanling M2s comes with an all-aluminum body as opposed to plastic that’s higher quality than anything I’ve seen in a player priced at $500 or lower. The build and buttons remind me of Sony’s first generation Discman, which I still use to this day. The finish is gorgeous, available in basic black or blue, although I wish there were more colours available. For this review, I received the blue version, and I can’t stop oohing and ahhing at it. The screen quality is on par with Apple’s Retina screen (800 x 480 pixels), with brightness that’s sufficient for day-to-day use. The 15 mm x 53 mm x 86 mm size and mere 100 grams of weight is a perfect balance: not too small, not too large, not too light so as to feel flimsy, but also not too heavy. The inclusion of an AKM4490eq DAC chip in a device this affordable astounds me. It’s the identical DAC to the renowned AKM4490, but with an added equalization option. Usually a DAC at this price comes equipped with gimmicky EQ. Not the M2s. The EQ is of a 10-band variety, which controls frequencies starting at 31Hz all the way up to 16kHz (read: highly useable frequency range) with adjustments ranging from -6dB to +6dB. The list of audio files the device can play is extensive. Of course it will play the obligatory MP3,
WAV, AIFF, and FLAC, but it also plays DSD256, PCM upwards to 32-bit 384kHz, as well as ISO, APE, ALAC, DFF, DSF, WMA, AAC, and OGG files. All files can be stored in the M2s using an optional microSD card; up to 256GB is supported. I wish there were two microSD card slots, but one should suffice for most users. The headphone amplifier uses my favourite Tripath TPA6120 chip, which outputs a staggering 130mW @ 32Ohms or 12mW @ 300 Ohms. In the world of built-in headphone amplifiers, those numbers are plentiful.
Listening Experience I had high hopes for the Shanling M2s, which follows the company’s first and well-regarded portable audio product, the M3. What I was not expecting was how much I would enjoy this machine. Before I begin, here’s a quick background on how I use portable players. I typically listen to 320kbps MP3 and WAV files, either Redbook 16-bit/44kHz or FLAC with higher res. I play music by folders, usually complete albums with cover art embedded into the music files. On my iPhone, I create playlists. With standalone digital audio players, I tend to drag music directly into folders on a memory card, and sometimes number tracks to create a poor man’s playlist. My reference points for this unit were iPod Touches, iPhones 5s/6s/7, and hi-res portable audio players from a number of other brands. Until the Shanling, my favourite unit was the Hifiman Supermini, mostly for sound quality, but not necessarily for user experience. (For the record, I still think that device is a bargain for what it offers.)
The GUI is easy on the eyes with themes provided to match your mood. Cover art, embedded as part of each file’s tag, is shown clearly, and I can search for songs using typical parameters like track title, artist name, genre, and album name. A jog dial is used for navigation – push it in to select an option. It felt great in my hand – as smooth and sturdy as a similar dial found on my Canon 7D mkII camera. In my view, the Shanling M2s punched way above its weight. Its sound was of a similar calibre to the Hifiman Supermini and several Fiio players, which was not my expectation going into the test. None of my in-ear monitors, such as my favourite PSB M4U-4 and the Audio Technica Quietpoint 33, really push a portable DAC/AMP very hard. My regular headphones, the PSB M4U-2, went well with this machine for rock, pop and jazz. However, my main reference Audioquest Night Owl Carbon for classical and choral music didn’t seem to be able to play loud enough by the M2s’ built-in headphone amp. What was truly sublime was this unit’s Asahi Kasei (AKM) DAC chip, the same brand used in various made-for-professional-recording-studio DACs, including the world-renowned Apogee DAC modules. This unit sounds great for all types of music; including classical, rock, and jazz, which were all included on the memory card I used for this review. The Hifiman Supermini is still better in sound quality, but I was impressed with the sound produced by the Shanling device. I tried this unit in DAC mode. It worked nicely, with few hiccups, as a computer DAC. It was also tested as a DAC with the iPhone using the camera connecting kit. It worked, but in general, I find the iPhone to be a glitch-ridden DAC source. I get dropouts all the time while listening to various podcasts, no matter what DAC I’m using, and the same was true here. It was no better or worse than using any other USB DAC when it comes to user experience. Reportedly, there are units that are slightly more reliable as iPhone DACs. But in general, I have diminished expectations for iPhone DAC usage in general. This is Apple’s fault, not the DAC. I also tested some DSD files. I had one demo file that was part of a Meridian test suite for MQA, and it sounded great. Unfortunately, the M2s won’t play the very few MQA files I have on hand. DSD files extracted from SACD ISO files using JRiver and other utilities deliver various pops and clicks when being played back for some unknown reason. I can only deduce based
PROS Very affordable Long battery life Superb sound quality
CONS Only comes in black and blue finish options Does not play MQA files Only one microSD slot
on my experience with other players where some files simply don’t jive properly, that this is an issue with the method of extraction, not the Shanling player.
Bottom Line It was love at first sight that sparked my interest in testing this digital audio player. But after extensively playing with the M2s for about three weeks, using hundreds of songs of various genres and formats for more than 100 hours based on my number of recharges (it lasted around 9-10 hours of total playback time per charge), and with three in-ear-monitors and two full sized headphones, I concluded that I’m truly in love with this player. Its highly affordable price of $269 combined with its beautiful yet rigid build quality, Retina-like screen, and easy-to-use graphical user interface, sealed the deal. Am I keeping this unit? You betcha! The Shanling M2s has become my new reference digital audio player. September 2017
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TELEVISION OR WORK OF ART?
It’s Both THE IDEA OF USING A TV to display artwork is nothing new. Display manufacturers have been doing it for some time, not only with imagery on screen, but also via sleek and sexy bezels that mimic picture frames, and ultra-thin panel designs that are works of art in and of themselves. But now, The Frame from Samsung, first previewed at CES, is taking artistic flare a step further. Once the 55” or 65” television is turned off, the screen automatically flips to Art Mode, displaying a selection of curated artwork, or showcase your own family photos. Sensors for light, motion, and colour adjust the tint and brightness so the image always looks like a painting. Art Mode is activated when movement is detected in the room, or the TV senses that a light has been turned on; and it can be turned off. For the first month, you can access a selection of artwork from the Frame app for free, but a rental subscription of $8/mo. will be required thereafter. Or, buy individual pieces for about $27 each - likely less than you’d pay for a nice, similarly sized piece of physical artwork. At launch, there are hundreds of paintings and photos from about 40 artists and photographers available, including everything from landscapes to wildlife, street art, and abstract paintings. With a subscription, you can select artwork on-the-fly to suit your moods or events, or grab five or six favourite pieces to rotate among. Maybe you want the striking piece called Landscape of Peace from Eko Nugroho of Indonesia, or the interesting Yun-Kyung Jeong (South Korea) drawing called Structural Sensibility, to serve as a backdrop during your dinner party. Then switch to something more playful, like Little Fighters by Wolf Ademeit of Germany, found under the Wildlife category, while you relax with the family. As noted, you can also upload images from your own library, choosing from various matte layouts and colours. Display multiple photos at once if desired, just as you might with a standard multi-photo frame. Once you’ve selected the piece or pieces you want, manage the art through the app or Samsung’s Smart Control remote. Despite Samsung’s focus on The Frame as a frame for still art imagery, let’s not forget that it’s also a Smart LED television. It can play back 4K resolution content with Active Crystal Colour technology and offers support for HDR10. Plus, you can access streaming services like Netflix and Websites like YouTube. Connect a variety of 66
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source devices via the four HDMI ports and three USB; the TV is also DLNA-certified. At $2,700 for the 55” version and $3,800 for the 65”, it’s a pretty expensive piece of art. Add to that another $250-$300 to swap the included black frame with something a bit more stylish, like walnut, oak, or white. Replace the standard five-foot transparent Invisible Connection cable with the extended, 15-foot Invisible extension cable for $200. And, for $800 more, opt for the tripod stand to create a “Studio TV” look versus having the TV hang like a painting using the included wall mount. Want to go all out? For a 65” beauty with a tripod stand, 15-foot extension cable, and gorgeous walnut frame, you’re looking at $5,100. And let’s not forget the $8/mo. ongoing subscription fee, which would up the cost to $5,188 for the first year. But how many of your other canvas prints or paintings can also play the big hockey game, awards ceremony, or favourite series for binging in full, 4K glory as well? Sure, you can theoretically display your photos on any smart display, or display with a wired or wireless connection to a content source, when
you’re not watching television. But The Frame offers a number of advantages over this clever workaround. First is the decor-friendly frames that customize the look of the TV. Second is the low power consumption: according to Samsung, Art Mode will only consume about a dollar’s worth of power per month. Third is motion sensing that will only activate the Art Mode feature when someone comes into the room or a light goes on. And fourth is ambient sensing that adjusts the picture based on surrounding lights and colours so you’re seeing a painting more authentically, not as if it were a frame in a movie. Over the last few decades, the television has evolved from the big black boxy eyesore it once was to a gorgeous, ultra-thin flat-panel that’s a welcome focal point of any room. But TVs have also become dimensionally larger screens that, when turned off, take up ample real estate that’s screaming for expression. The Frame by Samsung elevates this design aspect, allowing a TV to blend modern technology desires with something that can stimulate our more traditional visual senses. And that’s something we can all appreciate. —Christine Persaud
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