Tag Archives: Yamaha

Yamaha Reface (No, I haven’t played it)

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It’s Internet de rigueur to comment on the new Yamaha Reface keyboards — whether you’ve played them or not! So, here goes…

I’m in fat city with an original AN-200 (Prophet-5 plus beat machine in a box), a P-50m (pianos in a box), a CS-01 (monophonic analog synthesizer) and a Nord Electro 2. Although a few of these pieces are gathering dust, they pretty much cover the sonic territory of Reface. DX-wise, I had more than enough FM in the 80’s, thank you, and could always get my old CE-20 repaired, if the urge to frequency modulate should ever overcome me again. Overall, I’m unlikely to take the plunge and buy a Reface keyboard just out of necessity.

First off, I genuinely wish Yamaha all the success in the world with these products. This is the first time that Yamaha have strayed from the AWM2 mainstream in some years. I would hate to see this innovative product line tank and make Yamaha risk-averse. The Reface product line started out as an after-hours skunk works engineering project. The fact that Yamaha committed to manufacturing and marketing Reface is significant and shows real effort to shift their corporate culture. Further, if Reface makes scads of money for Yamaha, then its profits will lift other boats within Yamaha.

Sonically, Reface sounds pretty darned good. The CP and YC are my favorites because they fit with the musical genres that I work in. I hope that some of this technology will migrate into future synthesizer and arranger workstation products. Spectral Component Modeling (which includes Virtual Circuit Modeling) grew from VL technology. The VCM effects in the MOX/Motif are quite good, so please give me more of that! I am pleased to see Yamaha work on organ emulation and would like to see the drawbar control, vibrato/chorus and rotary speaker effects in a new workstation. Both the Motif/MOX and higher-end arrangers are missing the Hammond “vibrato scanner” effect — a significant omission.

So, why am I not buying? Apparently, “mini” keyboard sales are making money for Novation and others, and Yamaha wants a piece of this market. The decision to use mini-keys strongly bifurcates the marketplace — you either like (accept, tolerate) mini-keys or you don’t. I’m a “don’t.” I have tried mini-keys in the past and, well, no thanks. This is not an “anti-Yamaha” position — I lost all interest in the Korg Odyssey, for example, when I learned that it had mini-keys.

The Reface is touted as a portable, take-it-anywhere keyboard. If you’ve been reading this blog, then you know that I’ve put together a portable rig based on the Korg Triton Taktile (TT.) The TT has 49 full-size keys and is not much bigger or heavier than a Reface. The TT key bed is excellent and four octaves is enough room to roam. Although the TT is missing the up-to-date tone generation and effects technology in Reface, it’s a very playable alternative to Reface.

Finally, there is the issue of the $500 street price. I suspect that Yamaha is looking to make a few extra bucks from the early adopters. Korg may have pursued the same strategy with the TT. They brought the TT out at a higher street price and then eventually reduced the price to the current $350 USD. The TT comes with a superb bundle of software plug-ins and offers, making it a terrific bargain. Unfortunately, for Yamaha, this is the competition facing Reface (pun intended) and a $500 street price looks mighty steep for an ax with mini-keys and no free software incentives.

Internet reaction from Reface detractors has been vehement — far over the top, in my opinion. It seems like some people have taken Reface as a personal affront! Please, settle down. Yamaha is a big company and they will surely roll out new products for the rest of us. The Motif refresh is overdue, for example, and must be in the works. It’s good to see Yamaha releasing new products that are out of its mainstream offerings. All the best!

Yamaha: The business

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We musicians like to dream about new electronic musical instruments or even just simple improvements to the instruments that we already own. Everyone likes to think that their specific needs are indicative of the general market, and gosh, “Why doesn’t Yamaha (or whoever) realize that this is important?”

Well, like any other business, Yamaha or any other musical instrument manufacturer needs to make a business decision before committing money to a new product or product improvements. This rather obvious notion led me to find out more about Yamaha as a business.

A good place to start is the Yamaha annual report. Here are links to the 2012 and
2013 annual reports. There is way to much to summarize here, so here are a few brief observations and information from the 2013 report.

Yamaha has a new president: Takuya Nakata. One of the four key strategies is to expand sales in the electronics business domain (digital keyboard instruments, PA equipment and ICT devices). The priority in digital keyboard instruments is to 1. expand market share through product differentiation and 2. Respond to various market demand. The annual report doesn’t give any details as I’m sure that Yamaha’s competitors would be interested in that information, too! However, as an example, I will say that Yamaha is strong in the regionalization of its arranger keyboards, providing many region-specific expansion packs with ethnic styles and sounds.

Yamaha is clearly a global company and manufactures instruments in Japan and other locations. Labor costs are rising in Chinese and Indonesian factories. Yamaha has significant exposure to exchange rate volatility. These factors put considerable pressure on corporate finances.

The 2013 report has a long Q&A with the president. Here is an interesting quote from Mr. Nakata-san:

Q: What are Yamaha’s key strategies for the future?
A: Our priority business strategy is, naturally, to accelerate growth in China and other emerging markets. Our target is to achieve growth of 30% or more over the next three years. China is a market where acoustic piano sales accounts for more than half of musical instrument sales, but, with lifestyles changing due to urbanization, we expect major growth, particularly in digital musical instruments. With the goal of increasing the music-playing population and expanding the market, Yamaha is constantly increasing the number of Yamaha Music Schools and providing music instruction at schools in both markets. We will continue to increase the size of our marketing staff, including staff in other emerging markets, and develop and fortify our sales network.

Turning to products, we will continue to pursue our strategy of expansion in the electronics business domain. Our plan is to achieve sales growth of about 30% over the next three years in digital keyboard instruments, professional audio equipment, and information and communications technology (ICT) devices. Digital keyboard instruments are a promising field of growth in the previously mentioned markets of China and other emerging countries. However, the challenge we face is this: can we assess customer needs, focus on what the customer wants, and provide it at a suitable price? More than ever, Yamaha will develop products that are finely tailored to market needs with sound that is genuine, with style and tone data that take into account local preferences, and offer original and appealing products that excite customers.

The report has a map showing market priorities. Yamaha is definitely looking for growth in China, India, Russia, Africa and South America (notably, Brazil). We should expect to see more instruments that are specifically targeted for these regions.

What is an annual report without the numbers?

Overall sales/income
  2013 net sales: 366.9 billion yen
  Operating income: 9.2 billion yen
  Net income: 4.1 billion yen
  ROE: 1.9%

That’s 3.58 billion US dollars. Investors cannot be happy with such a low return on equity (ROE). Intel and Apple, for example, have an ROE of 18% and 31%, respectively. That’s probably why there is a new president.

Musical instruments provide the majority of sales:

Sales by business segment
  Musical instruments   74.3%
  AV/IT                 15.1%
  Electronic devices     4.1%
  Others                 6.5%

Sales by region
  Japan                 45.2%
  Asia, Oceania, other  23.2%
  Europe                16.5%
  North America         15.0%

Yep, Yamaha does make other stuff (e.g., golf equipment!) The 4-cylinder engine in my ten year old Pontiac Vibe was made by Yamaha. Regionally, Japan is still a very important market for Yamaha.

Musical instrument sales were 2.66 billion US dollars in 2013.

Musical instruments
  Sales:                272.7 billion yen
  Operating income:     8.1 billion yen

Now we get to the good stuff about musical instruments. Here are two breakdowns:

Musical instruments sales by product category
  Pianos                15.0%
  Digital musical instr 22.9%
  Wind instruments      11.1%
  String and percussion  7.3%
  Professional audio    11.7%
  Music schools, etc.   32.0%

Musical instruments sales by region
  Japan                 42.8%
  Asia, Oceania, other  16.9%
  Europe                16.7%
  North America         15.2%
  China                  8.4%

Most of the sales from “Music schools, etc.” is in Japan. It’s interesting that a large part of Yamaha’s revenue comes from educational services and not products! Further, this source of revenue is mainly in Japan. In North America, roughly one third of sales are guitar and drum sales.

The digital music instrument (DMI) category includes digital pianos, Electone organs, portable keyboards and synthesizers. Thus, when we complain about this workstation feature or that synthesizer sound, or whatever, our workstation or synth is really just a small part of bigger, global picture. Because Yamaha is foremost a manufacturing company, executives must carefully allocate development funds and capital. I do wonder, though, how much Yamaha regards itself as a software company and how much attention software is given.

The report notes that more than half of sales in China are acoustic piano sales. There probably is real sales opportunity for DMI in China.

I wish there was a further breakdown within product category. I’m sure the breakdown is in a 200 slide PowerPoint deck somewhere inside Yamaha. 🙂 This level of info is not usually available in an annual report.

Yamaha have clearly been hit by the global collapse/slowdown of recent years. The chronically stagnant Japanese economy cannot be a positive factor as well. The annual report also cites business disruption and effects due to the Great East Japan Earthquake.

Well, there it is — a quick marketing picture of Yamaha as a business. I wonder how they will differentiate their products? Hmmm…