$18,000 Simaudio AV processor actually a repackaged Denon AVR? - Page 4 - AVS Forum
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post #91 of 222 Old 11-17-2013, 10:06 AM
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Let's not sidetrack the issue, Amir. According to the AH article, what Simaudio did is buy 1000 or so Denon units. They didn't contact Denon who knew nothing about it. They're not an authorized Denon reseller. So either they sent all their employees on a buying spree or they got the goods on the down low from a distributor making them gray market. No different than if you went into a decent restaurant, ordered a burger and had 5 guys or In and Out Burger and slapping it in their own buns. Simaudio assumed they didn't have to pay any licensing fees because Denon already had.

Maybe they sent out letters to the various companies whose logos they so proudly display asking for confirmation that they owed no monetary compensation. Maybe they were advised by the crack legal team of Dewey, Cheatum, and Howe. Yeah once they got caught they were proudly saying all nice things like they never hid it from their dealers. Why they didn't even have time to out on their knee pads before they started trying to give Denon a happy ending.if I were one of the major players like or Dolby and found that their actions were illegal, I'd reach into my deep pockets and teach these mofos a lesson.
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post #92 of 222 Old 11-17-2013, 10:10 AM
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Originally Posted by FMW View Post

What you are saying is that the high end audio industry is a sham for the most part. I think we audiophile converts learned that quite a while ago. It is plain old disreputable.
I spoke of no high-end products in that post. The *entire* consumer electronics works this way. It is just that as consumers you don't know it.

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post #93 of 222 Old 11-17-2013, 10:16 AM
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Originally Posted by Chu Gai View Post

Let's not sidetrack the issue, Amir. According to the AH article, what Simaudio did is buy 1000 or so Denon units. They didn't contact Denon who knew nothing about it. They're not an authorized Denon reseller. So either they sent all their employees on a buying spree or they got the goods on the down low from a distributor making them gray market. No different than if you went into a decent restaurant, ordered a burger and had 5 guys or In and Out Burger and slapping it in their own buns. Simaudio assumed they didn't have to pay any licensing fees because Denon already had.
Do you live in US Chu? If so, you are the beneficiary of such wrong-doing anytime you watch a Netflix disc or go to the library. First Sale Doctrine says that once you buy something, you can do with it as you wish. Netflix (and Redbox) buy discs and then proceed to rent them against the wishes of the content owners. They make money from one disc whereas Netflix makes over and over. LIkewise the library lends out books that would theoretically reduce the sales of the book.

The law in US says that you are allowed to do this because the original producer of the product was paid. In this case, every Sim sale results in a Denon sale. Even if Denon had a valid legal claim and it won, it could not show any damages. They could not sell any more product if Sim was not there.

If I buy a Denon AVR, I should be free to make a change to it and sell it to you. Are you advocating to lose this right?
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Maybe they sent out letters to the various companies whose logos they so proudly display asking for confirmation that they owed no monetary compensation. Maybe they were advised by the crack legal team of Dewey, Cheatum, and Howe. Yeah once they got caught they were proudly saying all nice things like they never hid it from their dealers. Why they didn't even have time to out on their knee pads before they started trying to give Denon a happy ending.if I were one of the major players like or Dolby and found that their actions were illegal, I'd reach into my deep pockets and teach these mofos a lesson.
Why would Dolby be upset? They got their royalties through Denon. When you say this is illegal, what law is broken (putting aside the technicality of using their logo).

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post #94 of 222 Old 11-17-2013, 10:25 AM
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Why? If they can't make money at that retail price, how would they do so with a lower price??? Do you think the $18K is the dealer price? Do you know if the Denon is sold profitably?

No, I don't know and I don't care. Ripping out part of a product, repackaging and selling it for 10 times the price is unconscionable. Period. No exceptions. If someone loses money doing it, all the better. It might deter others from engaging in the same folly.
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post #95 of 222 Old 11-17-2013, 10:26 AM
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What am I supposed to think about?.
Think about why you aren't offended today about a product you were never going to buy 5 years ago.

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post #96 of 222 Old 11-17-2013, 10:29 AM
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I spoke of no high-end products in that post. The *entire* consumer electronics works this way. It is just that as consumers you don't know it.

So you're saying that Denon doesn't design their equipment either? They are part of the "entire" consumer electronics industry. And you might be surprised at how much I know about the consumer electronics industry.
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post #97 of 222 Old 11-17-2013, 10:55 AM
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So you're saying that Denon doesn't design their equipment either? They are part of the "entire" consumer electronics industry. And you might be surprised at how much I know about the consumer electronics industry.
I can't be surprise when you have not told me what you know smile.gif. But i have shared a lot that I know. Walk us through what is in that Denon AVR and explain what part is from their engineering design and what is not.

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post #98 of 222 Old 11-17-2013, 11:15 AM
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Originally Posted by FMW View Post

No, I don't know and I don't care. Ripping out part of a product, repackaging and selling it for 10 times the price is unconscionable. Period. No exceptions. If someone loses money doing it, all the better. It might deter others from engaging in the same folly.
Really? What if I told you it is Denon that is losing money selling that AVR? You still think that should be the basis for someone else pricing their product? How much is the dealer margin for it? How about the Rep? What is it for Denon? How much effort does it take to sell Sim vs Denon? Will some dealer bring you the Denon to your house, help you set it up, let you play with it for free for weeks and if you decided you don't want it, take it back? What if you have questions about its workings? You know someone who can contact the engineers in Japan to answer it? Does the guy who buys Denon go to the store where they are displayed and spend 3 hours chatting with the salesman and then not buy anything? And come back and do that two more times and your sales guy has to keep smiling and go with the program? How much money should the owner of that shop make from said AVR? The -$50 that exists potentially for that AVR because someone without a store is selling below your cost and you have to match that price? How about the guy who uses your three hours of time and then proceeds to buy it online?

You say you know about the industry. I like to know if all of the above was known to you when you showed your outraged above.

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post #99 of 222 Old 11-17-2013, 12:46 PM
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You have not established that this First Use Doctrine extends to the issues raised, Amir. Are you aware of any legal precedents that would suggest this to be so? Maybe the Johnny Cochran Principle is at play here - f the case fits you must aquit. And yes, I do live in the US, you ****.

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post #100 of 222 Old 11-17-2013, 12:49 PM
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Originally Posted by amirm View Post

I can't be surprise when you have not told me what you know smile.gif. But i have shared a lot that I know. Walk us through what is in that Denon AVR and explain what part is from their engineering design and what is not.

It is you who claimed Denon and others do not design their own products. It isn't for me to walk through anything.
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post #101 of 222 Old 11-17-2013, 12:51 PM
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Really? What if I told you it is Denon that is losing money selling that AVR? You still think that should be the basis for someone else pricing their product? How much is the dealer margin for it? How about the Rep? What is it for Denon? How much effort does it take to sell Sim vs Denon? Will some dealer bring you the Denon to your house, help you set it up, let you play with it for free for weeks and if you decided you don't want it, take it back? What if you have questions about its workings? You know someone who can contact the engineers in Japan to answer it? Does the guy who buys Denon go to the store where they are displayed and spend 3 hours chatting with the salesman and then not buy anything? And come back and do that two more times and your sales guy has to keep smiling and go with the program? How much money should the owner of that shop make from said AVR? The -$50 that exists potentially for that AVR because someone without a store is selling below your cost and you have to match that price? How about the guy who uses your three hours of time and then proceeds to buy it online?

You say you know about the industry. I like to know if all of the above was known to you when you showed your outraged above.

Sounds like selling AVR's is a lousy business model. I wonder why so many companies do it? All the things you mention are not worth $18000. Sorry. It is ridiculous. Beyond ridiculous. Beyond unconscionable. Pour all the sugar on it you want. It is still sour.
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post #102 of 222 Old 11-17-2013, 01:14 PM
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I work for the last 20 years in the heating industry, selling and installing condensing boiler based hydronik heating and domestic hot water producing systems.

Considering that a Boiler (96% Thermal efficiency) system with multiple zone controls, outdoor reset curves, boiler self diagnostics, setting of parameters in the boiler menu that can stretch over hundreds of lines of input, pumps that sense the pressure and temperature differentials and adjust their speed accordingly is available for about 30 000$/5000 sq' house (that includes the slab insulation, manifolds and pipes) - the notion to sell a piddly piece of audio equipment for an amazingly 18 000$ just is stunning.

Considering you can buy a vehicle with all wheel drive, sat nav, entertainment center, seven passenger capability, programmable seating position locked to your key, multi zone climate control for about 40 000$ - the notion of a piddly piece of audio equipment costing 18 000$ is just unbelievable.

There is something wrong in that picture. And it is not the equipment for heating or transportation.

On the other hand, neither vehicles nor audio equipment to me was ever a "status symbol". So I really cannot speak to that point.
At home I do not welcome visitors into our house except for good friends and the kids, and on the road I need something with 4WD and pulling capacity. Both items are strictly utilitarian; that is why I converted to all out digital audio PC and run old Klipsch Heresy speakers.
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post #103 of 222 Old 11-17-2013, 01:28 PM
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Sounds like selling AVR's is a lousy business model.
No, selling anything in consumer electronics is a lousy business. Unless you are Apple, or Samsung, you are probably in the dog house. Here is Panasonic's results: http://www.marketwatch.com/story/panasonic-posts-second-year-of-massive-losses-2013-05-10

"Panasonic posts second year of massive losses

It rolled the dice with massive billion-dollar investments in panel-making factories for televisions, only to see those bets sour when TV demand plunged. But the slide is not limited to televisions. Digital cameras, Blu-Ray disc players and personal computers are all feeling the pinch as consumers opt for products such as smartphones and tablet computers.

Under President Kazuhiro Tsuga, who took over Panasonic a year ago, the company is working to overhaul and streamline its operations. He has pledged to eliminate Panasonic's unprofitable businesses, while shifting the company into new growth areas in automotive and environmentally friendly technologies."

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I wonder why so many companies do it?
If you are a major electronics company in Asia, it is shameful to walk away from such business and concede defeat to likes of Visio from China. They will suffer and suffer until they have no choice and get fresh leadership like my friend Tsuga-san and try to cut the cancer out. But it still hard to face the employees, conduct massive lay offs, etc. Same story is there no matter where you look: http://www.twice.com/articletype/financial/pioneer-posts-q3-losses-plans-home-av-spinoff/105016

"Pioneer Posts Q3 Losses, Plans Home A/V Spinoff

The company called its home electronics business — which includes home A/V, DJ and optical-disc drives — “unprofitable,” with an operating loss in the quarter of 1.67 billion yen, compared with a year-ago operating income of 224 million yen."

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All the things you mention are not worth $18000.
It is not to me either smile.gif. But to many people, it is essential and required cost of doing business. These customers want to hear the gear and won't settle for anyone telling them they should buy things without that kind of service.

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post #104 of 222 Old 11-17-2013, 01:39 PM
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So do you same guys who are whining at amir also get mad at the fashion industry for selling a pair of jeans for $400? How about a diamond ring for $3k? You do know that the mark ups on diamonds are huge, right? How about rebranded luxury watches? Luxury cars which are only change the body and interior from a common model? Do you think it matters to the sucker buying an $18k AVR if he knows it isn't any more functional than a $1k model? You nerds are missing the entire point of a status symbol.
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post #105 of 222 Old 11-17-2013, 01:41 PM
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Originally Posted by amirm View Post

"[/i]
It is not to me either smile.gif. But to many people, it is essential and required cost of doing business. These customers want to hear the gear and won't settle for anyone telling them they should buy things without that kind of service.

I understand the schtick. I used to be a full bore audiophile. I used to think nothing of spending 5 figures for a preamp. I admit I was a fool but at least I got over it. One of the things I did early on when I got into the e-commerce business was try to put up a web site for high end audio. My feeling was that people like me, who do not live near a big city with high end audio dealers would be interested in home auditions of high end audio gear and worked up a business plan to do it. Not one single high end manufacturer would get involved. They had an amazing fear of the internet. I dropped the idea and never got involved in the audio business at all other than to sell vacuum tubes for a couple of years. That was profitable but soon was overrun by dozens of competitors and the tube industry isn't very big as you know. My opinion of the high end audio industry is pretty negative for a number reasons as you can plainly see.
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post #106 of 222 Old 11-17-2013, 01:59 PM
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Sorry, what Sim has done here is uninnovative and shameful. Simply modding a Denon and rebadging it as their own for an $18k premium tells me the character of this company. I fully understand sharing technology with industry partners but this doesn't qualify IMO. According to Denon, they didn't even know about it! They simply decided to take advantage of their target market and loyal client base, nothing more. Similar to what Harmon/ Lexicon did with their modded Oppo player. Perhaps worse.

However unlike the Lexicon/Oppo BD player, the partnership between Harmon and Bryston to manufacture the new JBL Synth processor is a little different. Yes, it's mostly an SP3 with a redesigned faceplate and modded firmware but JBL had a specific need in their Synthesis line and decided to leverage Bryston. They charge a $1k premium over the retail price of the Bryston version but Harmon has invested some of their time into customizing the Synth version. In any case, a premium most can probably live with.

Think about what you can get these days for $18k?

ADA+Trinnov
Theta
Datasat
McIntosh MX 150/151

All very innovative designs and require partnerships with other manufactures (Trinnov, RoomPerfect, Dirac). You at least have some comfort that your investment went into some research and development to bring you state of the art. What did Sim deliver for $18k? Upgraded powersupply and other components?

I feel for those that invested in this processor.

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post #107 of 222 Old 11-17-2013, 02:11 PM
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I have no problem with the status symbol, ahadyj. I'm questioning whether they legally violated anything.

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post #108 of 222 Old 11-17-2013, 02:12 PM - Thread Starter
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So do you same guys who are whining at amir also get mad at the fashion industry for selling a pair of jeans for $400?

A more direct analogy might be a small news outfit publicizing that a company selling high-end jeans for $400 was actually buying them from Wal-Mart and relabeling them, then having members of the mainstream press say "So what! We knew about that years ago!"
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post #109 of 222 Old 11-17-2013, 02:42 PM
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I have no problem with the status symbol, ahadyj. I'm questioning whether they legally violated anything.

I can see that, and all I can say is my moral compass isn't really feeling a strong pull in any particular direction here. If I were Denon, I would think it somewhat flattering to have that unit used in a far more expensive system. The extra sales don't hurt either, and why discourage outfits from buying your product by suing them? From a business perspective I don't see why Denon would take legal action. As for the moneyed folk who bought the Sim unit, all they really want is a high priced, fine brushed steel exterior and that's what they got. And for the suckers who bought it for performance reasons, they have bought into the audiophile myth and deserve to be parted with their money anyway. I have no sympathy for those who reject empirical reason.
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A more direct analogy might be a small news outfit publicizing that a company selling high-end jeans for $400 was actually buying them from Wal-Mart and relabeling them, then having members of the mainstream press say "So what! We knew about that years ago!"

That is still beside the point. The price tag IS the point, the appearance of affluence is the point. Authenticity and functionality have no relevance here.
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post #110 of 222 Old 11-17-2013, 02:57 PM - Thread Starter
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That is still beside the point. The price tag IS the point, the appearance of affluence is the point. Authenticity and functionality have no relevance here.

Different posters are making different points. It seems to me that authenticity was a major point of the article's author, though not the entirety of it. Value added (or not, as the case may be) is another big component.
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post #111 of 222 Old 11-17-2013, 04:04 PM
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To a large extent, I concur with Amir's synopsis of 'how things are done" and the economic reasons driving this. Yet, I'm troubled by what Sim Audio did for a number of reasons. It's one thing for some company to go to one of the many outfits in China or Korea who make a particular product and have it customized for them. Every month or so, I receive an email from Global Sources with a link to a downloadable PDF for the consumer electronics industry about Asian companies, what they're offering, they're capabilities, and who some of their OEM buying are. But this thing with Denon seems a little different to me. Rather than the car examples Amir brought up, the cr example that comes to my mind is when GM took a Chevy Cavalier and dressed it up as a Cadillac Cimmaron. A pretty mundane and uninspiring Chevy became a plodding and embarassing luxury automobile. it was decades later that an actual public apology was made.

As I said, I'm troubled for a number of reasons.
The sheer hubris shown by Sim Audo strikes me as insulting.
I wonder if a company can take an existing product,, open it, swap out a few parts, and put it into a new case ad legally claim that it still meets FCC regulations?
I'm bothered by the utter gullibility of many consumers who often think that the word design means they actually developed a prototype, soup to nuts, and had it made overseas.
I'm also bothered by the audio press which knows of these things yet fails to find a way to disclose it to the public. Car & Driver or Road & Track do a better job of disclosing rebadging. The audio press by and large act as a bunch of *******, seemingly afraid to ruffle any feathers, and instead act as publicists and spokespersons for the industry, serving them more than they do us.

So yeah, the news is old and I'm a little outraged. Lots of things happen in life that you find out years later. The passage of time doesn't make them any more palatable.

Bravo. Totally agree.

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post #112 of 222 Old 11-17-2013, 04:12 PM
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If they (Simaudio) are selling a product with a Dolby logo on it, then it needs to have been Dolby certified. Dolby would require them to run a suite of audio parametrics and submit them to Dolby for review. Dolby would also require Simaudio to submit a sample for review and testing by Dolby. Further, if they are selling a unit with a Dolby logo on it, they would be required to pay royalties to Dolby - whether or not Denon already paid those royalties.

This is my opinion, based on over 10 years of performing Dolby certification testing on various products and working with Dolby to assure we met their requirements.

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post #113 of 222 Old 11-17-2013, 05:16 PM
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If they (Simaudio) are selling a product with a Dolby logo on it, then it needs to have been Dolby certified. Dolby would require them to run a suite of audio parametrics and submit them to Dolby for review. Dolby would also require Simaudio to submit a sample for review and testing by Dolby. Further, if they are selling a unit with a Dolby logo on it, they would be required to pay royalties to Dolby - whether or not Denon already paid those royalties.

This is my opinion, based on over 10 years of performing Dolby certification testing on various products and working with Dolby to assure we met their requirements.
Dolby added that clause in mid 2000s which is a way to double charge licensees. My understanding is that runs afoul of patent exhaustion doctrine. Here is the Wiki on it: http://en.wikipedia.org/wiki/Exhaustion_doctrine

"Under the doctrine, once an unrestricted, authorized sale of a patented article occurs, the patent holder’s exclusive rights to control the use and sale of that article are exhausted, and the purchaser is free to use or resell that article without further restraint from patent law.....Generally, when a patent owner receives compensation for the use of his or her invention through sale of a good, the purpose of patent law is fulfilled with respect to that good.[5] Upon receiving compensation, the patent owner's rights to exclude others are exhausted and “the patent law affords no basis for restraining the use and enjoyment of the thing sold."

Fighting such rights is difficult though. But there is also significant risk for Dolby: should it lose such a fight over Patent Exhaustion, they would have to cut out the provision from their license and maybe pay back everyone who gave them such double fees. Therefore the upside has to be significant which it is not in this case with a little company and so few devices sold.

I think we should be advocates of such rights. Who here thinks Dolby should get paid twice? Now that would *outrage* me! That is how I felt when I heard about them attempting to do this.

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post #114 of 222 Old 11-17-2013, 05:43 PM
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Originally Posted by Chu Gai View Post

I have no problem with the status symbol, ahadyj. I'm questioning whether they legally violated anything.
And my question is why you would want it to be illegal? You rather give up your rights in this respect in order to bash a little company?

A system integrator today can buy a PC from a local shop that puts it together in a blank chassis and loads up Windows in it for you and then proceed to put their value-add in there. Countless industrial and commercial companies do this and put their name on the PC (including some audio and video servers). Should they now have to pay Microsoft a second license fee to Microsoft?

Why shouldn't I be free to buy a bunch of hardware in store, modify them and sell them to my friends? Can't I do that with cars today? Can the OEM that put the stereo in there come after me and stop me from selling that customized car and ask for second royalties? Should Dolby be able to sue said vendor for its technology that is in there? Can Bosch sue for their oxygen sensor patent used in every fuel injection system to collect a second fee from this little company? How would Johny the Kustom Shop be able to handle these logistics even if it could pay?

Why would any consumer be in favor of anti-competitive measures like this??? Are we that desperate for reasons to beat up the high-end guys that we want to give all of our privileges elsewhere? i think we have reached the point of unreasonableness in our fight against the high-end....

Amir
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"Insist on Quality Engineering"
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post #115 of 222 Old 11-17-2013, 05:55 PM
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When you buy a car, you pay tax. When you sell it to a person, they also pay tax. Simaudio made some changes to the Denon unit, gutting the amp section, adding a different power supply, and who knows what else.without testing, there's no way of determining if they're still in compliance.i don't think Dolby or any of the others would actually sue. A strongly worded letter on their legal firm's stationary would elicit the requisite compliance.

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post #116 of 222 Old 11-17-2013, 07:44 PM
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When I buy a new car I pay tax.
When I sell it they dont pay tax.
The world is bigger than your backyard.

Capitalism.....it is exactly this.
Just ask your banker.
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post #117 of 222 Old 11-17-2013, 08:35 PM
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In every state I have lived in, you pay sales tax on a used car, normally paid when you register the car, or when you title it.
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post #118 of 222 Old 11-17-2013, 08:51 PM
 
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Originally Posted by Chu Gai View Post

When you buy a car, you pay tax. When you sell it to a person, they also pay tax. Simaudio made some changes to the Denon unit, gutting the amp section, adding a different power supply, and who knows what else.without testing, there's no way of determining if they're still in compliance.i don't think Dolby or any of the others would actually sue. A strongly worded letter on their legal firm's stationary would elicit the requisite compliance.

As far as the tax issue goes, most sales tax laws don't tax intermediate transactions such as those from distributors to dealers, or as a consequence of industrial processing. Ford doesn't pay sales tax on the steel they buy, for example. Target doesn't pay sales tax on the stuff they buy from various manufacturers and distributors. Sales tax in the normal sales channel is only collected on the sale to the ultimate end user. When a car is sold to an end user the sale is taxed but sales from the manufacturer or auction house to a dealer is not taxed. A sales tax license is used to control these kinds of purchases.
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post #119 of 222 Old 11-17-2013, 08:55 PM
 
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If they (Simaudio) are selling a product with a Dolby logo on it, then it needs to have been Dolby certified. Dolby would require them to run a suite of audio parametrics and submit them to Dolby for review. Dolby would also require Simaudio to submit a sample for review and testing by Dolby. Further, if they are selling a unit with a Dolby logo on it, they would be required to pay royalties to Dolby - whether or not Denon already paid those royalties.

This is my opinion, based on over 10 years of performing Dolby certification testing on various products and working with Dolby to assure we met their requirements.

But you don't do any such testing on devices when they are sold by a distributor to a dealer, right?

When Simaudio buys a Dolby-logoed product they implictly pay Dolby's license fee which is in this case collected by the Denon distributor or dealer that they buy the equipment from. The money works its way back to Denon and then to Dolby from them.
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post #120 of 222 Old 11-17-2013, 08:57 PM
 
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In every state I have lived in, you pay sales tax on a used car, normally paid when you register the car, or when you title it.

Right and those are things that end-users do.
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