who is in the ID business yesterday. The topic of ED came up and after going through the various issues and facts as we know them, the following seems like a reasonable synopsis or answer to the question of what happened to the company.
ED sources their amps and drivers from China. Like many other companies, it's a cash business. You send them money, they send you product. It's not like years ago when there were terms where they'd send you product and then if you paid within 30 days there'd be something like a 5% discount. Once money has changed hands, you have no leverage unless you're an incredibly large buyer that the Chinese company depends upon. ED is not a large buyer.
Further, these Chinese companies have minimum quantities before they'll agree to an order. It's not like you or I who bought something at Home Depot that doesn't work and we can return it for our money back. Not only that, but the Chinese companies essentially don't offer warranties on what they sell you. So, if the amp you bought from them and put into a customer's box dies, that's your problem.
I asked this person what do they do when they place an order be it speakers, drivers, or whatever? He replied that based on historical experience, he orders an appropriate number of spares commensurate with what the data suggests he may need to both address the warranty and to provide replacement parts past the warranty period.
Where ED screwed up, and royally so, for some period of time, they offered a five year warranty on at least some of their subs. Considering that the company they're buying from is not going to provide freebie replacements should something go wrong, this was a reckless move. After all, it's not like ED has a testing lab that can perform accelerated testing and estimate failure rates. No, the offering of a 5 year warranty was done to provide a marketing edge over the competition. And that would've been wonderful if the amps held up but they didn't. Who knows what the reason was - bad caps, transistors, whatever? But just like the dearly departed AV451's MFW-15's amps, these were going bad.
ED I'm sure had ordered some extra amps but they never counted on multiple people having to replace multiple amps for the same sub. They never counted on having to reorder a bunch of amps to service their warranty or maybe going from a Class D switching amp to a Bash amp. Profits turned into losses and the losses were getting compounded because not only were additional amps being ordered but in some cases, the amps were taking out the drivers too.
So, we have a spillover effect. Money is tight and the portion of revenue that would be returned to the operating budget suddenly doesn't exist. Orders are taking longer to process and we're seeing staggered shipments. Screwed up shipments. Speakers come but we're waiting on grills. One sub isolation platform comes and the other comes months later but it doesn't even match. What does come is excuses. Excuses like capacitor shortages, shortage of packaging materials, emails that don't get answered and are somehow lost. People in meetings or vacations or trips. Credit cards are being charged and the product isn't shipping. The website says this or that is in stock but instead of getting the order in a timely fashion, customers wait. And wait. Calls for service aren't answered. Threads get deleted. For anyone who followed the AV451 fiasco, well here it is revisited.
Every penny that has to get spent on warranty issues is a penny that can't be used to order the supplies they need to keep the operation going. They really can't get into custom orders because there's no money to order the custom parts. And throughout all of this there's the 5 year warranty that still has years left.
Some folks under the five year warranty got an amp. Maybe even a second one. Maybe even a driver if the amp wound up knocking it for a loop. But then something happened. Well, a few somethings. There was talk (since rescinded?) about not sending out a replacement amp at no charge because maybe you used Audyssey and that caused the problem. Then if you wanted an amp, no problem just send in the money for it but if you mentioned the word warranty, they closed up like a clam shell.
Even though the company they bought the amps from doesn't make good if a customer's sub bites the big one, Elemental Designs is legally obligated to honor the warranty in existence at the time of purchase. They cannot legally modify that warranty by changing its terms. They cannot start charging customers for repair of warrantied amps. They can provide you with a refurbished amp and I think they can provide you with another type of amp that performs in a similar fashion.
If, after all this, you the customer throw your hands up in the air and agree to the payment or just stop trying and move on, then ED has won. Sure they won't get your repeat business but they've also managed to stop one of the exit wounds. Look, I get it that some feel that by insisting on compliance with the warranty they may feel complicit in putting ED out of business. But it's not you who should feel guilty, it's ED for acting in a reckless and poorly thought out manner. They're bad businessmen even if they're capable of making what some feel are nice products. Some of their actions can even be considered dishonest. Should you not continue to pursue your warranty claims by enlisting the services of the Consumer Protection division of Iowa's Attorney General's office, then not only has ED won but you've lost. You lost your investment. If people don't start acting soon, what may well happen is ED may at some point file for bankruptcy and at that point you certainly will have a boat anchor.