Sonova, Hearing Aid Fittings, & OTC Channel Growth

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Yes, it's amazing because I always knew there was a reluctance to use hearing aids and it takes 90 days to overcome this hurdle. The fact that the brain is no longer used to process the sound as it used to, and that it can be very painful for somebody using hearing aids the first time, very often they give up because it bothers them.

That goes to over the counter. I've talked to Google Venture Capital who are also excited about this market. I can take a hundred people with the same hearing loss, and in our world, we call it a matrix. We fit them with the same output gain and slope, theoretically, from an audiology standpoint. Their natural canal residence and aperture of their ear, with that device in their ear, each of them will have a different outcome verification and will hear differently. Some folks might even have more of a hearing loss after treatment. Getting a product out of a blister pack and fitting it on those same hundred people with that hearing loss, each person will have a different outcome.

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Let's talk about the fitting process because it seems to be a very crucial point when it comes to hearing aid adoption. How does it work when somebody comes to see an audiologist for the first time?

If I'm going to fit a custom, I'm going to automatically go to Starkey because they make the best custom hearing aid. Many audiologists or dispensers have a hard time going from one brand to the other. I would compare it to using Linux, Apple or Microsoft, whose operating systems are very different. The WS software has been more German, more engineering looking, if that makes sense. The Germans have that feel to it, Audifon from the KIND family, their software is very engineering feeling. When you go to GN, Demont and Sonova, you can tell the software is written by an audiologist.

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What went wrong in this launch; why did it not work?

So many things go along with that device, meaning the consumer doesn't want the device in the first place. The only person who is keeping it in that person's ear and fitted is that audiologist or dispenser. There were other direct to consumer products such as Whisper and Crystal Ear, and Johnson & Johnson had Songbird, and the studies proved it took us more time and effort to sell and fit those products for a lot less margin than it did to fit one with the stronger margin to keep that practitioner with a roof over their head and food on their plate. With Sona, you had this device in the office which they gave to practitioners on consignment. It was at a low price point, similar to what they're trying to do with Sona and Sennheiser, but they didn't sell. I think Sennheiser will go the same way as Sona.

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