Santa Ana’s SRS Labs Inc., which licenses technology to enhance the sound of TVs and stereos, is making a play for notebook computers.
The company has picked up some wins with Hewlett-Packard Co. and Japan’s NEC Corp.
It recently inked software licensing deals with Taiwan’s ASUSTek Computer Inc. and Dell Inc. for high-end laptops designed for music, video and games.
“We have the No. 1 and No. 2 PC makers and we also have ASUS, which is growing very fast,” said Craig Marking, director of marketing for SRS. “Those three are roughly 40% of the notebook market. But our goal is to be in all of them.”
The company’s move into PCs is a bid to diversify.
SRS’s main business is selling software for enhancing sound in flat TVs and other related accessories, including set-top boxes, speaker bars, headphones, home audio gear and digital video recorders.
The company has about $20 million in yearly sales.
“Traditionally we derived most of our revenue from the TV market and we have a pretty high market penetration there,” said Alan Kraemer, chief technology officer. “Flat panel TV sales are growing, even in this economy, but we don’t know if that is going to continue.”
The company last year had “to take a hard look at our technologies and our markets,” Marking said. “We put together a couple of packaged software solutions and then
made our primary focus the PC market.”
The Result
The company’s offering, dubbed Premium Sound, is the result of that effort.
The software relies on a technology called post-processing, in which the software intercepts and boosts the sound before it even gets to the speaker.
The software focuses on the three types of content most commonly found on PCs: music, video and games.
“There are unique characteristics to each that require a certain amount of customization,” Marking said.
The software also is customized based on different types of speakers, including external speakers, personal headphones and speakers built into notebooks.
With digital music files, SRS’ software helps make music fill a room.
“Since MP3s and others are compressed types of files, we are able to bring out the subtle tones that the content loses with some of the compression,” Marking said.
For movies, SRS’ software helps bring out the surround sound effect.
For playing video games, the sound quality helps scenarios feel more real.
“We bring out sounds that provide special cues to the player, such as footsteps approaching, gun fire or an explosion landing to one side or another,” Marking said.
SRS has some ties to the PC industry.
The company got its start in 1993 when Hughes Aircraft Co. (now part of Raytheon Co.) spun off a division that specialized in reproducing stereo.
SRS Chief Executive Tom C.K. Yuen in 1981 was a cofounder of AST Research Inc., an Irvine company that once ranked among the top computer makers before crashing in the mid-1990s.
Samsung Electronics Co. bought AST in 1997 and later dissolved the business. Yuen left AST in 1991 and became chairman and chief executive of SRS in 1994.
Marking joined SRS after a decade with the notebook division of Japan’s Toshiba Corp., which has offices in Irvine.
“We have a long heritage in understanding the PC industry,” he said.
Good Response
PC makers have been receptive,they look at good audio as another means of differentiating their notebook lineup.
SRS addresses a pretty broad problem with notebook computers. As they have gotten skinnier and lighter, so have their speakers.
“PC makers have faced a lot of complaints over time with the quality of audio, small speakers on laptops and the sound from headphones,” Kraemer said. “We can make it a much more immersive experience.”
SRS is still a tiny player.
It reported 2008 sales of $18 million, down slightly from 2007. It posted 2008 profits of $271,000, down from $5 million in 2007.
The company had a recent market value of about $70 million and is lightly traded.
Getting in to the PC market pits SRS against San Francisco-based Dolby Labora-tories Inc., which makes surround sound software for movies, cars, game consoles, home audio gear and computers. It has yearly revenue of about $670 million and a recent market value of $3.2 billion.
Next on deck is engaging in talks with other top 10 PC makers, including Toshiba, China’s Lenovo Group Ltd. and Apple Inc., Kraemer said.
“We want to get them all,” he said. “There is plenty of room for us to continue to expand in that market.”
