This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Digital Skeptic: Making Millions From $1,000 Earphones

NEW YORK ( TheStreet) -- When the man who figured out how to sell $1,000 earbuds offers me business advice, call me crazy, but I listen.

"It's the experience -- you work for a long, long time to get that as reasonably perfect as you can," Axel Grell told me a few months back. "Then, from there, you can begin."

Grell knows a thing or two about perfection. He's the product manager for high-end audio at premium German audio equipment giant Sennheiser. That makes him the brains and guts behind some of the most awesome headphones on the planet.

"If things have a quality, you see that and you can touch it," he explained. "I try to bring the best of what is possible for the money."

Not surprisingly, Grell's latest creation, the red-hot

IE 800 in-ear headphones ($999) flatly crush not only what Apple (AAPL) passes off as earbuds on the iPad, but trendy units from Beats By Dr. Dre, Sony (SNE) and Bose.

Good luck getting your hands on IE 800s. The company confirms that, in spite of building several thousand units since its release late last year, it has added a third shift at its German production plant to keep up with demand.

What makes them worth a cool grand?

"The secret is the transducers -- that's the tiny little speakers," he explained. "It is the five years it took to make them. They are superior to what is made in Asia."

What makes all this audio glory investor-worthy is that even though Sennheiser is a private company -- there is no ticker to trade, unfortunately -- German financial law requires a deep level of fiscal disclosure. That means, for investors tired of watching consumer tech giants such as Samsung, Apple, BlackBerry (RIMM) and LG bumble around figuring out who they are in today's race-to-the-bottom global tech market, Sennheiser has become a refreshing business case study.

The numbers Sennheiser posts are impressive. In spite of facing the worst European economic crisis since World War II, the audio parts company still managed to grow sales 13.5% in 2011, year over year. Headphones -- made mostly by Grell's group -- make up about 30% of that total, with cash flow from operations essentially tripling over the same period.

Be warned. Grell is no Steve Jobs. He can be shy, retiring and gleefully wanders deep into the tech weeds of 40mm ring enclosures and wide-band ring radiators. But let him speak and what you hear is as fascinating a picture of what's sounding good and bad in today's noisy global consumer tech world.

"The quality," is how he sums it up. "You have to have that quality."

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs