Piano World Home Page Forums Our Most Popular Forums Piano Forum Steinway as a piano, a good or bad "investment"? Is there a change in trend?

As was suggested by Lilylady, I’m reposting here some comments to a question Larry Larson asked. The original thread relats to any trend changes only after 4 pages, so perhaps this would be easier for someone who wishes to comment or respond.


On the original thread, Larry Larson wrote:

To which Marty Flynn replied a few pages down:

I related to Marty’s points by writing the following:


Marty did raise some good points here.
I'm not sure what kind of "research" he has done, and how the values for the used pianos were calculated, given different condition and usage, but my experience in the industry agrees with much of what Marty posted… but not with all of it.

Indeed, many pianos "appreciate" in dollar value after a certain period of time given that the dollar depreciate and most things, including new piano prices, get more expensive.
Of course, the initial purchase price of an instrument plays a role in how long it will take a retail buyer to get the same dollar amount he paid for a piano reselling it back to a dealer.

For a common home size instrument (up to 7'), and for a piano used in a home setting, a time period of about 15 years seems reasonable, assuming the buyer got a fair deal on a new quality piano to "break even" selling it back to a dealer.
It would be faster to get to this point by selling the piano privately, but often the inconvenience to both buyer and seller does not warrant the price difference, especially when taking to account the amount of work needed to bring the piano to a TRUE showroom condition.

Steinway pianos too will reach this "break even" point with inflation, but it would take them a few years longer to get there (I would say around 20 - 22 years), since it appears that the margins on new Steinway pianos are significantly greater than those on most other quality pianos. Affectively, this is creating a situation where a piano costing more than a Steinway on the wholesale level, may be sold new for less than a new Steinway.

However, most performance-oriented pianos, including Steinway, justify the first of two major cycles of work in a piano’s life.
After approximately 35 - 40 years, given a reasonable environment and medium to low usage, a good quality piano would need some major work. Usually at this time, one would expect to replace the hammers, regulate the action, replace the key bushings, install new strings, new pins, new damper heads, and do some furniture work as well as regulating the dampers. Some in the industry refer to such work as "rebuilding or restoration", I usually refer to this kind of relatively limited (in comparison to restoration) scope of work as reconditioning.

The cost of this limited reconditioning, depending greatly on WHAT has actually been done, WHAT parts where used, and perhaps the most important, WHAT was the level of workmanship performed, will range anywhere between $5,000 - $10,000.

Of course, the cost of reconditioning also greatly depends on the standards and expectations of both rebuilder and customer.

While most performance oriented pianos justify such an investment, one is less likely to spend $8,000 for reconditioning a mass produced instrument with a low current market value of $4,000 - $5,000, and especially when a new instrument with similar performance can be bought for only a little more than the combined cost of reconditioning and current piano value.

Hence, many instruments seem to keep their value for about 20 years or so, will see dramatic price reduction when past the 20 - 25 years of age, until they have very little value, if any at all after the 30 years mark. If these instruments were kept in a less than favorable environment, or got a heavier than normal usage, it is more likely than not that they will not justify the cost of the work needed.

Lower end instruments, which may need even more work due to initial compromises in materials, cutting corners during production, or initial inexperienced labor, will often have very little value in a substantially shorter time period since no one is going to invest in any major work for these, which is likely to cost more than an entire similarly performing new piano...
Often we hear the comment of "such and such instruments were not built to last"...but it is even more important that these pianos do not justify the cost of major repair when needed.

So while most high performance instruments justify this initial major work cycle and will keep on retaining their dollar value beyond that stage, many of the mass produced instruments will simply become obsolete.

In regards to the second cycle of work, which is usually also much more expensive (2 – 3 times the cost of the first work cycle), almost any discussion will probably be moot. It is not very productive to try and guess what will happen 70 years from now.
I personally doubt that the full restoration industry will be a viable business for many more years, and doubt that anyone will want to truly restore any instruments, Steinway or any other make, except for perhaps a sentimental value.


To this , Jazzwee replied:


And I answered:

I'm pleased that you agree with most of what I said.
In regards to what you do not agree with...while you may relate to my words as a "guess", I would describe it more as an educated opinion based on my knowledge and involvement in the industry.

Could I be wrong?

Of course... but the fact is that I'm running a very successful business with a double digit constant yearly growth in what seems to be a shrinking industry, including in this area of the country, where even established and long running dealerships have gone belly up in recent years, and the few newcomers forced to an "early retirement" only a year or two after opening their doors, or they seem to be struggling to survive.

One of the factors contributing greatly to any business success or failure is, in my opinion, the ability to read the market, identify coming trends and changes, and adjust accordingly.

So, I do base my opinion on the way I read the market, as a result of interacting with many customers and industry people alike, knowing the piano business in and out, and keeping a hand on the pulse of the industry.

The reason that we have differing opinions is that you form your opinion on: "what was in the past is also what will be in the future", not taking to account major overall changes occurring in the market, and your remarks are based on a statement I don't necessarily agree with like:

"there will always be a demand for less expensive Steinways".

In any case, you yourself have put a qualifier on your words with the phrase: "if nothing changes"...
Well, that's a big IF, and as it happens, I believe that great changes are occurring in the industry as we write this, and these already have a great affect, a trend which will only keep growing.


Please except my advanced apology since in order to understand the trend I’ll refer to, some basic explanations are needed, and this may be a rather long post.

The viability of the true restoration market, as well as the price buyers are paying for new instruments are both deeply connected.
A true high quality full restoration of an instrument is very expensive. I’m talking about the kind of restoration where all major parts are replaced with new (including the soundboard), the best parts are selected, seasoned, matched to the instrument, and only highly skilled (and expensive) workers are used in rebuilding the piano.
The finish of such instrument should look as good, if not better, than a comparable new piano by the same company, and the overall tonal performance should too either compare or exceed that of new such instrument.

A simple fact of life is that the best and most experienced people would like to get paid for their work, and they go to whom ever is willing to pay the most, and/or work independently for themselves.

Our family owned and run restoration facility, which is most likely the largest in the country outside of Steinway for restoring such pianos, is well aware of this.
We install new boards and fully restore close to 100 Steinway pianos each year, and many of the people working with us were working for Steinway for many years gathering experience before they left to rebuilders like us who are willing to pay more. Still, by the way, some of the best people we have, were actually trained in house.

In any case, high end rebuilding is quite costly, and any customer would find out that the cost for complete, quality work is expensive.
True high end restoration appeals usually to customers who have rather high expectations and standards, and who can afford, should they decide, to get a new Steinway.
Truly high end rebuilding of a 6’ piano will easily cost $25,000 - $30,000, and although significantly less expensive rebuilding may be available, my opinion, based on seeing thousands of such “rebuilds” remains that partial or incompetent work is not a good option for most consumers in the long run.
I understand that some people may see things differently.


Now, the restoration industry is depended upon the ability to get the money invested into rebuilding the piano back, as well as making a profit.
We do not restore for reselling any other instruments except Steinway and Mason & Hamlin pianos, in spite of the fact that there are other makes that were producing fine pianos 100 years ago.
Let’s take a 100 years old 6’ Chickering for example, even if the instrument prior to restoration has zero dollar value, not many people would pay upwards of $30,000 for piano with the name Chickering on the fallboard, meaning that it isn’t viable right now to truly rebuild such a piano. When I see such an instrument with the title of “restored” it usually only received partial rebuilding, and /or got a level of work which although may be satisfactory to some, I find way below standard.
I do not wish to insult anyone making a living from partially rebuilding or repairing such pianos. In fact, repairing such instruments, to a certain degree and in certain cases may make sense for a consumer wanting to stretch a bit more life out of an instrument, and that does not have the highest expectations, perhaps partly because of limited exposure to many true high end pianos and rebuilding.
Such a consumer may very well take this route, and be very pleased with the results.
This is especially true as long as the consumer understand that when the time comes to sell the instrument, they will most likely still not have much value in that repaired piano.

Although a Chickering from the turn of the century may be as good as a Steinway of that priod IF it is indeed rebuilt properly, it is not viable to truly rebuild it.
The fact remains that the prices of instruments prior to rebuilding are rather set in the market, and the differences rebuilders are willing to pay for pianos in need of full restoration are relatively small, and often within a few hundred dollars of each other, while some get double the money for the finished product.
If a rebuilder is willing to overpay for a piano in need of rebuilding, he will only be less competitive later when the extra cost of acquiring the piano is rolled over to the end consumer.


It is rather simple really. Most of the value of a rebuilt piano is in the restoration rather than the instrument itself.
A $5,000 Steinway prior to restoration can be sold for anywhere between $20,000 and $40,000. The difference is in the cost and quality of the work.
Consumers are not stupid, I can assure you that, and they will NOT pay double for something that is the same, and no independent rebuilder has the marketing advantage in the shape of claiming that they are “Steinway” allowing them to charge more money.

An older Chickering or Knabe prior to the rebuilding has close to zero value for a rebuilder. Since the restoration cost is going to be pretty much the same as that of a Steinway, but there is no way of getting the same amount of dollars for it, so most high-end rebuilders will shy from trying to fully restore such pianos for reselling them.


So what trend is occurring, in my opinion, and affecting the piano industry to the degree that true rebuilding is going to be a less viable business?

Well, in the past 50 years or so, a few companies have established presence as a “brand name” through a great investment in marketing and some other historical reasons.
Steinway is probably the first coming to mind, and the most successful in this regard, but Yamaha, Bladwin and probably Kawai are also instruments that have had great investment in marketing, and became a household name. Ask the average person in the street what brands of pianos he is familiar with, and most likely these will be the ones coming up.

If anyone is interested, by the way, I would gladly provide at least a partial list of some of the marketing investment and historical reasons I’m talking about in another post.

In any case, while Bladwin seem to no longer be a major factor in the market, and its decline may be blamed on bad management decisions and manufacturing problems in the 1990’s, and whileYamaha and Kawai’s sharp decline in unit sales could be attributed to a growing number of lower priced pianos from Korea and later China cutting to their lower end, what happened at the higher end of the market?

It seems that NY Steinway sales to the private market have gone south in the past few years, a trend that I believe will only keep on growing, especially when compared to the record sales set by some other higher end companies in the US in the past few years.

How do I know that?

Well first, as it turns, Steinway is a publicly traded company, purchased in the 1990’s by a duo of two very talented financiers (I think they were working for awhile with/under Michael Milken, the “junk bond king” at Drexel Burnham & Lambert), and they do publish annual reports.

From these reports one can learn that Hamburg Steinway is doing very well, having new markets opening for them in China and Russia, and have increased its grand piano sales in the past two years from 957 to 1100 units.
Hamburg Steinways are being sold all over the world, by the way, except in the US and Canada, where NY Steinway is selling pianos…this is with the exception, of course, of a good number of the concert grands provided partially by Hamburg, which are “serving” in Steinways loaner bank of 300 concert grand pianos in the USA.

Steinway institutional sales also seems to be very successful and growing rapidly (I guess that no one is going to get fired for getting a Steinway for their school), adding 18 new schools and conservatories to the “all Steinway schools roster” in the past two years (from 50 to 68), the majority of these new schools are in North America, as I understand, and being supplied by NY Steinway.

The number of Steinway dealers and showrooms have also increased by about 8% in the past few years, and at least some in the US, allowing for a significant theoretical increase in shipments of new pianos from the factory, since new dealers need to build inventory. In fact, an 8% increase in dealers and showrooms should account, in my opinion for a much larger percentage increase of factory shipments because the dealer will have to stock 5–10 of these pianos before he have sold even one instrument to a retail customer…

Still, however, NY Steinway shipments from the factory have DECLINED in the past two years by more than 9% from 2237 (in 2004), to 2114 (in 2005) and to 2034 units shipped (in 2006).
This decline is in spite the success of the “all Steinway school program”, and increased numbers of pianos shipped to institutions, as well as to any new dealers building inventory.


To me it seems when looking at these numbers, and taking all factors into account, that NY Steinway sales to the PRIVATE market, have declined much more sharply than the 9% reported as factory shipments. I would not want to speculate as to how much greater, but it seems to be a significantly greater decline than 9%.
In the end, it isn’t about how many pianos are shipped from the factory, but how many pianos are actually sold in the US to the private market.

Combine this information with the reports we hear recently on the forum, and in other places, about Steinway dealers lowering prices and giving discounts much greater than we learned to expect (although still relatively small in comparison to the rest of the industry), and the picture gets clear.
I can almost hear the screeching halt of sales stopping.

But I do not really need to read Steinway’s annual reports to know that this is the trend.
I can FEEL it in my showroom, and I have attended and rearranged the mix of my pianos to answer the change in demand in recent years well befor it was reflected in the numbers.

In the late 1990’s, more than half of my showroom consisted of Steinway pianos.
Many of the customers coming in stated upon looking at all the Steinways, in an agonizing voice, that it has always been their “dream” owning a Steinway…even if they were not willing to spend the money for one.
Many other customers have come to my showroom ONLY looking for Steinway pianos, and nothing else. They wanted to “select” the right Steinway, and would often be displeased by the mere suggestion of looking at another piano as well, even if only for the sake of comparison.
Only a decade ago, most people looking for a decent piano were first thinking of Steinway, if they could not afford one, or did not want to spend the money for one, well…than there was always Yamaha at a considerably lower budget, and if not Yamaha, than Kawai, or Baldwin.
These were the pianos people were looking for, almost all others were merely stumbled upon, unless one was a piano aficionado or particularly familiar with one brand or another.

While I still get some of these customers nowadays, the majority of today’s consumers seems to be much more open to the possibility that Steinway is not the ONLY high performance piano, and they are eager to try other brands.
Some of the customers coming to our showroom even make remarks such as “I’m not really interested in a Steinway, I know that they are overpriced for the level of performance they provide, and I’m not the one to overpay for the name”…

The change is so dramatic, that one must ask WHY did it occur.
The only answer I can come up with is rather simple.
The Internet.

The Internet is now equalizing the playing field.
While in the past, only makers with big budgets and great marketing efforts were the instruments consumers were looking for, the picture has now changed.
Consumers are now searching, wanting to play instruments that they would have never even considered or heard of before…especially people who can play the piano and evaluate for themselves.
While the production numbers in the mass produced market are great, the relatively small niche market of high performance pianos is much more prone to show this change, in the way of lost sales to the Steinway private market.

I can tell you that in the past couple of years, I have personally witnessed a great number of Estonia, Bluthner or Bosendorfer pianos that were sold from our showroom, instead of Steinway pianos (whether new, used or rebuilt), including the Steinway pianos in our showroom.
I can tell you that Estonia is working at full capacity for a few years now, and that Bluthner had a record-braking year in 2006 USA sales. They even started building an addition to their factory to be able and increase production. This is in sharp contrast to the decline NY Steinway has in sales to the private consumer.

The demographic of the buyers also seem to confirm in my mind that the Internet is the main factor in this trend. Most of those who are still coming to “select” a Steinway, and are less open to other possibilities, appear as they have done less research and are more prone to fall for all the marketing slogans we here from time to time, including the “investment value” that started this thread.
Even more surprising to me is that many piano teachers, whom I would hope would take a keen interest in pianos and the different tonal characteristics they provide, seems to know even less than most consumers about instruments, and have almost never tried another high end piano except a Steinway.
It is apparent that they do not do much research or reading on the web, and most are still recommending the same few pianos they are familiar with…


In all, I think that the name Steinway will keep on eroding, as people become aware that there are other choices out there…

The more people are aware that other choices are available, the greater is the likelihood that they try, and often choose a piano other than a Steinway.
Eventually, this will lead to a decline in new Steinway prices, and/or to consumer putting less importance on the Steinway name.

In terms of the rebuilding market, I would say that the current value of the name Steinway represents anywhere between 25% - 35% of what the buyer is paying for whether the piano is new, used or rebuilt. As consumers put less value into the name, and will be less willing to pay for it, the viability of true rebuilding for reselling market will become questionable, in my opinion.
Why would someone rebuild a piano if they can get an instrument which they like far better than either a rebuilt Steinway, a new Steinway, or a used Steinway for a similar budget.

Once the mystique of the name disappears, and the public realizes that the king IS naked, the fine silk of the non-existing shirt is looking much less impressive.

In my opinion it isn’t a matter of IF but only a matter of WHEN.
I hope that answers your question.


Disclaimer:
This post represent only my opinion.

Thanks for the well written market analysis.
I read it all through and found it to be very interesting.

I think you are right regarding the Internet. Once, when I was looking for a used upright, I decided to go and look at Blüthner grand instead. I seemed to recollect that I had played a good one as a child. Other than that I had no idea about the brand. I played the piano, liked it very much, and went home and did some research on the Internet. The information on the Internet was definitely a factor when deciding to purchase it.

In Europe rebuilders from eastern Europe are buying rebuilding candidates and selling them in western Europe. In Stockholm there is a shop which sends old pianos to Poland for rebuilding and sells them as "factory rebuilt". Apparently it is cheaper to send the pianos to Poland then to let Swedish rebuilders do the work.

Very intersting post Ori. Thanks.

Ori,

To go with the disclaimer that what is stated in your post is your own opinion, it would probably be fair to mention that whereas you represent many of the upper-market brands that you feel are drawing business away from Steinway, you do not in the strict sense 'represent' the Steinway company.

Ori,

I agree that the internet provides a new level of transparency and visibility and provides new levels of choice for the consumer.

On anther note you mentioned the decline of Steinway sales (% and units) in the US for 2004, 2005 and 2006. Do you have those same statistics for Estonia, Bluthner and Bosendorfer?

Fathertopianist,

Estonia has been working at full capacity since 2004.
They could not produce more pianos even if they wanted to, and in fact, have reduced the number of dealers representing them because they couldn’t supply the demand from too many dealers, and could sell their entire production through a smaller dealer network. This is also the reason they have been delaying the introduction of their 7 footer. Working at full capacity means that any 7 footer will come on the expense of another piano, and initially, there will be even a greater delay in supply for other models since workers will be allocated to concentrate on the 7 footer, perfecting it prior to its introduction.
As you also know, Estonia prices have gone up rather dramatically since 2004, much faster than Steinway prices, for example, yet they are still pre selling each and every instrument to dealers prior to arriving in this country, and doesn’t even need to have a warehouse in the USA for instruments coming from Europe.
About 90% of Estonia’s production is coming to the USA.

Bluthner had record sales last year (at least better than anything they sold over the past few decades), both in the USA and all over the world they too have problems meeting with the demand and have just started construction of a large addition to their factory.


Bosendorfer’s US sales have also exceeded expectations last year, and 2006 showed a significant increase in US sales.

Ori, all your points are well taken. The internet is levelling the playing field and sites such as PW are providing impetus for exploring tonal choices.

Re jazzwee's post in the original thread re perceptions in California, I think that New York and California are both points of diffusion and, in this case, the diffusion will come from the Right Coast.

Ori

I am not clear on why Estonia is being compared with Steinway (NY and Hamburg)? Aren't they at different price points? Steinway doesn't publicly view Estonia as a competitor in this class. Steinway says (marketing of course) that they have 89% market share in grand (NY/Hamburg)pianos in their price category and that they Bosendorfer and Fazoli compete for the 3600 pianos that sell in that class each year.

Who makes up the other 11%? They would seem to suggest that the 396 piano sold are shared by Bosendorfer, Fazoli, Grotian, Bluthner and a few others.

http://library.corporate-ir.net/library/76/763/76306/items/179082/SteinwayCJSConference_011107.pdf


PS: annual report for insomniacs-
http://www.steinwaymusical.com/dlreport.php

nor in the loosest sense! They are direct competitors. Take it in that context. Ori is of course entitled to his opinions and the internet is changing the marketplace in profound ways. I certainly agree with that. As far as having "no clothes", the Steinway piano is a very fine instrument and will continue to be chosen by a large number of piano buyers. What happens to prices in the future will be interesting.

Sophia

Ori-
Do you know the number of Steinway rebuilds that were sold in 1990 versus 2006? From what I read that number is increasing, although, I imagine it would be hard to document the actual number.

As I commented in the thread you mention above, it would be interesting to add the number of new Steinways sold in 1990 to the number of rebuilds sold in 1990 and compare this value to the number of new Steinways sold in 2006 added together with the number of rebuilds sold in 2006. I would speculate that it is possible that the total of new Steinways plus rebuilds from 2006 exceeds the total of new Steinways plus rebuilds sold in 1990 although I don't know how anyone could ever know for sure.

As as layperson it is my understanding that the Steinway rebuild industry has grown..possibly the number of rebuild annual sales units exceeds the new Steinway unit annual sales.

Fathertopianist,
It was you who asked for specifics in regards to Estonia pianos, so I’m a bit baffled as to why you’re asking for the reason this comparison id made.
In any case, it isn’t about what Steinway states publicly…or about whether the people working for Steinway are correct in their analysis of the market.

I simply stated a simple fact that I have witnessed many times over the last couple of years. The average Estonia buyer is very different now than it was only 6 or 7 years ago.
Many of the people who bought an Estonia from me where also considering a Steinway, whether new, used or rebuilt. Many of these customers could have selected from among more than 100 Steinway pianos constantly found in our inventory…pianos of all different vintages, sizes and finishes…yet they decided to purchase an Estonia.

Whether one recognizes it or not, I’m sure that Estonia took quite a few sales from Steinway in the past couple of years, whether new, used or rebuilt. Estonia brought about 330 pianos to the US market each year in the past few years.

As a side note, you should consider that at least at the wholesale level, an Estonia 190 is not all that far off than the price of a model “S” Steinway, and in some finishes just as costly, or even more costly than a Steinway “M”.
A custom Rosewood case Estonia 190, a piano that I delivered two of in the past few months (only three unfortunately were made, and two came to the US) has a pretty similar price on the wholesale level to that of a Steinway “M” in Mahogany.

Why Steinway dealers are set to get significantly higher margins than the rest of the industry while providing, I can assure you, no better service presentation or preparation then you’d find here, and whether a consumer is willing to pay the higher margins because “everyone else buying a new Steinway does”, is indeed a good question.
Still, it does not change the fact that on the wholesale level, a larger (but still in a reasonable home size) Estonia cost nearly as much, or more (depending on finish) than some of Steinway smaller models.

Of course it isn’t fair to compare between a smaller or a larger piano, but reality that Steinway do lose sales to Estonia, as well as other makes they wouldn’t relate to in their annual reports by name like Mason & Hamlin, for example, which has a more similar tonal characteristic to a Steinway than Bosendorfer (that they do mention), and which is selling in the US five times as many pianos as Fazioli (which is also mentioned).

I personally don’t think that when Steinway loses an “M” sale to an Estonia 190 rather than to the more comparable size 168 they comfort themselves by saying “oh well, the 190 is a bigger instrument so we simply didn’t have a chance”…but perhaps you think differently.

I dunno-when I was shopping a new S was $42900 and the 190 was not even close in price.

Karen,
I'm not sure if anyone can indeed provide numbers of Steinway pianos sold in the used and private market every year...but this is not really the point.

As I said in my initial posts, I brought Steinway sales figures as supporting the trend I'm talking about. However, as I also said, I do not need to see these figures in order to feel the trend in the market. I experience it each and every day, through interaction with my customers, and I direct my business accordingly.

I'm sharing my opinion here, and no one has to except it, but I do believe that the Internet did change things dramatically, and that nowadays consumers are more open generally to except other instruments and other tonal characteristics in a piano other than a Steinway.

I feel that overall, consumers who get a piano they really like rather than the one that they feel they are SUPPOSED to like, have a much greater potential to be happy with their choice in the long run.

Wholesale, Karen, it is wholesale prices I'm talking about.
Let me repeat what I said before:

Why Steinway dealers are set to get significantly higher margins than the rest of the industry while providing, I can assure you, no better service presentation or preparation then you’d find here, and whether a consumer is willing to pay the higher margins because “everyone else buying a new Steinway does”, are indeed good questions.

Still, it does not change the fact that on the wholesale level, a larger (but still in a reasonable home size) Estonia cost nearly as much, or more (depending on finish) than some of Steinway smaller models.



Thank you for emphasizing this point, perhaps you should start another thread asking people to answer this question.

My opinion is a lot of people who would like to buy Steinways are put off by the price. As I mention above, I think the suggested retail of an S is now $42990 and I was offered a price of $28000 in May of 2007 by a southern California dealer.

I was one of those shopping trying every which way to not have to shell out for the price of a Steinway. I almost bought a piano I wasn't really crazy about, and it wasn't an Estonia...it was quite a lower end piano. I figured if I wasn't going to get what I wanted, then I would just live with a mediocre piano and bite it.

My question would be-do people really want the alternative to the Steinway, or do they buy the other piano because they get fed up with Steinway's prices, or do they really feel like they are getting that much more by buying a longer bigger piano of another brand. I was pretty resentful of Steinway while I was shopping. I felt like hey-I am a pianist---for an M I think the MSRP is $48000 which I think is completely absurd.

It will be interesting as other currencies appreciate relative to the US dollar to see what happens to products denominated in other currencies. Also as commodity prices increase along with our depreciating dollar, the materials that go into all pianos will increase...wood is already much more expensive than it had been. So my thought would be that Estonias may not have more intrinsic value....but the US dollar has depreciated so vastly since 2000 that the Estonia may actually have just held it's own.

In the post above I meant I was offered a price of $28000 in May by the Estonia dealer on an ebony 190.

Ori

I'm not suggesting your analysis isn't thought provoking and interesting. Your posts are generally of great substance and often rooted in fact (which I appreciate). I was just looking at it and trying to get a sense of what was really happening in the different Steinway categories: NY/Hamburg Steinways vs. Boston vs. Essex.

I think at the high end and with such a high market share pressures would exist. Steinway seems to be countering with introductions of Boston and Essex for growth. Whether this dilutes the brand is a very interesting question and fraught with dangerous possibilities.

Looking at your analysis I think if Boston and Essex brands were isolated I think high growth would be noted.

In fact looking at Steinway's Q1 results they seem exceptionally positive vs a year ago:

http://phx.corporate-ir.net/phoenix...newsArticle&ID=995561&highlight=


P.S. New York often leads markets so maybe your experience will spread west and south.

Everywhere I read about investing, people with a lot of wealth are investing in bigger everything. Bigger yachts, fancier yachts, more expensive and multiple homes, vacation homes, $800 purses, Rolexes, $1250 haircuts (John Edwards) etcetera...and the average household income for a Steinway purchaser is way higher than average. My two buds at two different Steinway dealers both told me their Steinways sales are not suffering. they said these people with big incomes and lots of money come in and pay cash for the Steinways with player pianos to have at their parties. As one who bought the piano to PLAY it, that was annoying ....it is also confusing to me because many of these buyers do not play the piano at all...and so why the heck aren't they buying digital pianos? Why aren't they buying Pearl Rivers or Suzukis or Essexs? Or for that matter, why not Estonias?

OMG
I just looked at www.investor.com and entered Steinway for the current ratios and so forth; their FORWARD P/E RATIO IS: 116.80!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Fatherto,
You should not only read the numbers, but also the comments.

NY Steinway shipments to the domestic market have indeed gone up by 8%...definitely looks good at first inspection, but it also included in it shipment of pianos from Steinway’s largest institutional sale ever.

Please read this comment from the report:

Shipments of Steinway grand pianos increased 11% (8% in the U.S. and 16% overseas) and shipments of mid-priced pianos climbed 88%.

Comments

Institutional sales continue to be a healthy part of our business as we recently shipped 141 Steinway pianos to the Crane School of Music at SUNY Potsdam...


Again, please remember that I'm not talking about Boston or Essex piano sales, that indeed seem to be climbing up dramatically, but only about NY Steinway sales to the private market.
Multiplied by four, a 141 piano shipped equals to more than a 25% increase rate over the previous year...yet the growth is ONLY 8%.

I'm not a financial annalist, but to me it sure looks like the trend I was talking about, indicating significantly weakening sales of NY Steinway pianos in the US private market as continuing and perhaps only strengthening.