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August 18, 2004

Oticon marks 100 years with smarter hearing aid

From: The Spectator Newspapers, NJ - Aug 18, 2004

The Associated Press

SOMERSET, N.J. (AP) — Since George Pankey began using his new hearing aids, he can understand his 4-year-old grandson, he gets involved in conversations at family gatherings and he's resumed taking his wife to the noisy pizza restaurant she likes.

At one recent dinner there, the 71-year-old semiretired engineer from Scottsdale, Ariz., could hear every word his wife said. This time, she had to lean across the table to ask him to speak up.

Pankey, who lost 85 percent of his hearing from a nearby explosion while serving in the Korean War, is among the first customers to get Oticon Inc.'s new Synchro hearing aids. Hailed as the first-ever powered by artificial intelligence, they "listen" to the area around the user 20,000 times each second, continually making adjustments to produce the optimum sound — much like the way the brain works in someone with good hearing.

Oticon, part of a blue chip Danish company founded by an entrepreneur 100 years ago to help his hard-of-hearing wife, officially launched Synchro in about 30 countries earlier this month.

"It's the closest thing to real hearing that I've had since 1952," Pankey said.

Executives at Oticon Inc., which just completed a huge expansion of its U.S. headquarters in Somerset, are hoping for similar reactions from other hearing-impaired people, given that many hearing aid users eventually stuff them in a drawer, dissatisfied with their quality.

Synchro operates under what the company calls voice priority processing. The system's two tiny microphones automatically and continuously pick up nearby sounds, evaluate them and apply settings to boost the volume of speech and reduce background noise, according to Tami Gaeu, an audiologist and product manager in Oticon's marketing department.

Gaeu said that allows people to follow conversations in demanding situations: in a loud restaurant or bar, in a kitchen with a faucet and appliances running, on a busy city street corner, in a strong wind, even when someone is speaking from behind.

Synchro is the company's third generation of digital hearing aid, following its first-on-the market version in late 1995, the DigiFocus, said Oticon Inc. President Mikael Worning.

"There's no question that we'll see this kind of technology permeate the hearing aid field," Worning said.

The computer chip inside, barely the size of the tip of a match, has the processing power of a laptop computer, the sound range of a full stereo and a watch-size battery to power it all, he said.

"Certainly that's where the industry is going," said Karl Strom, editor-in-chief of "The Hearing Review," a top trade journal.

Medical technology analyst Neils Granholm-Leth said it's too soon to tell if Synchro is a revolutionary advance, but Oticon is known for setting technical milestones.

"Oticon is normally the first in this industry to launch new features for hearing aids," said Granholm-Leth, of Enskilda Securities in Denmark. "'Soon after, you'll see that many of its competitors will copy them.'"

Synchro is available in two versions: a discreet, in-the-ear model popular because of the stigma of wearing a hearing aid, and a larger one that fits behind the ear and is better for severe hearing loss. The price is about the same as for other high-end digital hearing aids, about $2,500 to $3,000 each, including fees for the hearing aid dispenser.

While cheap, disposable hearing aids are now available, experts say that with significant hearing loss, it is crucial to be tested to determine exactly which frequencies and sound levels the person cannot hear.

With custom hearing aids, a soft plastic mold of the ear's inside is made. That's sent to the manufacturer to serve as a model for a plastic shell. At Oticon, a technician then inserts the computer chip, microphones and other tiny components in the shell. Most hearing aids are made within a few days, the company says.

Finally, the audiologist or hearing aid dispenser fine-tunes the finished device to the customer's specific needs.

Pankey's audiologist, Bill Heob of Scottsdale, Ariz., said he's already fitted about 40 other people with Synchro hearing aids. Heob said most say they hear more clearly with it, but several who already had premium digital hearing aids have returned their Synchros.

"They don't see a big enough difference to justify the investment," he said.

Cost is an issue, Heob noted, because Medicare and most private insurance plans do not cover hearing aids.

About 28 million Americans have some level of hearing loss, and less than one-fourth are using a hearing aid, according to Granholm-Leth, the analyst.

Oticon is the No. 2 company in the $2 billion-a-year global industry with about 18 percent of the market, just behind Siemens of Germany, he said.

Oticon had had seen its market share in profits fall in the 1980s because it was slow to adapt to the trend toward smaller, less-visible hearing aids. The parent company, medical product maker William Demant Holding of Copenhagen, gave Oticon a new leader, radically transformed its management and entire corporate structure, and began focusing more on customers' needs.

Today, Oticon bills itself as "the hearing aid company that has learned to listen," and its motto, a prominent on company literature and signs, is "People First."

Meanwhile, it has grown from about 50 to 350 U.S. employees, and the holding company now has about 4,300 employees worldwide and $680 million in annual revenues. Last year, William Demant won the European Business Press European Company of the Year Award.


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