Today’s post is going to be a little different from usual. We are going to touch on piano stocks. Usually when we think of pianos, we tend to have the conception that are sold solely as an instrument. However, for a company like Steinway Musical Instruments, who only manufactures one product, they have to find other alternatives of generating revenue. This is because not many households nowadays can afford to buy a brand new piano.

Let’s not forget that the cost of constructing a new piano doesn’t come cheap either. In order to attain the precise details, it requires manual workmanship. This also explains the high price that it comes at compared to its competitors. Aside from traditional competition, advancement in technology also give rise to the invention of a digital piano, which comes at a fraction of its cost. Not to mention, the sound and feel that it produces is rather similar to the real thing itself.

With such modern competition, Steinway Musical Instruments primary brand, Steinway & Sons, has a smaller niche audience to what they would have preferred to have. In fact, there are only three main purposes for purchasing it. Firstly, if it is for a music college. Secondly, if it is for a concert pianist at the top of his or her profession. Lastly, if it is on loan for a concert, where the pianist plays is endorsed by Steinways.

Given the circumstances, you would assume that Steinway would suffer in the stock market. That did occur in February 2009 when their share price dropped to $9.22. Aside from that, it has remained stable at $25 per share the past two years. The reason is because despite the modern technology, there is still no substitute for a hand made piano. A professional pianist will always favour Steinway’s pianos when performing a piano concerto. Another reason for their success is that Steinway cooperated with Apple to offer an educational app for the iPad. This app is specially geared towards beginners who have just started to learn to play the piano. Steinway also purchased ArkivMusic, an online store for classical recordings, in 2008.

All the above investments has helped Steinway to become a reliable stock. It has been in the market for 16 years so far and the only time the price dropped below $12.75 was in February 2009. For the full story, check it out here.

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