The Engadget Interview: Daniel Sennheiser (video)

"I've worked for Sennheiser since I was born," the company's co-CEO says with a laugh. Five years ago, Daniel Sennheiser and his brother took over the reigns of the eponymous audio company, the third generation of a legacy that began in 1945, weeks after the close of World War II, when their grandfather Fritz opened Laboratorium Wennebostel. Two decades later, the company would go on to to revolutionize personal audio with the introduction of the open headphone.

"One of our engineers discovered that you can take a microphone transducer and put it close to your head and suddenly there's a near-field effect that creates very good sound quality," explains Sennheiser. "And suddenly the open-ear headphone was born. That was the first hi-fi headphone in the world. That didn't exist at the time. We had 100-percent of the market." A quick glance around the floor of IFA will confirm that's certainly no longer the case anymore.

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We asked Sennheiser how his company can compete in a world of budget headphones and compressed audio files. The answer, it seems, is to adapt subtly. In recent years, it's meant something as small as the addition of colors to the line. But the executive insists that his company has no intention of competing in the budget space. Because, while he acknowledges that audio has suffered at the hands of the internet, it's a trend he sees shifting back in the other direction.

"There is obviously a trend of music on the go, where the consumer is ready to comprise on sound quality, but we've seen that go away," Sennheiser explains. "When I listened to my first MP3 in 1992, it sounded awful. Today an MP3 is a decent format, if you choose a different bit rate. We don't think that quality is always deteriorating."