Peter Tribeman: In 1999, yes, with the five-channel 750 amplifier. A lot of competitors hoped we'd forever remain a one-trick pony company. We simply took our time with the 1050 receiver. We wanted to make it better, easier to use, more full-featured and less expensive than any other available quality receiver. We launched it in 2000, at $599. Our competitors hoped we had somehow messed up and introduced a flawed, non-viable product. Well, reviews and consumer feedback indicate we'd done our homework. The 1050 is the home-theater receiver our competitors wish would just go away quietly.

SE: Didn't you reduce the price to $499?

PT: Yes. We knew that the large Japanese corporations were coming out with their own 6.1 receivers. We wanted to remain less expensive than their products. We took a close hard look at our costs. Could we afford to lower the price? We could, and so we dropped the retail about three months ago.

SE: So what's Outlaw's core philosophy?

PT: About two years ago, Barron's magazine published an article headlined "Amazon-dot-bomb," in which the writer predicted Amazon's eventual downfall. He believed they operated on 19% profit margins whereas their operating expenses were 21%. The more they sold, the more they'd lose. He foresaw that only those e-tailers would remain successful who designed, manufactured and marketed their own products.

That's been our credo from day one. We're not paying other manufacturers to sell their wares. We only sell what we make -- direct without middlemen. With the exception of two Internet retailers with whom we have reciprocal agreements, nobody is selling our products but us. Therefore, we can set a fair price and our customers purchase our products at something very close to dealer cost. At the same time, we can make a fair profit and keep our business strong. It's a win-win for everybody,

SE: What qualifies you to gauge the market?

PT: Our seven Outlaw principals, myself included, are experts in failure. We all have worked in this industry for decades. We've designed, manufactured and sold every product in the book. We've learned what works and what doesn't. We know about engineering and manufacturing. During our combined 120 years of experience, we've enjoyed some successes, but we've also committed many mistakes -- hopefully we've learned a bit from those. We feel that we now have the right template to offer really successful products.

SE: Which is?

PT: To design directly for our customers and only commit to a product if it's better and less expensive than our competitors'. Our website gets product suggestions every day. When we hold online feedback sessions, this works out to hundreds of often very specific requests. Our customers tell us exactly what they want. Of course we can't build every single product they dream up, but when you receive dozens of suggestions about more or less the same feature, you'd be mistaken not to pay attention. We also watch the market and where it is going very closely. We identify problems for which we can provide unique solutions.

SE: Like your Integrated Controlled Bass Manager?

PT: Exactly. If you play anything other than Dolby Digital or DTS soundtracks on them, most of today's DVD-Audio and many multi-channel SACD players lack proper bass management. As a result, all the speakers receive full-range signals. With small speakers, this eliminates a lot of information, creates distortion and potentially damages the speakers. Without a subwoofer, the ".1" bass track isn't reproduced.

The ICBM is a very sophisticated crossover system. It filters bass information at various frequencies for different speakers. It then redirects the bass to where it's most appropriate. While its primary use is for DVD-Audio and SACD, it also works with conventional 5.1, 6.1, THX Surround EX, DTS ES-Matrix and DTS ES-Discrete -- all for $249 USD.

SE: How can you afford to finance R&D with those prices?

PT: Though we're accruing for paid work hours, none of our principals takes any money out of the company. We all still run regular day jobs in the industry to build our financial war chest and sink considerable funds into new product development. For the last two and a half years, it's been mostly sweat equity.

SE: How does your particular direct-sales approach work internationally?

PT: We're not quite sure. Quite frankly, we never expected to be contacted by any international distributors. However, more and more are coming forward now. They're very persistent, too. We have to explain our financial structure at great length to convince them that there really is no room for them to make money. However, some insist on becoming part of our company. In certain countries, we've worked out arrangements with colleagues who run their own chains of distribution. Finland, Norway and Sweden are covered that way, Israel is in the works, and we have something going in the Dominican Republic. In addition, the UK, France and Germany have shown a keen interest in us.

SE: What's next?

PT: We have some 7.1 products that will startle everyone -- look for them soon. We're also developing another amplifier, the 770. That would be a 7 x 200-watt unit for under $2000. Someday, we also plan to build our own DVD-A/SACD player with progressive scan.

Within the next six weeks, we'll release our own Outlaw cables at outlaw prices. We've got the "Short Stack" -- a group of six half-meter interconnects specifically designed to connect a DVD player to our ICBM or a pre/pro while the "Full Stack" is a 1.8-meter version. We're also introducing a superior TosLink cable.

SE: Isn't the optical interface inferior to standard single-ended RCA-S/PDIF?

PT: [clears his throat] Let's just say that we look at this purely from an engineering standpoint. From that perspective, TosLink, when properly done, is every bit as good as S/PDIF. In fact, TosLink is so efficient that you could cut off the cable connector, hold the cut surface against the output of a source and still transmit signal.

SE: You're really having fun with this, aren't you?