Friends hi-fi system not very good, what do you do or say?

Personally, I try not to mention any details about my system.

I've noticed that.

Here is some life advice: If you don't have anything nice to say, shut the f*&^# up. 

This rule applies well beyond the question asked.  Cheers!

Every system can sound good if set up right, even a Bose. If you appreciate music, and appreciate even more what someone can do with ‘low-Fi” you can find something to like in every system nearly. Now, if they have it set up poorly, I would say it sounds good but ask them if they have tried experimenting with speaker placement, etc.

After all, what are we really talking about here? A bunch of boxes in a closed room trying to approximate, for example, an orchestra in a huge hall….never going to happen. If some boxes are a little better than other boxes, they’re all still producing sound waves in a small room. Even the cheap ones.

What I think is really bad are those people with multibuck systems with absolutely no concern paid to set up or room. Those can actually sound pretty bad too!

You're close to the third rail here....."Honey do I look fat in these jeans?"  The easy answer is a redirect.  Don't talk about your system or his but embrace the brotherhood of the hobby and invite him over to your room.

it's a great conversation starter if they ask what you think. Tell them about your journey, how much fun it is, how they can improve their system. You can be constructive without hurting their feelings. 

I always start with the extremes and put things in perspective. It's very possible that they are not hearing what we do. Their system may perform well for their criteria. Incremental changes are not one way but the best way to learn and appreciate this passion