Bang & Olufsen to debut (slightly) more affordable gadgets

The luxury consumer-electronics maker will soon release the Beolit 12 speaker for iPhones, the first product from its B&O Play sub-brand.

Bang & Olufsen's Tue Mantoni Bang & Olufsen

A running analogy proved hard for Bang & Olufsen Chief Executive Tue Mantoni to resist.

Mantoni, an ultra-marathoner, described the launch of a new sub-brand of slightly more affordable goods from the struggling luxury consumer electronics firm as the first steps in a long race.

"We've run the first couple of miles in a marathon," said Mantoni, who once ran for 30 hours straight in the 102.5-mile Mont Blanc Ultra Trail Run in France. "In some parts of Europe, there is still a very big hill ahead of us. There's hail, and a very strong headwind."

Mantoni, Danish-based Bang & Olufsen's third chief executive in four years, is working to make sure the company doesn't wither before the race ends. The global recession and the current European debt crisis have hammered the company, whose speakers and televisions can approach $20,000 each. At the same time, the company, known for its gorgeous industrial designs, has strained as entertainment devices have become more interactive, testing its limited software-design expertise.

One of Mantoni's first initiatives to put B&O back on track debuts next month. That's when Bang & Olufsen's newly minted sub-brand, B&O Play, will launch a new wireless, portable speaker for iPhones, iPads, and other Apple devices. Introduced at the Consumer Electronics Show this month, the lunch-box size speaker, dubbed Beolit 12, will cost $799 and sell at the company's 700 Bang & Olufsen stores worldwide, the company's online shop, as well as at Apple's online and retail locations.

The idea behind B&O Play is simple enough--the company wants to sell plug-and-play gadgets, the kind customers don't need technicians to set up for them. But the bet is as daring as anything Bang & Olufsen has ever done. The company, after all, is known for its luxury goods, a handful of which are so beautiful that they are part of the Museum of Modern Art's permanent collection. Tinkering with that brand runs the risk of undermining the exclusivity that the company's customers have come to expect.

But for Mantoni, not launching B&O Play is just as risky.

"If we are to make Bang & Olufsen successful, we cannot do what we've done for the last 10 years and do it 10 percent better," Mantoni said.

B&O Play Beolit 12 Bang & Olufsen

The idea for B&O Play came, in part, from watching the remarkable sales of a different iPhone and iPad speaker, the striking BeoSound 8, with its twin conical speakers that produce remarkably rich, full sounds from Apple's digital music players. The $999 BeoSound 8 debuted in December 2010 and sold more than 60,000 units in its first 12 months on the market, accounting for almost 6 percent of the company's revenue, according to Mantoni.

The sales spike caught Mantoni by surprise. And it got him wondering if perhaps Bang & Olufsen could tap into that new market while still adhering to the high-end brand sensibilities for which the company is known.

"Is there a way to take all the stuff we're really good at and put it into a different usage pattern?" Mantoni said.

The speakers aren't cheap, by any definition. And a new television set that will be coming soon, Mantoni said, will still have industrial design flourishes that are unique to Bang & Olufsen. Toeing that fine line between offering plug-and-play goods and crafting electronic objets d'art will decide whether B&O Play succeeds or waters down the Bang & Olufsen brand.

"B&O Play must never compromise on design and never compromise on craftsmanship," Mantoni said.

B&O Play will focus on creating products in four categories--portable sound systems, headphones, speakers, and televisions. While there's no specific ceiling that B&O Play products can't top, they will likely cost significantly less that the company's luxury televisions and sound systems that require technicians to install.

The success of B&O Play is crucial to Bang & Olufsen, which posted $7 million in fiscal second-quarter profits earlier this month, well below the $8.3 million financial analysts were expecting. Mantoni noted that the company is seeing solid growth in the United States as well as in developing markets such as Brazil, Russia, India, and China. But he recognizes that that there's still plenty of work to be done.

"We're still not out of the woods," Mantoni said. "We're in a market where we need to carve out our niche."

The ultra-marathon running CEO is betting that B&O Play will help Bang & Olufsen find its stride.

 

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