Future of B+W speakers

[james]

From the Observer ..

http://www.theguardian.com/business/201 ... eaker-firm

Joe Atkins has a contacts book that includes George Lucas, the Sultan of Brunei and the senior management teams at Apple and Maserati. For 30 years he has built Bowers & Wilkins (B&W) from a niche British speaker manufacturer into a world-beating consumer audio brand.

But unlike its ubiquitous rectangular headphones or its Zeppelin Air and A7 wireless speakers, the Canadian owner of B&W is a virtual unknown.

“I don’t like to be in the spotlight,” he says in his grizzly bear rasp. “But there’s an opportunity for Bowers to become better-known among a wider group. Until now, we’ve largely been a product company. We need to become better storytellers.”

It is almost 50 years since John Bowers, a communications engineer in the second world war and classical music nut, opened a modest shop selling audio kit in Worthing, West Sussex. Now the company that bears his name is a global electronics brand employing 1,100 people with an annual turnover of £120m.

Atkins, 59, has been invested in the business for 30 years, after first buying B&W’s North American distributor. Bowers died not long after, in 1987, and left the UK operation to his partner Robert Trunz. Nine years later Atkins bought Trunz out, and ever since then he has taken it to greater heights, while retaining its focus on product development.

Britain’s manufacturers are still struggling to shake off the hangover of recession – official figures this month revealed that the manufacturing sector shrank 0.3% in the last quarter and is 4.8% smaller than it was on the eve of the downturn in early 2008. But B&W is a star in Britain’s industrial firmament.

The producer’s high-end speaker systems, which range from £12,000 for its 800 series of floor-standing speakers up to £1m for its Sound System range for music festivals, are still produced by 600 workers in Worthing. These state-of-the-art speakers are designed in nearby Steyning, nicknamed the “university of sound” because this is where B&W does all its research and development.

B&W’s products are sold in every Apple store, can be found in Maserati and Volvo cars, and grace film and music studios such as Abbey Road in London and George Lucas’s Skywalker Sound studios.

So it is hardly surprising that Atkins is committed to the company’s British manufacturing base. “Our workers are highly skilled,” the Canadian says. “Some of them have been with us for more than 30 years. There’s a strong engineering culture in Britain and there’s a strong affinity with music.”

Atkins is dressed in sombre black jeans and turtleneck sweater and dark jacket. He shrugs, throws his arms open and twiddles his spectacles around in the fingers of his right hand before admitting: “We do source things in the far east. We have lots of products that are made by contract manufacturers.

“About 80% of what we do we make ourselves, including half of that in the UK,” he adds. “We don’t buy off-the-shelf technology and platforms. We have the same group of designers and sound engineers focused on how the 802 speaker sounds and how the Zeppelin sounds. That’s very important.”

It is a balance that has worked well. In the last 15 years, B&W has doubled its turnover. Much of this is credited to its push into mass-market consumer products that complement Apple’s range of iPod and iPhone music players, such as the Zeppelin and its range of headphones. These alone now account for about 35% of annual sales.

However, Atkins, who owns 60% of B&W, recognises he is not getting any younger. His daughter has indicated that she has no interest in taking on the firm. He is clearly preparing to offload the business, having already sold a 40% stake to two private equity investors. Brussels-based Sofina grabbed 20% in 2006 and Caledonia Investments, based in Britain, snapped up the same-sized stake in 2011 for £24m.

Is Atkins looking to sell up to a larger electronics group, or would he rather float the brand on the stock exchange?

“Thirty years is a long time to invest in a brand and there’s a big responsibility that goes with that,” he says. “I’m now thinking, how does a 50-year-old brand become a 75-year-old brand?”

He does not want to sell B&W to a large corporation, preferring to hand it over to a group that understands and nurtures premium product lines. “I think you have to find a way to transition the stake-holding while you are still invested. That point may not be now, but it’s not 20 years from now either,” he says.

“I don’t want someone to take the brand and apply it to something that doesn’t stand up to the B&W name. But, obviously, there are large entities, like LVMH [the French luxury brands conglomerate that owns Louis Vuitton, Christian Dior and Moët Hennessy], that put brands in their portfolio and preserve them. That longer-term progression would be great, and it’s achievable.”

It is easy to see why B&W might attract high-calibre interest. Its precisely engineered, British-made products turn reproducing music into an art form.

The imposing cherry red and walnut 802 floor-standing speakers in B&W’s listening room at its London office have a synthetic diamond tweeter, rather than aluminium. This helps to eliminate all distortion in the range of sound that can be heard by the human ear.

Such attention to detail makes total sense to this listener as the room is submerged in high-definition sound – the burst of syncopation from Keith Moon’s drum kit at the start of The Who’s Young Man Blues is as exhilarating a listening experience as it must have been when the sneering upstarts performed it live in their pomp.

If Atkins manages to snag a big fish like LVMH it will cap a remarkable investment odyssey for a man who only stumbled across B&W by accident.

“I bought it [the North American distributor] as a business investment. It was a relatively small brand at the time,” he recalls. Atkins had built a car leasing and dealership business in Canada and was focused on that. But things changed seven months later, when John Bowers died.

“As a distributor you are only as good as the manufacturer you represent. John Bowers was an entrepreneur and an engineer who was passionate about making the world’s best speaker.

“It was a business based on passion and not a lot of business sense. So there was a void there. America was the biggest market, so I stepped into the void that was the business side of things. So it was very accidental.”

Atkins grew up just outside Toronto, the second child of five. He has three brothers and one sister. His father was a chartered accountant and executive at a “large company”, he says; his mother was a housewife. “She was busy driving us to hockey games.”
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Atkins followed in his father’s footsteps and studied accountancy at the University of Toronto before joining Peat Marwick, now part of KPMG, where he became a chartered accountant. He spent five years in the insolvency practice at Peat Marwick before setting up car leasing and car sales dealerships with his brothers, including the country’s first Hyundai dealership.

Atkins sold the car-leasing business after buying the B&W distributor and recently sold the dealership business. He is now 100% focused on B&W. And that includes coming out of his shell and telling the speaker firm’s story, rather than letting rival streaming and speaker brands Sonos and Bose steal all the limelight.

Does he ever worry about competition from such rivals? With a straight face, Atkins shoots back: “Everybody knows Bose. I mean they make clock radios. Great company.”


ends==

[Diapason]

Interesting read, thanks for sharing.

The new 800 range is due to be launched very soon, and internet rumours would suggest it's a complete overhaul with one site even saying that the now iconic kevlar driving might be gone. It will be interesting to see what happens, but internet rumours also suggest a fairly serious bump up in price, so most of them will be out of my price range I suspect. Still, looking forward to hearing them, as I was never sure about the kevlar driver.

[Seán]

Does he ever worry about competition from such rivals? With a straight face, Atkins shoots back: “Everybody knows Bose. I mean they make clock radios. Great company.”
ends==

Great aricle James thanks for posting it and what a great way to finish it.

[Adrian]

Great read there James... thank you.

Apparently of all the speaker manufacturers.... Cloney's stock B&W all the time.... no shortage of buyers it seems.

It's is good to hear a success story... and I wish B&W well for the future.

However with the meltdown going on in China... there may be a slow down in high end sales for the far east? Perhaps?

As for Bose... well they do make good ear phones... a bit on the pricey side... but they are good.... IMO!

[HiFiFan]

Thanks for posting, I have never been a B&W fan but it was an interesting read.

[Diapason]

Just heard the new 804 in the shop and I have to say, they sound great. They only had 20 hours or so in them, but sound balanced and open already, very "fast" and with deep and controlled bass. I haven't been a massive fan of the flagship B&Ws in the past, but these certainly sound like a step up to me.

[DaveF]

..... certainly sound like a step up to me.

with a step up in price too Im guessing.

[Diapason]

It's not too bad for the 804 (there's a step up yes, from 7k ish to 9k ish EUR I think). The 803, on the other hand, has now headed off into the stratosphere: it's going to be 17k Euro or something like that. The design has changed completely, in fairness, and it now gets the separate head thingummy, but it's still a bit galling that I can't even come close to affording the 3rd speaker in the range.

[DaveF]

That 803 price is crazy alright. Even the 804 is very very expensive now. I remember buying a new pair of 804's in 2008 for 4-5k. Back then there was no 804D, just plain 804. There was also the 804S (a very poor seller I believe) which was next in line below the 803D. They're you go, some useless facts for you.

[Diapason]

I also had some 804s for a while (back when the 800 series was called the Nautilus range, even though it was nothing to do with the Nautilus Nautilus). Anyway, I was living in an apartment at the time, but I just couldn't get them to sing in that room. And it wasn't for want of volume, as I eventually discovered when I turned the music off and heard my neighbour banging on the door. I have no idea how long she'd been there, but she wasn't happy.

But yeah, expensive.