September 2005 Issue


An Open Letter to Bjorn Dybdahl

By Ira Friedman Several issues ago, Bjorn Dybdahl from Bjorn's Audio Video in San Antonio wrote a column outlining a difficult transition his company recently undertook. It made for good reading, because Bjorn was honest about his company's troubles—particularly the partial mutiny of his installation department. Seldom do I hear a dealer confront his company's managerial failings as directly as Bjorn has. For this, I commend him. And yet, the solutions Bjorn has put into place are reminiscent of those employed by other retailers facing the same situation: the fixes tend to be misguided, and usually miss the point entirely. Here's a recap of

B&W Group Doing More with Less

Other vendor groups address a variety of distribution channels and market arenas with the goal of reducing market risk. But Joe Atkins, chairman and CEO of the B&W Group, says having multiple brands with a consistent business model allows B&W to be "a more valuable partner to the dealer." B&W Group brands—Bowers & Wilkins, Rotel, Classe Audio and iCommand—all go to market the same way, worldwide, through a select group of independent specialists, reaching international dealers through a network of distributors. The group sells to about 2,500 dealers worldwide, reaching approximately 250 in the U.S. through its distribution subsidiary Equity International. "We can

D&M Holdings Addressing All CE Segments

D&M Holdings, parent of D&M Holdings US, has built a portfolio of brands through a unique mix of private equity and public shareholder funding. Ripplewood Holdings LLC, the New York-based private equity investment firm founded by Timothy Collins, created D&M Holdings in May 2002 by acquiring and merging the operations of Denon and Marantz. In March, Ripplewood transferred its 51-percent ownership of D&M Holdings to RHJ International, a Belgium-based holding company it created. D&M acquired the McIntosh Laboratory, ReplayTV and Escient brands in 2003. That's not all D&M's acquired in recent years. Its executive ranks include Merle Gilmore (formerly of Motorola) as chairman

DLNA Prepares for Takeoff

Is this emerging common architecture the future of home A/V networks, or just another false start? By Cliff Roth AN INTRODUCTION TO DLNA While the promise of home entertainment networked devices that "talk" to each other has been long touted, and has achieved some success in same-brand systems utilizing proprietary standards, DLNA is different in several significant ways. First, DLNA spans numerous brands, including practically every major consumer electronics company—Sony, Panasonic, Philips, Samsung, Mitsubishi and more. Second, DLNA isn't tied to any particular connector. Where previous home A/V networks required interconnecting components using a special proprietary connection, DLNA is technology that can be incorporated

Don't Call It Shallow, But?

…NAD focuses on beauty as well as brains and brawn with its new Master Series. By Nancy Klosek Lenbrook, which markets the NAD and PSB brands, has trademarked "Build-Artistry" as an umbrella phrase for its NAD Master Series. These new products, which make their North American debuts at CEDIA Expo, represent an attempt to formalize the company's oft-stated commitment to no-nonsense, clean-line audio components and truth in power specs. However, NAD knows that in today's marketplace, how a product looks is increasingly as important as what's inside—so the Master Series takes NAD's salt-of-the-earth heritage and gussies it up for a night on the

Get to Know the Right Competition

Looking for best practices? Instead of visiting other electronics shops, check out the local Benz dealer. By Robert Ain For years, I have been telling retailers about my hourglass theory of the market, and the "suck-out" in the middle of the traditional marketing pyramid. Interestingly, I recently attended a talk given by the senior management of a retailer that is being squeezed by this suck-out of its customers. One of the topics discussed was the market research the retailer had performed regarding its customer base. I was very surprised by the research—not by what it showed, but by whom the retailer had commissioned to

Getting Their Attention

Imagination is key when it comes to attracting customers. Here's what some C-tailers have dreamed up. By Nancy Klosek The question of how to attract buyers to what you have to sell is as old as the first day a Cro-Magnon with 500 sticks of firewood—and the need for only 100 to live through the winter—wondered how he could interest his less-industrious neighbor (with just 50 sticks) in a deal for some of his surplus. The species may not have evolved a lot since then, but the need for innovation in luring clients certainly has. Merely hanging out a shingle and hoping for

Harman Portfolio Opportunity

Starting with Dr. Sidney Harman's acquisition of JBL in 1969, Harman International has a track record of expanding via acquisition. The company went public in 1986 and has used shareholder funding to strategically diversify its holdings. The chart below maps the business structure of the Harman Consumer Systems Group, comprised of the Harman Consumer Group and the Harman Specialty Group divisions. It does not include Harman's professional groups in the automotive and music industries, nor does it fully address the large volume OEM business of Harman Consumer Systems Group's mobile brands. Yet these businesses do feed and strengthen Harman's consumer and specialty efforts.

Ingram Micro's AVAD Proposition

It's a sweetheart of a deal for AVAD's founders, but is the rest of the industry feeling the love? By Janet Pinkerton Ingram Micro's purchase of AVAD, a deal completed July 21, has evoked a curious mix of industry awe and dread—awe for the manufacturers' reps who created the distribution group and sold it for big bucks, and dread for what an Ingram Micro-owned AVAD might do to specialty A/V margins and the overall custom retail business. The business questions surrounding this deal focus on what vendors will do now that AVAD is owned and capitalized by Ingram Micro, the enormous IT distributor that

Klipsch Audio Executing a Global Strategy

Private equity funds and venture capital firms have invested in several of the vendor groups written about in this report, but with VantagePoint Venture Partners, Klipsch Audio Inc. possesses a high-powered minority shareholder with vast information resources, and the companies work together closely to execute a mutually agreed-upon strategy.  VantagePoint first began pursuing an investment strategy for the digital media market in 2002. It "incubated" a portfolio company called Aurora Inc., founded by John Carter, former chief engineer of Bose Corp., and Tom Jacoby, former CEO of Harman Consumer Group, to help VantagePoint refine its strategy and select a company in which to invest.

Legrand North America Wired for Growth

Hartford, Conn.-based Legrand North America, with its On-Q, Ortronics, Pass & Seymour, Watt Stopper and Wiremold brands, seeks to be, in the words of President and CEO John Selldorff, "the leader in all markets in products and systems for electrical installations and information networks for buildings." The North American business unit of Legrand S.A., based in Limoges, France, has acquired its brands deliberately over the course of two decades: wiring and device manufacturer Pass & Seymour in 1984, lighting control manufacturer Watt Stopper in 1996, voice data and image connectivity manufacturer Ortronics in 1998, cable management company Wiremold in 2000, and home networking

Lenbrook America The Last of the Independents?

Robert A. Brown, president and CEO of Lenbrook America, is very aware that NAD Electronics and PSB Speakers are "quickly becoming two of the last independent brands independently owned and not up for acquisition." According to Brown, Lenbrook is not looking either to sell the brands or add brands, and has so far declined equity investors—in no small part because, he says, both NAD and PSB are doing so well now thanks to major product development. "Our feeling is that our growth potential is in the multiples, not in the percentages, so we don't have a crying need for it." Sharon, Mass.-based Lenbrook America

Linear LLS Gathering Brand Momentum

Linear LLC's consumer technology brand acquisitions started quietly in 1999, with Xantech and Multiplex Technologies. Then they gathered steam in 2003 with the addition of SpeakerCraft, Elan Home Systems and gate/door control manufacturer Operator Specialty Company (OSCO), followed by the purchases of OmniMount and M&S Systems in 2004. This year, Linear's acquisition of Panamax in April and Niles Audio Corporation in July got everyone's attention. Linear, as a brand portfolio, is gathering market clout. Its parent company is Nortek Inc., a Providence, R.I.-based manufacturer/distributor of residential, light commercial and commercial building products. Formerly a public company, Nortek is now privately-held—through Nortek Holdings, by management

Merger 101 When Vendors Become Brand Portfolios

By Janet Pinkerton The seismic shift taking place in the specialty A/V vendor landscape needs a soundtrack: perhaps the groans and gunfire-pops of windblown ice pressing the leeward side of a winter lake. Perhaps screeching changes of metallic gears. Perhaps the scuffling stampede of the leather-soled shoes of CE executives desperately running to keep up with their expanding business operations. Choose your acoustic metaphor: it's all about pressure, consolidation and change. The traditional video market, with its eroding plasma and LCD margins, is largely dormant when it comes to consolidation, but audio and A/V accessories—two chaotic but profit-margin-rich categories with scores of brands fighting

Mitek Profiting on Self-Propelled Growth

"Mitek is a tiny little player in the land of the giants, and the giants are getting more giant," says CEO Loyd Ivey of the company he founded in 1971. Mitek Corp. started as a home audio company with two brands: MTX and American Acoustics Labs. The company has expanded without outside funding beyond the occasional bank loan, soon retired. After a flurry of acquisitions that began in the mid-1990s and ended in 2001, Mitek's mobile, home and professional brand holdings now also include DCM Loudspeakers, Musica, Atlas Sound, Xtant, Coustic and Streetwires. Each Mitek brand serves a distinct target trade market, but the

Prospect or Suspect?

How to say "no" to business—and be better for it. By Greg Nettles Being an unpaid consultant is no way to make a living. The trick is to identify the people with whom you really want to do business, and build your relationships from there. To accomplish this, you need to engage in some seemingly harsh practices. Teach your sales force to pick and choose from the customers coming through your door. Ask your customers to pay for proposals. Create estimates for any necessary walk-throughs. These approaches seem contrary to customer satisfaction, but if done right, they'll ensure customer satisfaction, as well as a

Take a Look at Yourself, Coach

Feel like you're in a rut when it comes to educating and motivating your employees? It's time to examine your training methods. By Elly Valas As a mildly avid sports fan, I'm fascinated by what goes into creating a great team. How did coaches like John Wooden, Dean Smith, Phil Jackson and Joe Torre build their winning dynasties? Was it their charisma, or did they just get lucky in recruiting top players? Did they work harder than other coaches? Were their players more motivated to win? Were their training camps tougher? Coach Wooden said "success is peace of mind, which is a direct result

Your Ride, Your Way One Year Later

MERA's initiative to alert consumers and installers about vehicles that are "difficult" for aftermarket service and integration has come a long way—but the best is about to come. By Brett Solomon There are a few times in life when it must be almost disheartening to be a mobile electronics retailer. Ever have a customer pull in with a used Lexus or Mercedes—let's say a 2000 or a 2001, a car that should be his or her pride and joy? The customer recently purchased the pre-owned vehicle, and the problem is that the ride has a factory-installed multimedia/navigation display that doesn't work anymore. You figure