Bang & Olufsen rides the Blue Ocean

BY NADIA LOUISE KRISTENSEN

The interior of an Aston Martin DBS fitted with the Bang & Olufsen BeoSound DBS. Photo: Bang & Olufsen

When Bang & Olufsen hatched the idea of making luxury sound systems for luxury cars eight years ago, the Blue Ocean Strategy had not even been invented – but it has become a genuine Blue Ocean adventure all the same.

It is as if The Eagles are playing for me personally – that they are standing on the bonnet and performing magic on their instruments, while I am sitting back and relaxing in soft, beige leather upholstery. I am passenger in an Audi A8, in which Denmark’s Bang & Olufsen Automotive has been tasked with placing 14 loudspeakers in the doors at the front and back to give a sound which makes me feel that I have won a ticket to a one-person concert. The best part is that I can choose myself who the performers are.

And I am not the only one who is thrilled by the sound. James Bond himself enjoys a Bang & Olufsen system when he races around at lightning speed in his Aston Martin DBS, in which the system has become the standard.

Many thousands of car owners enjoy the sublime sound of a Bang & Olufsen sound system while they cruise to and from work, meetings and their homes. One in five of those who buy an Audi A8, Q7, R8, A5, S5 or Q5 drive away from the showroom with Bang & Olufsen inscribed on the loudspeakers.

Bang & Olufsen is most known for designing exclusive loudspeakers, TVs and music systems for the home, but over the years the Danish company has extended its business activities into everything from stethoscopes to sound systems for cars. The latter has turned out to be a real Blue Ocean adventure. The Blue Ocean Strategy is one where a company minimises competition from others by being unique, and in that way creates a Blue Ocean. A Red Ocean conversely symbolises a company surrounded by tough competition.

Initially there was no special competition in the area where Bang & Olufsen is skilled.

“We were surprised that in fact there wasn’t anyone making really good and exquisite sound systems. It was actually strange, when you think about how much time you spend in your car. People who have a lot of money are often not at home, but they still pay for expensive loudspeakers for their home,” says Jens Peter Zinck, who is director of Bang & Olufsen Automotive and was part of the new business group which in 2000 took on the task of finding new business areas for Bang & Olufsen.

The best car sound system you could get for an Audi A8 at the time cost around EUR 1,000.

“We could not find sound systems that used exquisite materials or design, and the sound was not impressive either. There was simply nothing that matched the level one has at home. And the sound systems that were around didn’t fit with the image of luxury cars. It was in fact a completely unexploited business area,” says Jens Peter Zinck.

The point was that an Audi A8, for example, costs upwards of EUR 100,000, and people are happy to pay EUR 4,000 for leather seats and even more for a more powerful engine, so wouldn’t Audi owners pay in the region of EUR 6,000 to get a stylish and music-friendly sound system?

180 DEGREE SOUND

In the years leading up to the birth of the idea of luxury sound systems, Bang & Olufsen invested solidly in acoustics research – not just to make the most stylish loudspeakers, but also the best.

“We made a breakthrough, which in all modesty we consider one of the world’s best” says Jens Peter Zinck.

The breakthrough was called BeoLab 5 and it moved into the first homes in 2003. The loudspeakers have been under development for a long time, and one of the unique features is that they emit sound through an angle of 180 degrees, which means that you don’t have to sit in the middle of the sofa to get the best sound or move the loudspeakers if you want to sit somewhere else. It is exactly this functionality that has been adopted in the sound systems that Bang & Olufsen makes for Audi and Aston Martin. The technology is called acoustic lenses. When you start the sound system, two round acoustic lenses rise up from the dashboard and send the sound out into the car. Without them, the sound would hit the roof and floor, and destroy the lovely sound.

But what about the rumble from the road or the drumming of the rain? Bang & Olufsen has taken that into account. The system automatically adjusts the frequencies so that the listener gains the same sound experience regardless of what the weather is like, or what the road surface the wheels are rolling on.

Jens Peter Zinck, Director of Bang & Olufsen Automotive, behind the wheel of an Audi A8 fitted with Bang & Olufsen’s Advanced Sound System. The system automatically adjusts the sound settings to give the listener the same experience regardless of the surrounding noise. Photo: Bang & Olufsen

THREE TOUGH YEARS

But although Bang & Olufsen had the competences to conquer a new market, it was nothing like as easy as they had hoped for.

“We went round the world with our PowerPoint presentation. People thought it sounded exciting, but they didn’t really believe there was a market for it – it was too expensive,” says Jens Peter Zinck.

A German marketing company even predicted that the market for high-end sound systems was negligible – only 100 per year.

“In the initial process, we debated whether it was the right business areas we had plunged into. But all the time, there was a belief that it was a good business area,” says Jens Peter Zinck.

One of the automobile manufacturers they courted was Audi – and now Bang & Olufsen changed the strategy. They bought an Audi and built in the sound system so that Audi could experience the sound for themselves. And the breakthrough came on 24 October 2003.

“We got the CEO of Audi, Dr. Winterkorn, into our Audi A8. We had also prepared a large number of PowerPoint slides, which we wanted to show him afterwards. But after the demonstration in the A8, he knew what he wanted and just said: “das machen wir”. It was the best day of my career,” reveals Jens Peter Zinck.

In November 2005, the first Audi A8 owners could drive home with a Bang & Olufsen Advanced Sound System.

The German marketing company which predicted annual sales of 100 sound systems were left red-faced. In the first year, Bang & Olufsen sold 4,000 units.

“It exceeded both our own and Audi’s expectations. It generated a lot of good PR for both companies. Audi was written about in places which otherwise don’t write about cars, just as car magazines suddenly wrote about us,” says Jens Peter Zinck.

Since then, some of Audi’s lower-priced models have followed suit. The name is Bang & Olufsen Sound System and it costs about EUR 1,000 before tax.

Two years ago, Aston Martin agreed to having Bang & Olufsen’s system as a standard in its DBS model, which many know from Agent 007 – James Bond. But before that became a reality, Bang & Olufsen had to make a live demonstration of the sound. Aston Martin’s director Dr. Bez kindly lent his DB9 to Bang & Olufsen – and just like Audi he was seduced when he heard and saw the result.

“One of the things we have learned from this process is that you cannot convince the automobile manufacturers with PowerPoint – you have to sell with feelings. And it’s no use demonstrating a sound system in a competitor’s car – it only makes them grumpy,” says Jens Peter Zinck.

The German automobile magazine Auto-focus has just given Bang & Olufsen the best rating in a number of reviews of sound systems for luxury cars. Altogether, Bang & Olufsen’s sound system is one of Bang & Olufsen’s products which have generated most media coverage. And it’s not bad when Agent 007 drives around in a car with a Bang & Olufsen sound system in the new James Bond movie.

“If nothing else it gives some self-confidence. And in a dialogue with a potential customer, it is interesting to show images from the James Bond movie, where you can see our sound system”, says Jens Peter Zinck.

FROM BLUE OCEAN TO RED OCEAN

Eight years after the new business group discovered a product with its own Blue Ocean, the number of staff has grown. At the time, they were a handful who knocked on doors around the world. Today around 100 people are working in a facility which little resembles a place where luxury sound systems are made. In a company where design is almost a religion one might expect something more fancy. The director’s office is just big enough for a desk and a small meeting table, and ventilation consists of opening the window.

“It is part of being a new company where we need to be very cost conscious,” says Jens Peter Zinck.

Bang & Olufsen has so far had the market to itself. And the review from the German automobile magazine shows that competitors do not quite yet match Bang & Olufsen. But competitors are slowly creeping in, with both established and new companies starting to produce better and more expensive sound systems for cars.

“The ocean will become red at some point. Red tracks are starting to appear here and there. So we need to constantly develop ourselves. And that is fortunately an exercise which Bang & Olufsen is very used to. So we just have to advance.”

And in the more secret rooms in the basement, advances are being made. Sound systems are being built in completely new and still secret car models. Jens Peter Zinck predicts that the next step will be to think the car’s sound system into the home’s sound system, so that if you download a song to your computer in your living room in the evening, it will automatically be in your car when you drive to work the next day.

“The car needs to be thought of as another room in the house – which happens to have wheels,” states Jens Peter Zinck.

Where Bang & Olufsen’s next Blue Ocean is hiding, Jens Peter Zinck will naturally not disclose. He will however reveal that Bang & Olufsen Automotive will end the current financial year with black numbers on the bottom line and continued growth. The company has just acquired a new partner – Mercedes AMG – we are only told that it is something to do with sound. And then Bang & Olufsen Automotive sees a partner or two more in the future.

“One or two partners in total are too few and too vulnerable. But to maintain our brand positioning, we will exclusively work with up to for example five premium car brands. And each sound system will continue to be unique and individually developed to exactly the car in which it is installed,” says Jens Peter Zinck.