Top audio, missed opportunities, B&O & new customers

[XavierItzmann]

Techmoan is a British guy who reviews audio products, mostly, and has 1.3 million subscribers.  So he’s got great reach among people who are not traditional B&O customers.

It was exhilarating to see his video from today, where he declares at 5:15 he is “very, very impressed” with the paired stereo performance of the A1.  A student who buys an A1 today should become an A9 customer in a few short years, I say.

Except the reviewer found a few too many software bugs in his review to ultimately recommend the product wholeheartedly, despite how good the acoustics are.

I hope B&O can kill its software blues before those doom the company.

[NQVHNWI]

XavierItzmann wrote:

Techmoan is a British guy who reviews audio products, mostly, and has 1.3 million subscribers. So he’s got great reach among people who are not traditional B&O customers. It was exhilarating to see his video from today, where he declares at 5:15 he is “very, very impressed” with the paired stereo performance of the A1. A student who buys an A1 today should become an A9 customer in a few short years, I say. Except the reviewer found a few too many software bugs in his review to ultimately recommend the product wholeheartedly, despite how good the acoustics are. I hope B&O can kill its software blues before those doom the company.

Ok, so I have lots of problems with this. I get it that the first-time Millennial buyer is going to be impressed with a rather small bluetooth loudspeaker…paired and that it can be a gateway drug……to what? More Bluetooth quality devices?

The next step-up in can be Emerge, Level, A5 etc…but as one grows (and can afford), your looking at the A9 which is nearly £4k. Then the BL28s at over £12k. That’s serious money territory for most of us and there’s a whole lot of non-B&O products out there that can more than compete with B&o.

Go back to my youth….BS Century, then quickly to BL6000/BS2500, then add-in the linkable MX TVs and BL4000s, 8000s etc….a complete system – scalable and on (then) less than the average UK wage circa 1995-2000.

Now currency inflation is as assured as taxes and death, listening content changes…as does living space and style but it seems to me that B&O back then offered a clear relatively affordable pathway to more than a half-decent AV system. Certainly less so today.

But before we get to todays products…….and developing the Customer base (oh and remember, most of us will be excluded as we are not B&Os new customer base which is the high net worth individual – or as former CEO Tue Mantoni put it….. “its not for everybody”)

…….we stumble on some continual basic software glitches.

 

[Sandyb]

allow me a pedantic, but I think non-trivial, correction.

They changed their description of target market segments from HNWI’s to Very HNWI’s.

In that context, the recent adding of 2000 GBP/EURO to the base price of a Theatre makes sense.

Absent that context, it doesn’t.

[NQVHNWI]

Yes…pedantic Sandy.

For your future B&O Lexicon knowledge base …….“its not for everybody” = Very.

Glad to have clarified that for you.

🙂

[XavierItzmann]

I was unaware that B&O had re-targeted its product line to VHNWIs.  It is fair for any company to re-target its product offer, if it thinks a better business opportunity lies there.

According to the magazine Forbes, in the U.S. market, this describes households with liquid assets between $5m and $30m.  The website Insurance Newsnet says that these households are heavily concentrated in the 55 to 74 age group… and further defines this group as the famous, much derided 1% (!).

Well, it looks like we might all be, either by legacy or by recent purchase, one-percenters.  Congratulations are in order, one can hazard?

Did B&O announce when do they expect to complete this transition?  Because I have news for B&O: it is a bit questionable that Explore and A1 are suitable for this market, even if a rather gauche prancing horse happens to be pictured in the casing, except, perhaps, as party favors for the hired help.  I’d even put an asterisk by the Emerge.

Same goes for Beoplay EX, methinks, and Beoplay HX —for, if the target truly is the 1%, why does HX even exist?  What kind of skin-flint one percenter would buy HX, and why, when good and proper H95s are available?

As to the Stage, well, who knows, perhaps true one percenters could have it installed it in the servant’s luncheon area.  To show some magnanimity, you know, and besides, ostentatious displays of equity are all the rage.

But what really gives me pause is that Bang and Olufsen is included in the Audi A4 Premium Plus which retails for $45,400… this is below the price of the average car in the U.S.  Do one-percenters get around in compact conventionally fueled sedans?  Questionable.  On the other hand, they may buy this vehicle for their daughter as she departs for university, so it is not like 1% households would never own an A4.

——

Please take no offense, this brief essay is written with tongue fully planted in cheek.  In all seriousness, I am glad B&O still offers entry-level products and most of mine are, in fact, entry-level items.  And my current cars cost a fraction of what an A4 does.

[NQVHNWI]

Xavieritzmann,

I think SandyB has a very good grip on the direction of B&O’s marketing direction having listened (Im told) to numerous investor podcasts and has scoured B&Os financial results with an eye more detailed than a tax man looking for his next victim to suck the life-blood out of.

The message appears clear………Doubling of Margin, reduction of range and units sold and focussing on the VHNWI’s for the big-boys toys (gold-plated Bl90s etc) and I guess what you would call the “aspirational Bluetooth/portable/flexible” offerings for the rest of us.

This will be accompanied by reduced store count, focussing towards flagship boutiques and online sales.  I think the recent 30% price increase is the first real shot of attempting that strategy?

As a footnote, on the 1st September, the BL90s will have exactly doubled in price since their introduction in March 2016. Additionally, the base Theatre soundbar (with out all the add-ons required to make it a Beovision) will be priced at £7990 within the next two days – representing ~40% increase over the price I paid in October last year

I’m sure SandyB will come correct me on the detail but that I would say that there are not going to be many people who are prepared to keep supporting that rate of increase on an ongoing basis unless they are in the higher net worth demographic?

[Millemissen]

Read all about it here

MM

[matteventu]

XavierItzmann wrote:

I was unaware that B&O had re-targeted its product line to VHNWIs. It is fair for any company to re-target its product offer, if it thinks a better business opportunity lies there. According to the magazine Forbes, in the U.S. market, this describes households with liquid assets between $5m and $30m. The website Insurance Newsnet says that these households are heavily concentrated in the 55 to 74 age group… and further defines this group as the famous, much derided 1% (!). Well, it looks like we might all be, either by legacy or by recent purchase, one-percenters. Congratulations are in order, one can hazard? Did B&O announce when do they expect to complete this transition? Because I have news for B&O: it is a bit questionable that Explore and A1 are suitable for this market, even if a rather gauche prancing horse happens to be pictured in the casing, except, perhaps, as party favors for the hired help. I’d even put an asterisk by the Emerge. Same goes for Beoplay EX, methinks, and Beoplay HX —for, if the target truly is the 1%, why does HX even exist? What kind of skin-flint one percenter would buy HX, and why, when good and proper H95s are available? As to the Stage, well, who knows, perhaps true one percenters could have it installed it in the servant’s luncheon area. To show some magnanimity, you know, and besides, ostentatious displays of equity are all the rage. But what really gives me pause is that Bang and Olufsen is included in the Audi A4 Premium Plus which retails for $45,400… this is below the price of the average car in the U.S. Do one-percenters get around in compact conventionally fueled sedans? Questionable. On the other hand, they may buy this vehicle for their daughter as she departs for university, so it is not like 1% households would never own an A4. —— Please take no offense, this brief essay is written with tongue fully planted in cheek. In all seriousness, I am glad B&O still offers entry-level products and most of mine are, in fact, entry-level items. And my current cars cost a fraction of what an A4 does.

“Cheaper” products (HX, Explore, etc) are aimed at Gen Z and young millennials with the purpose of raising brand awareness and interest in people which may later in life become VHNWIs to which B&O will then feed the more expensive Beosound and Beolab range.

Same for the B&O audio systems in cheap car.

Oh, and if you freak out for the B&O audio system in the Audi A4, let me give you a heart attack: B&O Premium Sound System is also available in the £22.000 Ford Fiesta ?

[XavierItzmann]

Actually, it is available from the next-to-base model, the £21,200 Fiesta Titanium ?.

I had forgotten Ford still makes sedan automobiles —traditional cars.  In America, it ceased car production in 2020 and 2021 when it closed the last Mexican and Brazilian plants that made them.

The only Ford car still sold this side of the pond is the Mustang, but that’s a 2-door “sports” coupé.  Everything else is a truck, and yes of course, you can get a truck with Bang and Olufsen audio.

But in all fairness, it is certainly the case that contract decisions for B&O entry-level vehicle supply were made long, long before the company decided to re-target.  Also, it is not clear to me if these automotive-supply contracts are drawn by Samsung Electronics, by its subsidiary Harman Audio, or indeed by its partner B&O at all.

[etype76]

I like some of Techmoan’s videos, I have experienced plenty of the audio gear he gets in over the years. His first A1 video commented how rare it was for him to consider a 200quid bluetooth speaker but noted how good modern tiny speakers can be. He certainly doesn’t promote B&O and yes it is a shame that some software bugs diminish the experience. I would also agree with him that a video about a portable bluetooth speaker is a dull subject indeed in most cases.

 

As for the B&O price hikes, I nearly fell off my chair. I checked on Sept 1st and here in Japan no change and then this morning on the 2nd…wallop! What I paid last year 1,000,040 yen is now 1,432,000yen (not including the TV vesa mount). Faced with that price today, I simply wouldn’t buy it. I had hoped B&O would release some satellite speakers for the Theatre at an “accessible” price point but I think if they do, the price will be eye-watering. I am  glad to have had my nose touch the hem of a VHNWI’s garment but it may be the last.

I also don’t buy that A1s/Explore/Emerge etc are gateways for future VHNWIs. Those people could have been using Jabra or Anker and still walk into B&O and come out having spent $150,000 in the blink of an eye. I don’t believe they hold “brand loyalty”, not for B&O anyway.

[Sandyb]

Yes, you’ve summarised it pretty well (although doubling of margin is not quite their aim, as that would be unrealistic!).

But otherwise it can be summarised as this : the strategy has changed to target the VHNWI’s, as that is where they think the money is, especially for luxury brands with some halo desirability associated.

This has various implications, be it a comfort with high visibility collaborations, moving some previously standard colours into custom/bespoke, more flagship experience stores, true exclusive luxury pricing etc etc.

There’s also a geographical market focus shift involved too, with a downplaying of China as a growth opportunity, and a re-emphasis of North America.

Additionally, there is some implicit comfort in not trying to expand sales volumes, and an acceptance that selling less for more is not a bad result. It at least ensures that supply / production overhangs won’t occur if the economic environment has a down period.

Both here and on Discord there is much discomfort at this new strategy, though while I don’t like it at all for my tastes / wallet, I wouldn’t be so quick as others to dismiss it as doomed to fail.     They’ve had some success in targeting the wealthier ends of London / Paris (which is having a mini boom) and spots in America.

They will certainly need to raise support levels to satisfy the ultra wealthy clients, who will be less tolerant that we are of software glitches.

But that caveat aside, there is non trivial chance that as a medium term survival strategy, it may work out.

 

[Mark]

It almost sounds like a prediction that the world-wide economy will continue to get worse, mostly affecting the middle income people buying their top-end products.  To compensate and maintain their profit levels, they need to substantially raise their prices on the flagship products and sell fewer of them to the wealthy because even at their previous pricing there will be a big sales decline.  This is kind of scary, but I can see that.

[Mark]

Maybe not so much a prediction in that it is happening now.  I just came back from the grocery store and many of the prices make my eyes bleed!!!

 

[Sandyb]

Not sure about specific prediction from the company, more that by targeting the super wealthy they insure themselves somewhat against ups and downs of a global economy that is fragile, and likely to have semi frequent issues over the media term.

As a strategy it has some logic, and as I said above, it may well work out (to a greater extent), even though we may not like it.

[Mark]

I may have missed something checking out the new prices but it looks to me that most of the price increases were pretty modest except for their top three products, Beolab 90, Beolab 50, and Beosound Theatre.  It looks like the wood elements of many of their products went up by $100 US.  In general, I wouldn’t say that B&O are targeting the super wealthy across the board, but they realize which target group is most likely to buy their top 3 products no matter the price and adjusted them accordingly.  I probably would pass on the Theatre at today’s price, but I am glad I purchased when I did.  There may be other supply chain issues or something else that cause them to want to make less of those.

I very much expect when they do release their new satellite speaker for the Theatre it will be at an accessible price, seeing the Beolab 18’s only went up $250 US, which can be attributed to inflation.

[trackbeo]

Mark wrote:

Beolab 18’s only went up $250 US, which can be attributed to inflation.

…or to a slow normalization of US prices against EU? 18s have been roughly 30% higher than European prices for a long time now.

[Mark]

Does the European price include taxes?  The US prices don’t include state taxes, and they vary depending on the state.

Edit: Looking at the German website, the price of the gold Beolab 18’s are 8.750 €, which works out to under $9,500 which is lower than the $11.250 US price.

Sorry I initially read it as the European prices were 30% higher, which is not was you wrote.  How much of an increase did the 18’s get in Europe?

 

[Sandyb]

18s went up a very small amount.

European prices are all quoted inclusive of sales tax.

[Sandyb]

the satellite speakers won’t be any less than 6k USD. My best guess is somewhere in the 6-8k range. They are supposed to be Beolabs after all.

 

[Mark]

Which puts the new satellite’s in a similar category to the Beolab 17’s.  I found my old Beolab 17 receipt from November 2015 where I bought them from Abt Electronics because they were a bit cheaper and the total was $5443.91.  I very much love my Beolab 17’s and I don’t find any reason to replace them.  Would 6-8K be outrageous?

[Author]

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