Mr. Torben Ballegaard Sørensen                                                                      January 4, 2006

Bang & Olufsen a/s

Peter Bangs VEJ15

DK 7600, Struer

Dear Mr. Sørensen,

I am writing in hopes that you might briefly indulge the thoughts of one of your company’s most adamant supporters.

I am a loyal Bang & Olufsen user and have been for the past several years.  I love your company, your company’s history, and, of course, your products.  I literally daydream about B&O equipment.  I am also a loyal Apple computer user having switched from Windows powered machines about five years ago.  Over the past several years, I have sold many of my friends on the virtues of both B&O and Apple products.  In my humble opinion, B&O and Apple share many similar corporate ideals and, therefore, B&O and Apple subsequently share similar customers.  Both companies design simple, ergonomic, and integrated products that appeal to individuals who appreciate technology working “invisibly” in the background to make for a cleaner user experience.  And, both companies value ergonomics and design more so than their respective competitors.

Though B&O and Apple certainly make a few similar products, I likewise see these two companies as more complementary to each other rather than outright competitors.  B&O is primarily an audio / video equipment manufacturer, and Apple is primarily a computer software / hardware manufacturer (and soon to be media distributer).  In my opinion, B&O makes the best A/V equipment and Apple makes the best A/V software.  I foresee Apple’s software becoming increasingly important in the arena of consumer media consumption.  I would therefore very much like to see B&O work more closely with Apple; in fact, I see any union of these two companies’ products as a way of solidifying and guaranteeing B&O’s future presence in the rapidly changing marketplace that is consumer media.

For the past couple of years, I have actually contemplated writing you and enclosing a piece of Apple equipment (a wireless Apple Airport Express WiFi hub) as I would love to somehow convince someone within your company of the elegance of Apple’s software and what I see as Apple’s plan to change the way consumers acquire music and video.  I keep hesitating to do so as I realize that this would seem incredibly audacious on my part - I am not an engineer or audio / video specialist (I am actually a retinal surgeon).  Also, I realize that B&O has it’s own audio / visual software, it’s own “media hub”, and it’s own mp3 player.  Yet, I believe in my heart that Apple is about to change things in a very fundamental way, and I want B&O to be a part of this change.

Just to briefly outline what I see happening to the A/V market from the perspective of a well-informed consumer:  I see Apple’s iTunes software and Apple’s wireless audio and video hubs as revolutionizing the way music and video are acquired and played.  These integrated pieces of software and hardware have changed the way we listen to music in my house - we now send it wirelessly to our B&O stereos from our Apple computers.  These integrated solutions are driven by a magnificently clean user interface that incorporates constantly updating software that also allows for music and videos to be purchased.  And, Apple’s software allows me to do this for either Apple or Windows based computers.  I have also set up this same type of home audio system for many of my friends (using a combination of B&O and Apple equipment), and I have been able to experience first-hand how much people enjoy this particular confluence of technology.  Soon, we will be able to do this with video, too, when Apple releases their “iTV” product (name subject to change).  I fully expect to wirelessly send movies to my B&O television in the very near future.

I believe that Apple’s market share in terms of computer users will start to significantly rise over the next few years, but (more importantly) I believe that Apple’s software and their wireless hubs will find their way in to consumers’ living rooms (regardless of which type of computer, stereo, or TV the consumer owns).  I also believe that Apple will soon introduce some sort of computer based audio-video “server” that will become the proverbial and oft-promised “digital hub” that consumers have anticipated for so long.  And, I believe that this digital hub will (like the iPod and iTunes) be designed for Windows and Apple machines, and (like the iPod and iTunes) become the de facto standard.

My humble suggestion is that B&O find a way to partner with Apple and start using Apple’s software (which runs on Windows and Apple machines) to power your hardware.  I realize that this would represent a fundamental shift in philosophy for B&O away from “in house” software design.  However, if Apple’s CEO, Steve Jobs, were to demo B&O televisions and audio systems utilizing Apple’s forthcoming “media hub” and software, I believe it would be a boon to your company that would actually make it difficult for B&O to keep up with demand.  Likewise, and with all due respect, I see Apple’s software design teams as better than those of any other company (including Microsoft and B&O) as Apple is simply so committed to this vision and so good at designing the “end user experience”.

In talking with some B&O employees, I get the impression that B&O does not contemplate the Apple market much (if I am wrong, please excuse my ignorance).  Part of this may be based on Apple’s seemingly meager market share, but, as I pointed out, I see this as a moot point as Apple’s audio / video software will be independent of computer type.  As an aside, because B&O and Apple attract the same type of consumer, I believe that the percentage of B&O users who also use Apple computers is much higher than the percentage of Apple computer users in the general market place.

Thank you for taking the time to read my overly lengthy letter.  For the record, I do realize how truly ridiculous it must sound having someone like me write someone like you and offer advice about future corporate trends.  I am very passionate about both B&O and Apple, and I so desperately want these two companies’ products to better integrate.  Plus, I obviously feel that some sort of union like the one I am proposing would offer future dividends for B&O as well as secure B&O’s place in an increasingly volatile marketplace.  Please also know that it is not my intention to in any way denigrate B&O’s software, wireless efforts, or the Beomedia product.  On the contrary, my sole impetus in writing this letter was to offer my admittedly amateurish outlook on a topic that I feel has the potential to strongly effect a company that I love very much  - Bang & Olufsen.

Sincerely,

Mark J. Douglas, MD