A Company's Quest for High-Quality Sound
FRAMINGHAM, MASS. — AT age 13, Amar Bose started a basement radio repair shop in Philadelphia that became his family's sole support during World War II.
By the time he was 19, he knew that one day he would have his own company, Dr. Bose says.
Today, Bose is founder, chairman, and technical director of Bose Corporation, the world's largest manufacturer of component-quality loudspeakers.
His privately held, 29-year-old company sold $450-million worth of speakers in fiscal year 1993, and has 15 international subsidiaries. Based in this suburb 23 miles west of Boston, Bose speakers have been best-sellers this decade in the United States, Europe, Japan, Canada, and Australia, the company says.
Bose Corporation is like the Toyota of the sound-system industry: Once consumers realized the quality of its products, sales kept going up and up, Bose says.
"I'm very strict about the [quality] standards," he adds.
While other businesses are cutting back, Bose Corporation is expanding production capacity. The 1990-91 recession and the subsequent years of slow growth have not stopped the company from increasing its sales.
Sales grew in the last fiscal year by 7 percent. Since 1984, when the company's net revenue was $86 million, sales have almost quintupled.
Bose says the main reason for his company's success is "customer satisfaction," which hangs on product research. The company reinvests 100 percent of its profits into growth and development, he says.
"The distinguishing characteristic [of Bose Corporation] has been its innovation," says Michael Riggs, executive editor of Stereo Review, a consumer publication.
This summer the company plans to come out with what Bose considers a revolution in radio - a wave radio. Although he will not describe the radio, Bose says it is "one of the inventions I am most proud of."
Bose's emphasis on research has paid off in the past. In 1968, the company introduced the 901 Direct/Reflecting loudspeaker, priced at $476 a pair. A pair now costs $1,499.
More than 80 percent of the sound that listeners hear during a concert reaches them after being bounced off the ceiling, floor, and walls, Bose says. Unlike conventional speakers which aim sound forward, this loudspeaker, consisting of a pentagonal enclosure housing nine small speakers, radiates most of its sound from the back. Only one speaker aims directly at the listener.
Confident with the home-stereo market, the company expanded into the car-stereo market in the late 1970s. Sales of factory-installed sound systems were sluggish, giving Bose the idea of customizing music systems to fit the car and the seating of its passengers. He approached General Motors Corporation in 1979 and made a deal with the automaker's electronics division.
Bose committed $13 million and four years to the project. Since then, he has formed partnerships with seven other automakers, including Mercedes-Benz, Mazda, Audi, and Honda. Other sound-system companies, like JBL and Infinity, followed Bose's lead into the auto market.
Next came television. In 1984, Bose Corporation developed the Acoustic Wave Music System, a portable stereo system similar to a boom box, which now sells for $997. The system consists of an 80-inch-long tube folded into a cubic foot of space and hooked into a radio tuner and cassette tape player.
It took Bose $14 million and 15 years to develop the formula. With his patented acoustic waveguide technology, he signed on with Zenith Electronics Corporation, the only major company manufacturing television sets in the US. He was able to adapt the Acoustic Wave tube for Zenith sets, adding only an inch to the cabinet size of the set itself.
Deals with auto companies and Zenith account for about 25 percent of Bose Corporation's total sales. More than 50 percent of total sales are made overseas.
When the company began in 1964, it survived on government military contracts. Today, Bose has 3,000 employees worldwide and government contracts account for less than 2 percent of total revenue. The company's closest competitors, JBL and Polk, are smaller, both in size and market share. "Bose is among the top market holders in the world," says Paul Gluckman, managing editor of Audio Week, a trade publication. There are more than 450 small, fragmented companies in the sound-system business, says a spokesw oman of the Electronic Industries Association.
Bose says he does not follow industry trends. "We never give it a thought," he says, referring to his competitors. A company that pays too much attention to its competitors becomes a follower, not an industry leader, he says.
Bose's passion for research and his search for a better product have led him to expand outside of sound. "We are doing research in fields in anything from basic physics to projects for automobiles that have nothing at all to do with sound," he says.
Bose says he plans to keep his company private. He currently owns two-thirds of Bose Corporation. The rest is held by private investors.
"I don't even think of it," he says about the possibility of going public. "Public companies are by nature short-term oriented. They have to make their financial statements look good every 90 days. And when you do that that's a formula for eventual loss."
Bose says he has no plans of retiring soon. "I'm enjoying what I do," he says.