Japan and Korea may have newer tech but one tiny Danish company still make the world’s most desirable home electronics.
Tim Liu-McIntyre talks to Torben Sørensen, President and CEO of Bang & Olufsen.

Torben Sørensen, President and CEO of Bang & Olufsen, has good reason to smile. B&O profits in 2006 were up 13 per cent from last year on the back of strong sales in flat screen TVs and loudspeakers; not bad for a company that was staring catastrophic decline in the face only six years earlier.

Sørensen guessed rightly very early in his tenure that the company’s cathode ray tube (CRT) TV business was on the verge of imminent disaster. “If we stuck with CRTs, one-third of our total turnover would disappear within three years. We had to find ways to distinguish ourselves in the new flat-screen arena,” he explains. Meeting technological paradigm shifts was just one of his problems. The company continued to bleed operationally from its 32 B&O owned-and-operated retail outlets in the US to the tune of some €10 million (S$20.2 million) per year. “Running a retail outlet is something you need to be passionate about. Operating stores with professional managers just didn’t work for us,” he acknowledges. “But we couldn’t just shut them down as we were bound by a lot of legal issues and long leases. Closing stores would also raise questions about our branding, presence and commitment.”

With Sørensen at the helm, B&O found a way out of the quagmire. The company appointed ‘independent leasing partners’ who bought over 24 B&O retail outlets, which they operated as owner-proprietors rather than employees. It was a move that dramatically changed the complexion of the group’s business. “Now, we are looking confidently at further growth in the US,” he reveals.

“Bang & Olufsen now makes the best flat-screen TVs and loudspeakers in the world. That’s not my opinion, but those of independent reviewers,” he says with obvious pride. “But we still don’t see ourselves as luxury because there are many luxury products that are qualitatively empty — expensive but lacking in substance. We prefer to talk in terms of values such as innovation, performance and design. These aren’t always present in a luxury product,” he says.

B&O doesn’t even make flat-screen TV displays. “Flat screen TV factories cost billions. So, we buy them from Japan and Korea; but only the highest quality LCDs from Samsung and Sharp, and plasmas from Matsushita,” he explains. “A good display is one parameter of quality, but the ‘engine’ that produces the picture — the bit stream — that’s something B&O has been doing for 30 years. We’ve refined the algorithms that determine detail and realism.

And that’s a science unto itself,” he explains. Sørensen adds that the company also has its own technology to control picture contrast and reflection, and a mechanism that synchronises back lighting from the TV to match the lighting in the room.