Peter Griffin: More Bang for your music buck

Danish luxury stereo and TV maker Bang & Olufsen is set to expand here as more people seek higher quality electronics.

B&O products are coveted by home theatre enthusiasts worldwide, but their high prices keep most in the clutches of electronics makers selling cheaper, mass-market equivalents.

"Yes, we are more costly. So are Porsche and BMW," said Lars Myrup, B&O's managing director for Asia.

On a visit to B&O's small New Zealand operation, Myrup said sales of its exclusive products were increasing here, driven by the move to large flat-screen TVs.

The next big investment for people is swapping their old tube TV for a [flatscreen model], he said.

"Forty-inch LCD screens are cannibalising our market for 42-inch plasma screens. I think LCD will win that battle."

B&O, which has sold its products in New Zealand for 40 years, has a shop in Newmarket and will open another in Christchurch next month. It recently bought all of its 15 Australian stores from their independent owner.

Getting customers into B&O stores was crucial to convincing them it was worth paying a premium for high-quality electronics, he said.

The difference between B&O and cheaper brands like Samsung and Sony is becoming less obvious as electronics makers in general pay greater attention to aesthetics.

It was superior craftsmanship, ease of use and choice of materials that separated B&O from competitors, said Myrup. "But [competitors] are becoming sharper. We are having to work harder."

B&O is small but profitable, producing a DKK125.8 million ($30 million) surplus for the six months to November.

B&O is also under attack from new competitors - computer makers who are now building entertainment PCs for the lounge.

"It's a challenge we're facing, the computer guys slowly sneaking into the living room," said Myrup.

B&O's Beomedia is a hard-drive-based media player that stores music and video and allows access to the internet. B&O has decided to go it alone on designing a media centre device rather than partner with Microsoft, the heavyweight in that area.

Myrup said Beomedia's primary use is storing and playing digital media. "We don't want to have a keyboard on the coffee table. You want to lean back and relax, you don't want to lean forward."

B&O is increasingly diversifying its product range away from home entertainment audio and TV systems. It has signed a deal with Korean electronics maker Samsung to design a mobile phone which will be released on the European market soon. B&O has also moved into car audio speakers through a deal to supply Audi with speakers for its new cars.