Bose Case Study

This case was written by Sagar Chakraverty, under the direction of TR Venkatesh, ICFAI Business School, Bangalore. It is intended to be used as the basis for class discussion rather than to illustrate either effective or ineffective handling of a management situation. The case was compiled from published sources. © 2006, ICFAI Business School, Bangalore.

No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner.

BOSE: The Sound of Success
“For me, the profits that come in are like the blood in the human system. However, the real excitement is the way the body works.” – Dr. Amar Gopal Bose, Chairman, Bose Coporation Bose Corporation (BOSE) was the story of how a young MIT grad, Amar Bose’s quest for the perfect stereo system led to the creation of unparalleled Bose Corporation in 1964. The privatelyheld company1 went on to become a sound transnational, with an annual sales turnover in excess of $1.7 billion2 in 2005-06 (5.9% revenue growth over last F.Y.) and a reputation of building the world’s best audio systems and a paragon so difficult to emulate by others. According to industry experts, it was this zeal, passion and innovation that had made Bose Corporation a highly valued company with deep roots in principles, philosophy, quality and R&D, resulting in Bose being featured on the 2006 Forbes Billionaires list with $1.2 billion3.

The company anticipated continued growth for the foreseeable future and 100 % of profits were reinvested in the company’s growth and development. Bose loudspeakers were the best selling in the United States and throughout the world. The closely held company recently reached another milestone. Bose was ranked in 2006 as the most trusted consumer brand by far among 22 well-known tech companies, ahead of heavyweights like Apple, Microsoft, Dell, Intel, and Sony, according to a survey of 4,7324 U.S. households by Forrester Research. The company gained nine points of market share, to a total of more than 20%5, and is now second in market share in home audio to heavyweight Sony in US market.

But Bose was not without its criticism. Critics said that the company’s products were overpriced and gimmicky — and that Bose overspent on marketing to the detriment of sound quality. Bose Corporation said the criticism was unfounded. The company had consistently claimed ‘Better Sound Through Research’. So was its reputation more than quality that had given Bose consistent success?

Dr. Amar Gopal Bose – The beginning
Albert Einstein lived just 20 miles from where young Amar Bose grew up in Philadelphia. Sometime in the late ‘40s, a young Indian journalist came to stay with the Bose family, went to do an interview with Einstein, and came back to tell them all about it. Till then, young Bose knew little about Einstein’s philosophical bent of mind. The journalist asked Einstein to visit India, since a lot of people there, like Mahatma Gandhi, revered him. Einstein replied, “My body is too old to make that journey, but I will be there in my next life.”6 That’s when Amar Bose realized Einstein’s penchant for philosophy. It stuck with him for life. Amar Bose was born and raised in Philadelphia, Pennsylvania; his father, Nani Gopal Bose, was an Indian freedom revolutionary from Bengal who had to flee Kolkata in order to avoid prosecution by the British colonial police. Young Bose attended Abington Senior High School7 in Philadelphia.

The engineer in Amar Bose was revealed far earlier while he was still crawling as an infant playing around with electrical equipments and opening the equipments apart. In 1943, 1

The term privately held company refers to ownership of a business company in two different ways—first, referring to ownership by non-governmental organizations; and second, referring to ownership of the company’s stock by a relatively small number of holders who do not trade the stock publicly,when he was 13 and in school, he opened a radio repair shop, because his father’s import business failed as there were no shipments due to the World War II. The shop proved to be quite a success at that time because everybody else who was able to service and repair things was forced to go into the military.

Against his will, when he was 6 years old, Bose’s parents had him learn how to play the violin. Though he was not particularly pleased about it at that time, Bose is thankful now. If it had not been for the musical sense he developed, he never would have formed Bose Corporation, since acoustics was not his field when he graduated.

Bose moved on to repairing transistors; so he entered Massachusetts Institute of Technology8 (MIT) with a great deal of practical experience in electronics. After he graduated with a BS in Electrical Engineering in the early 1950s, he went on to complete his Ph.D. from MIT and he started doing research on speaker technology in 1956. He had been studying the mathematical side of communication theory. When he was writing his thesis, he went out and bought a hi-fi, on the basis of the excellent features it boasted of. “When I turned it on at home, it sounded terrible. I wouldn’t have realized how terrible it was if I hadn’t spent so much time on the violin. I was curious the presentation of the product said it was good, and my ears said it was bad,”9 recalled Dr. Bose. He was disappointed to find that speakers with impressive technical specifications failed to reproduce the realism of a live performance. He later began extensive audio research aimed at fixing what he saw as key weaknesses plaguing such high-end systems. The principal weakness, as he saw it, was how the overall design of the loudspeakers and electronics failed to take into account psychoacoustics (the human perception of sound).

Bose embarked on a personal crusade to invent a stereo loudspeaker that would reproduce, in a domestic setting, the vivid sound that a member of the audience hears at a great concert hall. He began a research project in psychoacoustics10, investigating the relationship between reproduced sound as perceived by people and sound as measured by electronic instruments. That research led to the development of new audio technologies which he patented. Bose’s early patents won him great respect within the industry; but he needed capital in order to do further research and begin production. In time, Bose received financial support from MIT professor Y. W. Lee who bet his life savings on the effort. MIT encouraged Bose to start a company to create products based on his patents which eventually led to establishment of Bose Corporation. Eight years later (in 1964), he founded the company, charging it with a mission to achieve Better Sound Through Research (which is also the company’s slogan).

The head quarters of Bose Corporation was located 20 miles west of Boston, atop a 150-foot-high hill called ‘The Mountain’. At the headquarters of Bose Corporation, philosophical quotations from Einstein were etched on the walls in several places, reflecting the personality of the company’s founder, Dr. Amar Bose (Annexure I).

Bose Corporation
As a student at MIT, Bose had learned that 80% of the sound heard by a person in a concert hall is indirect — i.e., bounced off the ceiling and walls — rather than direct from stage to ear. Bose capitalized on this notion by inventing the 901(R) Direct/Reflecting(R) speaker system (Annexure II), one of the first stereo loudspeakers to utilize the space around them instead of 8

The Massachusetts Institute of Technology, or MIT, was a private research university located in the city of Cambridge, Massachusetts, USA. MIT was ranked #2 overall among the world’s top 200 universities by The Times Higher Education Supplement (2005) and #1 worldwide in technology.
Source: As sound as it can get: Dr. Amar bose, Polish Yourself, www.buckleyourshoe.com 10
Psychoacoustics is the study of subjective human perception of sounds. Alternatively it can be described as the study of psychology of acoustical perception reproducing sound as if in a vacuum. In 1968 Bose used technology patented for these systems to enter the consumer market with the 901 Direct/Reflecting loudspeaker system. It instantly achieved market success and critical acclaim, paving the way for a regular stream of products from the company that received widespread consumer acceptance. The company’s first products were high-power amplifiers produced under contract to the US military. Bose’s 901(R) speakers remained an industry standard for 25 years. Bose also developed the Auditioner(R) audio demonstrator, which took the specifications of a given room, hall, or other space and demonstrated precisely how a given Bose speaker system would sound in that space –even before it was built. Bose’s sense of spatial acoustics also helped him conquer the car stereo market, with systems that transformed the on-the-road listening experience. Bose proved that full, rich sound did not require big, bulky speakers; in fact, his products are also famous for their simple and elegant design (Annexure III).

Dedicated research and design by Bose engineers led the way to another revolutionary idea, later to be known as Acoustimass speaker technology: a system that delivers room-filling sound without the compromises of conventional solutions (Annexure IV). Bose Corporation had been making noise in the audio products business for over 40 years. The products for homes and public places were available around the world (Annexure V). In the professional solutions business Bose group provided solutions for varied venues: from Madison Square Garden in New York to General Motors Place in Vancouver; from the Sistine Chapel in the Vatican to the National Theatre of Japan. Department stores like David Jones, The Gap and CompUSA, among many, also had Bose systems. They also made car systems, which were custom designed and were factory installed by the car manufacturer. It made a variety of consumer models for stereo systems and home theaters, including its compact Wave radio system. Bose supplied sound systems for small private aircraft, cruise ships and also supplied sound systems for NASA’s space shuttles

For sound professionals, Bose offered loudspeakers and amplifiers, as well as products designed for musicians. Bose sold its products at more than 100 factory and showcase stores and through affiliated retailers. The company was engaged in the production of audio systems in North America and Ireland and the company’s subsidiaries, distributors, and manufacturing facilities were located throughout the world. Bose had a workforce of about 8000 people in 2006.

Bose’s way of leadership
According to industry experts, the Bose’s style of entrepreneurship taught two lessons. First, to believe passionately in how one wants to run the company, and ensure his actions were designed to reflect his beliefs, no matter how illogical or non-businesslike it might seem to others. As innovation was everything, it was ideas and not hierarchy which determined the direction of research. Since Dr Bose was a fierce believer in ethics, every employee learnt to be very circumspect in their behaviour — salespeople were sacked on the spot if they were caught criticising the competition.

Second, to avoid doing what one did not believe in, no matter how logical it seemed to others. Since he wanted to ensure that the Bose Corporation was driven by research and not financial results, Dr Bose refused to take the company public and be bullied by Wall Street. Since he did not start the company for personal wealth, Dr Bose’s salary was fixed by the HR department just as it was for every other employee (Annexure VI). None of his children worked there nor will they inherit it — instead, it was expected that he would pass it on to an education trust. The company’s product strategy was set by its founder, Dr. Amar Bose, whose eccentricity was legendary as per industry watchers. Even after more than 40 years, Dr. Bose, 76, invested all of the privately held outfit’s profits back into research. Bose President, Bob Maresca said, “Dr. Bose is extremely eclectic in his research interests.” Indeed, Maresca recalled how Bose invested tens of million of dollars over 19 years to develop headset technology before making a profit. Later headsets were a major part of the business.

Exhibit II: Bose Corporation Philosophy
“Since Bose Corporation was founded in 1964 by then Massachusetts Institute of Technology Professor Dr. Amar G. Bose, the original philosophies and founding principles have not changed. Bose maintains an exceptionally strong commitment to research, for it is within the discipline of research that yesterday’s fiction becomes tomorrow’s reality. We strive to identify things which, when made better, improve people’s lives.

But it’s more than just research. We aim for excellence in everything we do. From the way we run our business to our customer service. From the products to the owner’s manuals you’ll use to set them up. In everything we do, we truly believe that “good enough” is merely a starting point. We’ve taken our commitment and our passion for innovation and applied them to developing unique sound solutions to meet virtually any audio challenge in any application, even the space program. While many of our products are designed for entertainment and home audio solutions, you’ll find Bose sound is prevalent in both the aviation and automotive industries, too. We’ve also designed professional sound systems for many applications, including stadiums and auditoriums, houses of worship, retail businesses, department stores and restaurants. Our commitment has served us well. Today, Bose has operations in the United States, Europe, Canada, Australia, Asia and South America.”

Management style
Analysts said that this combination of perfectionist attitude and business integrity was reflected even more profoundly in the company’s external dealings. Bose Corporation claimed to have very strong business ethics. If anybody in sales criticized a competitor’s product in an attempt to sell Bose products, and if that was verified as truth, he lost his job immediately. “We don’t pay anybody anything under the table, which is a big hindrance to starting our business in India. We’d rather give up business than give in to that.”11 Industry experts and competitors also feared Bose’s litigious tendencies, and the fact that it patented everything. Several companies had been sued by Bose on similarity in advertising copy and resemblance in design. To fuel this relentless pursuit of quality, as a policy, profits of the company had always been plowed back into R&D activities. According to the company, there was more research going on in sound engineering at Bose than anywhere else in the world. Another unique policy that the company had followed from the beginning was that there was no retirement age for its employees. There were two conditions for working beyond the normal retiring age, if the person wanted to work and if he was physical strength to work.

There were two different part of the main premises of Bose Corporation. R&D and business. Research leading to development was not an inevitable sequence at Bose Corporation. There were research projects going on there, some for decades, where the product was not yet even defined. Several of these projects had nothing to do with sound at all. These were driven by Dr. Bose’s relentless passion for research. He felt that research was like a maze. He said, “You bump into walls, and you back up and you find there are a thousand ways to go. You have to hope that you can choose which way is the next best one and go in that direction. There are a lot of things that you do in research that aren’t going to pan out. But maybe something else will come out of it when you start doing the research. You have to be willing to run that risk.”12 When a team of researchers from Cornell University claimed that energy can be produced from water, six researchers at Bose research lab were put on the trail of ‘cold fusion.’ Like several other teams, the company put out a paper that concluded that no excess energy was being produced by the process.

Dr. Bose reflected, “In a sense, starting a company is like raising a child, when it’s small, you are thinking about all the problems that it could have, like disease, learning to do things at the right age, etc. You are looking out for the child . . .There are some principles that I have. I didn’t name the company Bose Corporation; someone else did. In the beginning whenever someone would mention the name of the company, I would flinch: ‘Oh my god, that’s me!’ But now, there is no connection between that logo and my name. The only difference is that I don’t have to put up with politics from above. I only have to put up with politics from below. My main interest in the company is in the research and development side.”13

Why were Bose systems so expensive? According to some analysts, they tried to be better than the competition in all of the product categories that they are in. Dr. Bose explained, “Better than the competition involved a lot. The kind of PC (printed circuit) boards that we use and the components, etc., we try to go first-class on that. The kind of quality control that we have on our assembly line, which is one of the most modern in electronics anywhere in the world, is very expensive. And we spend that money not to reduce the price, but to get the quality. You see, a machine does the same thing every time, but a human does not. Even our supplies cost a lot since we reject so much of it.”14

Once Bose Corporation did not ship one of its bread-winning products because the cones for the speakers were out of specifications. The vendor was using the same process and measurements. The problem was eventually traced to the paper used for the cone. Its grains had changed. So as Dr. Bose says, “You get what you pay for. And if you don’t, then that company is not going to succeed.”

Not Going Public
According to analysts, US companies like Bose almost invariably went public. But Dr. Bose decided not to follow that track with Bose Corporation. He explained that he had interviewed a number of people who were his colleagues on the MIT faculty and had started companies and taken them public in the Route 128 area, the Silicon Valley of the East Coast. Dr. Bose asked them why they went public and the biggest reasons were personal. They wanted a second house, or a swimming pool, besides the need and opportunity for expansion, and they needed the capital. Every one of the people he met said, ‘Oh my God, if I had ever known what was involved here.’ According to him, they were all technical people, and they were spending 30 to 70 % or more of their time on keeping up the public image, instead of working on the object, and none of them were happy about that.

There is another overwhelming reason that Bose explained by an analogy. “If you were playing chess with somebody, and I told you that you had to play according to the rule that you would take as many of the opponent’s players as possible on each move, that’s a sure formula for losing the game. Because you very often want to back up, sacrifice something and then clean up afterwards. Basically, public companies are playing for the short-term. The average tenure for the president of US public companies is five years. If the balance sheet does not look good after the second year, he is at the short end of the average. You are looking to optimize very quickly and that is of no benefit in the future you wouldn’t be there in the future anyway. If you want to do things in the long run, you want to be able to back up a couple of steps, to make a giant leap forward later on. That’s the heart of the reason I don’t want to ever have a public company.”15

Dr. Bose said further, “A key to his company’s success, is that it doesn’t have to answer to shareholders.” At a time when many public companies were trying to jumpstart their innovation engines, Bose believed privately held companies enjoyed an R&D advantage precisely because they were not accountable to Wall Street or federal regulators. That was the reason,according to him, why the former MIT professor, who launched his company with a $70,000 stake, could pursue his passion for teaching and research and thumb his nose at conventional business practices.

Marketing approach
Bose products were simple-looking, yet more expensive makes which made it more difficult to market. Besides, how sound was perceived by individual customers could not be measured. Yet Bose had maintained its market leadership over three decades. So how did Bose Corporation explain to a consumer that this speaker that costs three times as much sounds much better, when that could not be actually be quantified? Dr. Bose answered, “You can’t explain it. Most of our business comes from word of mouth. The thing about live music is that the composer knew what he intended. And for any engineer it would be a miracle if he could actually create some buttons and knobs that could improve on the performance. But we can strive to make the performance as close as possible. When you do get as close as possible, you begin to touch the emotions of the person like the composer had intended. So there is an emotional aspect to very good art paintings or sound. We find that the closer you come to reproducing what the composer created, the more it will touch the people emotionally.”16

From the beginning, within the area of audio products, Bose had kept a tight focus on what its audio systems brought to the listener. The company’s fundamental strategy was to make products that came as close as possible to reproducing sounds of live performance. This strategy set Bose apart from several other leading players in the market. However, Bose Corporation was not the brainchild of a business strategist, but an ongoing experiment by a brilliant scientist who knew how to use logic to move from assumption to conclusion. So, in 1968, when the Bose Corporation came out with its first breakthrough product — the 901 Direct/Reflecting Speaker which reflected 89 % sound off walls and brought live concert-like sound into homes — Dr Bose also decided to come up with a breakthrough marketing strategy to sell the product. He said, “I knew this speaker was better than anything in the market. But, if I had left it to the salesperson, he wouldn’t even try to explain the attributes. So, I came up with the idea of a 7-minute demonstration. It was like teaching or writing a textbook”17. A visit to a Bose products showroom (Annexure VII) or store would reveal that a typical Bose system did not have too many sound controls that were found on competitor’s systems often priced lower than Bose products. Dr. Bose said, “They call it ‘digital signal processing.’ And that’s total nonsense.

In an effort to sell products, they put all these buttons and knobs. All of the ones I have seen introduce more distortion than they ever remove. They do not convert you from one hall to another. It is very unlikely that engineers, through electronic means, will be able to improve on the composition of Mozart or Beethoven, or anyone, for that matter.”18 Each retail outlet came with its own demonstration room. Walk-in customers were urged to take in what could only be called a ‘Bose son-et-lumiere’. Customer sat in front of a bank of impressive-looking stereo equipment including awesome speakers that thrum life-like sound at the customer. At the end of the show, the salesperson removed the large speakers to reveal that actually all the hi-fi sound was coming from the tiny Bose speakers. At this point, the audience remained dazed as per analysts and those who who experienced it (Exhibit III). Exhibit III: Three Things You May Not Know About Bose® Stores 1 Interactive displays make it the perfect place to audition and learn more about a Bose product before you buy it, so you can be sure it’s the right product for you. 2 Local Bose staff can provide you with an in-home audio/video consultation, providing you with recommendations for the entire family.

3. Visiting a Bose store gives you a chance to experience our theater show and to win a Bose product in a quarterly prize drawing. Bose used research into how a human ear responded to sound to build automated tone control into products. Many other audio makers’ gadgets required the user to use knobs and dials to adjust volume. With Bose products, sound levels were adjusted by Bose’s ADAPTiQ technology, which analyzed a room’s acoustics and made automatic adjustments aimed at improving sound performance of speakers.

There was a lot to be said for Bose’s sleek design, as per several analysts. Bose’s Wave music system’s plastic cover had no molding marks – which was a great manufacturing feat. The company’s Lifestyle home theater in a box had only two speakers, instead of the industrystandard four, making it easier to set up, explained Ross Rubin, an NPD Group analyst, “They have components that look good, don’t take up a lot of space, don’t have controls all over the place.” Market researcher NPD Group19, conducted a survey of more than 600,000 people between April, 2005, and March, 2006, and found that in home audio segment, Bose was not even one percentage point away from No. 1 Sony in terms of customers’ repurchase intent (Annexure VIII). A larger proportion of people who bought Bose systems said they were willing to purchase it again than did buyers of almost every other brand.

Bose Corporation had entered into an association with Apple Computers20. The companies collaborated on a set of speakers for Apple’s digital music player, the iPod, and in 2004, Bose released the $299 Sound Dock Digital Music System. Rubin said that Bose pioneered the all-inone premium iPod speaker system. According to Envisioneering Group21, speakers turned out to be the best-selling category among iPod accessories, a fast-growing $5 billion market. The fact that Apple admitted licensing its iPod connector technology to Bose and, at first, offered the speakers exclusively in its own stores was a big vote of confidence from a company not known for forging alliances. “It was the first time Apple CEO, Steve Jobs acknowledged an outside collaboration,” said Richard Doherty, director of Envisioneering Group. Nick Shore, founder of branding consultancy Way Group in New York opined that, “There has been an uptick in their image since the iPod has been connected to it. They feel almost like the Mercedes Benz of sound systems”

Some other analysts also said that a lavish ad and marketing budget kept prices and visibility for Bose products higher than was warranted by their sound quality. They said the company overemphasized design to the detriment of audio.

Bose Corporation was unfazed by the coments. “Unless we believe we offer significantly better performance, we won’t make a product. We are careful to never over-promise.” said Bose President Bob Maresca. The company, like many rivals, offers a 30-day money-back guarantee on its products.

Bose’s India – China expansion
Dominic Waters, Director (Marketing), Bose Corporation Asia-Pacific region opined that a different levels of maturity and stability in economies existed around the Asia-Pacific region. He thought a parallel could be drawn between China and India in the way their economies were changing a great deal. He said, “With India and China, and some parts of West Asia, it’s really new business for us. We are still on the growth path whereas our more mature countries are down to a level of stability and steady growth. So, the levels of growth that we would expect from our more mature countries are going to be less that what we would expect from our growing countries.

The NPD Group, founded in 1967, provides consumer and retail information to manufacturers and retailers. The company collects its information from retailers and other distribution channels. The information includes retail channels, consumer demographics, specific products, features and pricing. Covered industries include apparel, appliances, automotive, beauty, consumer electronics, food and beverage, foodservice, footwear, home improvement, housewares, imaging, information technology, movies, music, software, toys, video games and wireless.

20
Apple Computer, Inc. was an American computer technology corporation with global annual sales in 2005 of US$13.9 billion and 14,800 employees in several countries. Headquartered in Cupertino, California, Apple develops, sells, and supports a series of personal computers, portable media players, computer software, and computer hardware accessories. The company’s most well-known products were the Apple Macintosh line of personal computers, the iPod portable music player, and the iTunes media player. 21

Founded in 1983, Envisioneering Group were dedicated to providing public and client audiences with the best possible news, data and trend research possible – to better enable them to do business with existing & emerging markets. 22

He said that Bose strategies would change as per markets. “We have different levels of branding and different levels of marketing and communications. But it really does come down to the fact that we are a diverse area in Asia-Pacific. We have many different cultures, many different ways of doing business and the markets react differently to the kind of products that we sell. I think the key to going forward is that we have an over-arching strength in the way we communicate our products, and we saw some of that today: simplicity, elegance, performance, and expandability. These things become generic in our communications but our marketing is localised. And that depends on the level of maturity and level of understanding of those we are trying to pitch to. It really has to be localized, as far as we are concerned” 23 He opined that the key to success was that they ensured that they never lost sight of the fact that they need to communicate to a country in a way that the country would understand and accept. So, they said that they would never presume to have one over-arching creative or communications strategy for all countries around the world. He said, “We know that that would just not work. We place a great deal of importance and responsibility on local marketing to ensure our messages are communicated.”24

Therefore, he thought that in India, direct method of selling through Bose stores allowed Bose Corporation a good opportunity to do business in a structured way. Bose Corporation, had expanded its Indian retail strategy to accommodate ‘experience’ outlets in the cities it operates in. “This strategy will allow the company to cater to the needs of the market more comprehensively and provide the ‘Bose Experience’ to a much larger audience”, said Mr Ratish Pandey, General Manager, Bose, after opening one such outlet at the Forum Mall in Bangalore. The products on display would include the Bose LifestyleT Home Entertainment Systems, The Bose 3.2.1 systems, Wave, Radio/CD and Stereo Speakers. For the computer enthusiasts, the outlet would offer Media MateT computer speakers and the TriportT Headphones. In 2006, Bose had retail stores in Delhi, Mumbai, Gurgaon, and Bangalore. Globally, Bose had 100 exclusive stores in the Americas and 18 exclusive stores worldwide (not counting India) — six in UK, four in Japan, three in Mexico and one each in Italy and Canada. In China too, Bose Corporation sold through Bose stores and they followed the same method of direct selling.

In Australia, they had a mix, a growing band of Bose stores self owned and some third-party owned also. Waters viewed that they had varying levels of brand awareness around the world and there was no doubt that were starting on the right foot in India. He sounded optimistic by saying, “We know that we can build great brand awareness around our name. In the market that we started, that’s in the US, we are very well known. Our brand awareness is exceptional. In some of the markets where we are very new, such as China, we have got a long way to go but we are increasing awareness through more stores and better ways of communicating to our consumers. For our demographics, we are extremely well known and sought after and that makes us an aspirational brand. And word of mouth has a lot of way to do with that, as well.” 25 A serious concern was the grey market in both the countries. But according to him grey market was more a serious problem in India compared to China. He said, “To import products into China is difficult because there are several gates at the duty and customs area that will not allow those things to happen.” However, he said that China problems with the proliferation of counterfeit. There was a lot of counterfeit manufacturing going on in China, and they made some very good look-alikes.

The broader plan of the company was to invest the net profit in additional stores. Bose India and Bose China had been introducing newer products and was eyeing untapped markets. But, he said, 23

“With the kind of growth that we have seen ourselves, we are not overtly worried about it. I am sure over time, things would settle down. And, globally, there would be reasonable price parity.” The company seemed to be happy with the progress that it had made, enabled by a robust economy that had propped up disposable incomes in both the countries.

A resonant future?
Even when he approached 80 years of age, Dr. Amar Bose was in great shape slim and tall in physique, animated and passionate in speech, and solid as a rock in his beliefs and principles. He had led his company’s research-driven business and product strategies from the front, never compromising on quality, innovation and simplicity. It was due to his single minded efforts that Bose Corporation was counted as one of the few US companies that had beaten the Japanese juggernaut in consumer electronics.

In addition to running his company, Dr.Bose was a professor of electrical engineering at MIT for many years until he retired from MIT after the Fall 2000 term maintaining title of professor and still taught an acoustics class at MIT. Dr. Bose was still the Chairman and primary stockholder, and also held the title of Technical Director at Bose Corporation. None of his children worked there nor would they inherit the company — instead, it was expected that he would pass it on to an education trust. Dr. Bose said, “I’m forming a charitable institution for education. At MIT, I had the good fortune for seven years to teach network theory, which is basic to many disciplines, to one-third of the undergraduate student body. It was an experiment to see how high we could bring their level of understanding, and it exceeded all of my expectations. I hope that the institution will succeed in maximizing students’ potential in the same way. I will give all of my stock to this institution. It will own the Bose Corporation and be funded by the Bose Corporation.”26 His son, Vanu Bose, followed his father’s entrepreneurial instincts. Vanu Bose started a high-tech startup called Vanu Inc. Vanu Inc. specialized in a futuristic new technology called Software Radio that Vanu Bose worked on during his Phd. at MIT. This technology was expected to create more ripples in the world of sound waves. Industry insiders believed that the time had come for Bose Corporation to leverage its growing branding power to expand into new product categories and markets.

The company had a decision to make: “Do they want to expand the market and compete more aggressively on price, or just sell to the existing, high-end customer base?” said Ted Schadler, a Forrester analyst. He opined that Bose needed to plan and strategize for the future challenges, whether by expansion of customer base in existing markets or tapping new markets in the high-end category. He further sounded optimistic by saying that Bose potentially could move beyond sound systems into consumer electronics more broadly.

Better sound through research was the sole mission of the company and in years to come more break through tecnologies were expected. “We are not in it strictly to make money,” said Bose President, Bob Maresca. This was not the only reason why Bose Corp. had been successful as per analysts. Integrity, ethics and deep pride are all ingredients that have gone into ‘soundly’ selling ‘Better Sound.’

While testing the original 2201 speakers, Bose engineers first began to understand why the ratio of reflected to direct sound is so important to live music. Their experiments revealed it was the spatial characteristics of the concert hall that gave music its live quality. To get the same effect from a loudspeaker, they’d have to emulate those characteristics. Thorough experimentation ensued, and in 1967 a pair of pentagon-shaped enclosures, each with nine drivers, emerged from the lab. But it was their unusual configuration —eight drivers pointing to the rear and only one to the front—that was the breakthrough. The team had learned that a desired ratio of reflected to direct sound was about eight or nine to one. Because the majority of its drivers faced the rear to reflect sound off the walls, this unconventional speaker system delivered sound similar to that of a live performance.  An industry-wide objective of the early 1980’s w as the goal of delivering big sound from small speakers. Conventional three-piece systems of the time struggled to meet this goal, but rarely delivered on the promise. The sound often came at a price, with a subwoofer that often produced audible distortion limiting its placement options.

Dedicated research and design by Bose engineers led the way with a revolutionary idea, later to be known as Acoustimass® speaker technology: a system that delivers room-filling sound without the compromises of conventional solutions.

For years, conventional speakers needed to be big in order to give listeners full, rich sound. As a result, those speakers became the unsightly centerpiece of most listening areas. An early approach to this problem was to split the two large speakers into three separate pieces: one large subwoofer for low frequencies, and two smaller speakers for mid- and high-frequency sound. Ideally, you would only see the smaller speakers and the subwoofer could somehow be tucked out of sight.

The idea was valid but, due to the nature of conventional speaker design, another problem arose: Drivers in the subwoofer would often distort due to inefficiency, creating a localizable range of sound. While this is less noticeable in a two-piece system, when a conventionally designed subwoofer produced the same audible distortion, listeners could pinpoint its location, ruining the stereo effect.

Localization meant the subwoofer had to be placed between the two smaller high-frequency speakers, making it clearly visible and defeating the intended benefit of a versatile, three-piece speaker system. The original problem didn’t go away. You just went from two large visible speakers to one large visible subwoofer.

Bose engineers took a different approach to solving these problems. The result was the revolutionary Acoustimass® speaker technology. When a conventional approach to three-piece systems produced the additional problem of localizable distortion, Bose® engineers set out on a research path to deliver rich sound from a small system. They found that by encasing the bass drivers inside a specially engineered module, low-frequency sound could be launched into the room on a column of air. Low-frequency speaker drivers were placed between separate acoustic compression chambers inside the module. As each speaker cone moved, it excited air in the chambers. The air trapped in the chambers interacted with air in the ports, to produce more low-frequency sound with greater efficiency.

This system, to be known as Acoustimass speaker technology, proved to be more efficient, required less cone motion and produced less distortion. If any audible distortion was produced, the patented design trapped it inside the acoustic chambers — so it never entered the room. The result of this innovative approach to speaker design was an Acoustimass module that could be placed virtually anywhere, with a technology that allowed for truly small speakers.