Jonathan:

sorry, it's just too funny!

Every company make a note. If you want to survive, increase your prices by over 20% because your customers won't mind paying that little bit extra for you not cutting costs...

Best strategy I've ever heard!

I'm saying it's a better value for money to pay a little bit more to get a Danish made product than pay a little bit less for a Chinese made one. This is why I would personally buy a BS1 or even a BS3 for 500-600 pounds rather than a made in China BS8. My point is that brand strategy should not simply be about profit. If they had the type of integration such as a dock that the BS8 has and a similar deal with apple to sell in their stores. I am sure people wouldn't mind paying a little bit more. If the BS8 was the price of a BS3 or cheaper, it would be a different story, but it's closer to the price of a BS1 which is just silly! People who shell out 1000 pounds on an iPod dock aren't going to mind a couple hundred more for one that's made in Europe. It's only that B&O set the price at 900 that people think it's the correct price, what if they had set it at 1100? People would still probably buy it whether it was made in China or not. My point is that the success in sales for the BS8 and Beolit 12 are exactly the iPod integration, licesning, and sales at Apple stores... It's the reason the A8 headphones were so succesful in sales numbers! If they had done that with the BS1 and used the same strategy, perhaps B&O would have succeeded greatly with that... Like I said if they were charging for the BS8 closer to what the BS3 cost rather than what the BS1 cost then I would be more understanding as a consumer. However, if they had made theiir other products which are similarily price to the BS8 (or some which cost less) more succesful through marketing, deals with Apple, integration, etc... then they wouldn't have needed to outsource! I believe they could still do that instead of outsourcing with their new products... but it's too late now that they've done it...

The A8s are made in China!

To sell products in an Apple store, B&O have to pay Apple to do this. This makes the margins even thinner! And to increase prices by 20% in a Global Financial Crisis!!!

 

Regardless of where they were made, their success relied upon the fact that they had a huge distribution such as duty free in airplanes, apple stores, etc... 

I'm not saying to increase prices. The point is that the BS8 is 900 because that's what the company decided it to be. Had they decided for them to be made in Denmark and sold at 1100 for example, that's what the price would be. It wouldn't be a 20% increase in the minds of consumers as that's the only price they would have seen. Selling a Chinese made unit for almost the same price as a Danish made one which is much better is just plain robbery in my eyes. If they sold enough of the Danish made units (which they would given the licensing, sales in Apple stores, integration, etc..) they would have more than enough profit to survive. They were complaining about not selling enough, that has more to do with distribution, with brand recognition, integration, marketing, etc.. 

At least this way they would have had perhaps a smaller profit margin than with Made in China products, but a much much bigger profit than they had before they went to China...

And by the way, regardless of where it was made. B&O increases their prices of products by 5-10% every year or so anyways!

Dkatz I admire your persistance, Modern businesses need to run in modern ways. Things evolve, maybe they will move more and more over to China? 

 

They couldn't sustain doing things in the way they did, there was no profit!! Hense the reason for this thread!!

 

I think we are a bit niave to think that anything made in china will be of poorer quality, I think its best to agree to disagree on this subject as we aren't getting anywhere and things are getting a bit sour! 

 

Thanks for a great discussion 

 

Nick

I doubt they will move their higher end manufacturing to China. The reason being is that they still want it to be of the highest quality and standard. I think they know that if they do they will become another generic brand like Bose or even like Sony. The thing is even those brands which I mentioned don't outsource their higher end products exactly because they know that the build quality will suffer. How could it be that the 10s of thousands of brands that don't outsource their professional or high end products are wrong and you and a few others are right about China's quality?

They couldn't sustain it because of them worrying about share prices and dividends. Before they wen't public they wouldn't have had these worries. They complained about not having enough sales, but the reason the BS8 sold so well is like I mentioned because of marketing, sales in apple stores, dock integration, etc... If they had made this unit before, and made it in Denmark and sold it for a little bit more, it would have been just as succesful and they wouldn't need to outsource. They wouldn't make as much money but they would make enough to survive...

Dkatz:

Regardless of where they were made...

Eh? You're contradicting yourself now. In fact, you're going around circles in your own posts.

Dkatz:

At least this way they would have had perhaps a smaller profit margin than with Made in China products, but a much much bigger profit than they had before they went to China...

Yeah, and life would be so easy to solve if you had your way. You should perhaps apply to UNICEF or something as you seem to have the simple answers to solve all life's issues.

Basically your entire argument is that you want everything to be made in Denmark, and that the BS8 would somehow improve if it was, and that you wouldn't mind the price rising (even though everyone thinks it's overpriced as it is) and that B&O would somehow be seen to be the savour of men by refusing to seek better profit margins by using established mass-manufacturing?

But still ignore the fact that most of B&O's kit is made in Eastern Europe (Czech Republic), but you have zero issues about this.

In fact, perhaps B&O could follow your "advice" then lecture Apple and tell them where they are going wrong, too.

Here we go again!  

 

Thats me done here 

 

Ta-ra!!

 

Dkatz:

I would personally buy a BS1 or even a BS3 for 500-600 pounds rather than a made in China BS8

Interesting that the BS3 meets your standards for manufacturing & build quality vs price ....I am fairly sure (although might be wrong) that I recall being told it is made a long way to the East of Denmark... and I dont mean the "halfway house"....

If so, and its "worth" the money and hasn't undermined the B&O brand since its launch ..... perhaps this is all a fuss about nothing.

BS8 & Beolit 12 are good products - Best in Class is the term, I think... this topic is interesting, but some aspects are being overthought into infinity.

 

 

moxxey:

Dkatz:

Regardless of where they were made...

Eh? You're contradicting yourself now. In fact, you're going around circles in your own posts.

Dkatz:

At least this way they would have had perhaps a smaller profit margin than with Made in China products, but a much much bigger profit than they had before they went to China...

Yeah, and life would be so easy to solve if you had your way. You should perhaps apply to UNICEF or something as you seem to have the simple answers to solve all life's issues.

Basically your entire argument is that you want everything to be made in Denmark, and that the BS8 would somehow improve if it was, and that you wouldn't mind the price rising (even though everyone thinks it's overpriced as it is) and that B&O would somehow be seen to be the savour of men by refusing to seek better profit margins by using established mass-manufacturing?

But still ignore the fact that most of B&O's kit is made in Eastern Europe (Czech Republic), but you have zero issues about this.

In fact, perhaps B&O could follow your "advice" then lecture Apple and tell them where they are going wrong, too.

I am not contradicting myself. I am saying that the successs of the A8s, and BS8 and Beolit 12 were not that they were made in China or not. It was about the distribution, integration, marketing, all things they could have done with their other products.

It's not easy to solve anything. In fact it's always much easier for companies to go to China. That's the easy way out, they don't even have to worry about the manufacturing process as it's done for them!

I agree that the BS8 is overpriced, but not because it's the BS8, but because it's Made in China. You have a BS3 which was made in Struer or Czech that cost nearly half the price of the BS8! That in itself shows that there was something wrong with B&Os pricing. The fact that they are selling a superior BS1 for only a little bit more that's made in Europe rather than a 900 pound made in China product is already saying something...

I never said that B&O would be seen to be the savour of men. They could have, however used "Made in Europe" or "Made in Struer" or whever in their campaigns to sell even better at the Apple stores. True most people don't look at the labels, but given the choice, many would see the higher price as justified and would even choose the European made equivilent. They would have differentiated themselves from other Dock makers for example in this simple marketing technique.

I don't ignore the fact that many of B&Os products are made in Czech. In fact if you look at most of my previous posts I put Struer/Czech... Because B&O has THEIR OWN factories in both locations. The Czech republic in terms of manufacturing has higher social and direct benifits for each employee than does the US even according to the US Labour Statistics. According to the statistics in 2010 the Czech manufacturing labour wage was $11.50 an hour compared to $1.68 an hour of China that's about 10 times the wage rate. $11.50 an hour is excellent pay for the Czech republic especially considering all the social and direct benifits they get from the company and since then it's probably increased as well. And as mentioned it is their own factory, with their own workers that they trained themselves, that only make B&O products to B&Os standards. They have EU labour laws they must abide by, overtime pay, certain maximum hours they can work, etc...

Apple and B&O are different companies. You might disagree but B&O is a luxury high end a/v manufacturer, Apple is a mass production consumer brand for the masses. No, I don't think that they can lecture Apple, and they don't produce nearly as much as Apple does either... but to me Apple is not a luxury brand, even many poor people in the west can afford an iPod, not many can afford a BS8. B&O hasn't become more affordable, the BS8 is only slightly less expensive than the Century, BS1 before it and is more than the BS3... Therefore B&O is still trying to market itself as a luxury high end a/v brand whilst starting to to something that a mainstream company such as Apple would do. You may think this is right, but I think it is wrong, because what they are becoming is a mass production generic brand like Apple rather than a high end a/v manufacturer...

 

folkdeejay:

Dkatz:

I would personally buy a BS1 or even a BS3 for 500-600 pounds rather than a made in China BS8

Interesting that the BS3 meets your standards for manufacturing & build quality vs price ....I am fairly sure (although might be wrong) that I recall being told it is made a long way to the East of Denmark... and I dont mean the "halfway house"....

If so, and its "worth" the money and hasn't undermined the B&O brand since its launch ..... perhaps this is all a fuss about nothing.

BS8 & Beolit 12 are good products - Best in Class is the term, I think... this topic is interesting, but some aspects are being overthought into infinity.

 

 

I don't think the BS3 is made in China. From what I've heard it's either made in Japan or Czech, some people have even said Austria although I really don't believe that. Either way, it costs almost half as much as the BS8, which would make it better value for money. This is why I am saying the BS8 is overpriced, if it's made in China, price it at half or less than the price of your Czech or Danish produced products not at nearly the same price (BS1)... This way they could sell even more units as more people would buy it if it was 400-500 instead of 900 pounds... The consumer would be happier and B&O would still make a hefty profit... This would make it more "fair" although as I said  previously it would have been better to make it in Denmark or Czech and advertise that fact and use it as a selling point if you were going to sell it for 1000 pounds...

I think its time to outsource this thread.

I wonder though, what happened to all girls working in the factory in Struer, I met quiet a few of them back in 70/71, did they get outsourced too. Wonder if they would recognize me with my cloth on

Dkatz:

Regardless of where they were made, their success relied upon the fact that they had a huge distribution such as duty free in airplanes, apple stores, etc... 

I thought this thread was about 'outsourcing'

What is the point in even discussing all of this? This thread did not need to be this long.

 

 

pure entertainment value???

Hey Dave, you should always sign off with a

Jonathan:

Dkatz:

Regardless of where they were made, their success relied upon the fact that they had a huge distribution such as duty free in airplanes, apple stores, etc... 

 

I thought this thread was about 'outsourcing'

It is, my point is that the products success in sales wasn't whether it was outsourced or not but based on distribution and integration! So if it was made in Denmark or Czech it wouldn't be any less successful had they followed the same formula of marketing, distribution in Apple stores, and of course iPod integration...

And if you have nothing useful to contribute except criticizing and making fun of me and what I say, then please don't post anything at all. Your smiley's and "jokes" only lengthen the post. The post will stop when everyone stops contributing so if you want it to stop and have nothing to add you are more than welcome to leave...

the high volume sellers you keep referring to are all made in China!

Maybe you have it the wrong way around? In order for B&O to be successful, they should make everything in China!

I think there is a lot to say for both parties and that B&O is also worried about quality and sales. They need the volume to survive but will never outsource there best products.

Why launch B&O "play" as a sub brand... If it goes wrong they just cut there loss and say, sorry it is not as high end but hey it is produced in China for less, all the "play" products.

They need a cashcow to keep producing and devellop. The time of tubes are over, tv's are every month with new technology and this is for a small company hard to follow. I paid in 2007 full price for a bv7 with dvi while all other companies where producing hdmi. People asked me if I was mad...

These are hard times, I would buy there "play" products but will always know it is not the same quality.

Why do we need BS3 and BS1 to be comapred to all the time? Both are obsolete, the BS3 was and is a completely rubbish product. Even if it was made in Denmark. The fit and finish is nice, but almost all units suffered the top control plate to break mine included. The files that could be played on it... Now talk about limitations.  I have one, but it functions as a clock. It was about as future proof as a Hollywood marriage.

Dkatz, you sound like a smart guy, so surely you must know that an iPod/Pad/Phone Dock isn't the same as an Aux cable. The dock provides us with superiour sound. Using the headphone outlet on the iThings gives you crappy sound.

 

Gee, I'm still here and regretting it already. Well, let's see...

Dkatz:

I agree that the BS8 is overpriced, but not because it's the BS8, but because it's Made in China. You have a BS3 which was made in Struer or Czech that cost nearly half the price of the BS8! That in itself shows that there was something wrong with B&Os pricing. The fact that they are selling a superior BS1 for only a little bit more that's made in Europe rather than a 900 pound made in China product is already saying something...

I'm afraid about 97% of the folks here agree that BS8 would be somewhat overpriced if it had been manufactured by Fabergé jewellers under direct supervision by monk Rasputin himself. Still, many people buy it, and as far as I have noticed, 100% of them have been very happy with that decision. That's great!

Why do you keep talking about such success stories as BS1 and BS3? Do you even know that BS1 has been discontinued for a while now? I don't know why, but I strongly suspect great sales numbers of this European made nice price product wasn't one of the reasons.

BS3 is a completely different product from BS8! It's a mono FM radio that includes an overwhelmingly mediocre integrated MP3 player. To make it a sensible product, it should've had the sound reproduction of a Beolit 12 (ahem), an MP3 feature that could actually be used, stream net radios and other content via WiFI, and all right, have Air*** as well. Many of the features of a SqueezeBox, years after it, but anyway...

B&O seems unable to update its products like this, which gives them a too short usable timespan in today's world, in comparison to us loonies still happily enjoying our '80s or '70s products each day. Suits the iGeneration though, I suppose nobody expects to have much to dock into a BS8 in 2022. At least they gave it an AUX input.

Why they don't update... my theory is that they simply don't have the resources to do any R&D on "complete" products. They struggle to bring anything to market in time. And now you want them to invest in new factories in Europe for large series products such as the BS8, and hopefully, Beolit 12. With what money? The 27 million DKK per year profit that was mentioned?

That's 3.6 million euros and about 300.000 euros per month. Rent an old cattle shed, buy an angle grinder and a soldering iron, pay the electric bill and it's just about spent. Some industry. If the new shares offering hadn't been almost fully subscribed a few years ago (by people like me ) and the strategies changed, we certainly wouldn't have to discuss these new outsourced products now. I suppose you are aware that in most (North) European democracies, an employee will cost to the employer about twice his gross wage before taxes? I don't suppose Denmark is much different from Finland, and with our average salaries, all that profit would've been eaten by some 75 extra employees, which I believe would be about 3% increase in their currect directly employed global work force.

Also, a Beosound 8 weighs about twice as much as a Beosound 3, so it is only logical that it costs twice as much as well.

 

Jonathan – Do some research before you comment. I am referring as I mentioned to the professional or high end lines of these high volume sellers. Many of these products sell at high volume as well for example: Canon makes the 1D, 5D and 60D in Japan whilst outsourcing the lower end Digital SLRs, Nikon does the same, Sony keeps production of some of their high end models in Japan as well, Panasonic makes the Toughbook (their top of the line notebook) in Japan as well. All of these brands keep their high end video and HD camera production in Japan as well. Denon, Technics, and many Audio brands also keep their high end mass production manufacturing in their own country...

 

The reason for this is simple, they know professionals as well as people seeking high end products need the highest level of quality control, reliability and build quality. This is why these products are not outsourced. Now the point of me mentioning this was that most people on this forum seem to think that the quality does not go down if the product is outsourced. Well if that is so, then why don't most companies which produce high end goods (many times in high volume) outsource? It's because like B&O they know to keep the high end products at a high quality they must keep production in their own factories. If like everyone says the quality doesn't change and most consumers won't be bothered (you say that B&O will only lose a few customers like me and a few others on the forum) then why wouldn't B&O outsource everything? Well I don't think they will for the same reasons the other companies don't!

 

Chucky – Spot on there mate! This is what I was getting at but my point is that it doesn't cost much less. Look at the BS8 as compared to the BS1, almost the same price but the BS1 was not made in China...

 

Bayerische – I agree with you, the BS3 was not a great product. My point is that it was cheap as chips for B&O and not produced in China, the fact that a made in China product costs twice as much which cost them about 50 times less to make is what makes me feel ripped off.

 

My point was that they should have built something like the the BS1 priced it at the same level but had the dock integration and other features, licensed it with apple to be sold at their stores, and it would have been a success. The profit margins would be less if it were built in Denmark or Czech but they would sell just as many units if not more by advertising that it was the only dock made in Europe for example...

 

Tournedos – I agree that the BS1 and BS3 were not a success and that the BS3 was not a great product. My point is that the BS3 cost half as much as the BS8 and wasn't made in China. The BS1 was only discontinued a year or two ago, fairly recently so I was using the prices from a year or two again as listed on Beocentral. My point was that if they had integrated the same features as the BS8 or Beolit 12 into the BS1 and sold it for the price the BS1 was selling at and had a deal to sell it at apple stores, it WOULD have been a success. 

 

I thought B&O was all about research and innovation. They have some of the best sound testing equipment, excellent component designs, speakers made of aluminum with 2 built in amplifiers in each. I mean most companies don't do a lot of what B&O do, and they make their own plastics and metals and are ahead of the game by 20+ years in design, the products will still look good 20 years from now. Look at the Ouverture from nearly 20 years ago and how it looks now, amazing still and the sliding doors are to die for. This is another thing I loved about the BS1 is the antenna and CD player and how they came out, those little things are what set B&O apart for me!

 

I don't want them to invest in a new factory, I understand that the BS8 and Beolit 12 are much more mass produced than the BS1 and BS3 were but they can just expand and produce more without opening a new factory soley for producing those two models. They could have hired some more employees, perhaps in their own factory in Czech if they couldn't afford to do it in Struer.

 

My point is by creating this lower end range that's made in China, they are becoming increasingly like the mass production brands I mentioned earlier in this post that keep their high end production at bay and outsource the cheaper stuff. That's what's so sad. Sony and many other mass production brands have excellent quality high end audio products but that's not what those brands stand for, those are just a small pebble in a lake of big stones and I'm afraid B&O will become just as generic a name...

 

I don't see how the weight of the BS8 has anything to do with it costing twice as much as a BS3... I would say again the cost of producing an item should transfer to the customer, hence if it costs a lot less to make then cut the cost of the product for more consumers to buy it and feel happier, then most people won't feel it's overpriced for what it is.

 

Let me reiterate - the company lost a small fortune in 2009 with a product range that included the BS1 & BS3. The main reason was a slump in sales - no one was buying the products. The profits you seem to think B&O are making on each product sold can hardly be referred to as a profit if the company is losing money! Increasing the price of the products further would result in a death spiral.

So, there was a significant restructuring within the company, a significant number of layoffs and the BS8 was developed. Last year, including first year sales of the BS8, they just about broke even, actually making a small profit. They are still not out of the woods, product prices (especially TV's) are straining the envelope of acceptibility and yet the company is bearly breaking even.

Passing on lower costs of production is therefore not going to happen! B&O are not out of the woods yet! The price of the BS8 needs to be keenly set to balance total sales with product margin in order to maximise the total return.

Most folk here are speaking about a specific company with specific issues - continually wiffling on about cameras, cars and leather handbags is a complete irrelevance.

Puncher:

Let me reiterate - the company lost a small fortune in 2009 with a product range that included the BS1 & BS3. The main reason was a slump in sales - no one was buying the products. The profits you seem to think B&O are making on each product sold can hardly be referred to as a profit if the company is losing money! Increasing the price of the products further would result in a death spiral.

So, there was a significant restructuring within the company, a significant number of layoffs and the BS8 was developed. Last year, including first year sales of the BS8, they just about broke even, actually making a small profit. They are still not out of the woods, product prices (especially TV's) are straining the envelope of acceptibility and yet the company is bearly breaking even.

Passing on lower costs of production is therefore not going to happen! B&O are not out of the woods yet! The price of the BS8 needs to be keenly set to balance total sales with product margin in order to maximise the total return.

Most folk here are speaking about a specific company with specific issues - continually wiffling on about cameras, cars and leather handbags is a complete irrelevance.

 

I think Dkatz is struggling to comprehend this, thats why we keep going round in circles!  I am sure he will be here in mo, to argue his case even further!!

 

Puncher:

Let me reiterate - the company lost a small fortune in 2009 with a product range that included the BS1 & BS3. The main reason was a slump in sales - no one was buying the products. The profits you seem to think B&O are making on each product sold can hardly be referred to as a profit if the company is losing money! Increasing the price of the products further would result in a death spiral.

So, there was a significant restructuring within the company, a significant number of layoffs and the BS8 was developed. Last year, including first year sales of the BS8, they just about broke even, actually making a small profit. They are still not out of the woods, product prices (especially TV's) are straining the envelope of acceptibility and yet the company is bearly breaking even.

Passing on lower costs of production is therefore not going to happen! B&O are not out of the woods yet! The price of the BS8 needs to be keenly set to balance total sales with product margin in order to maximise the total return.

Most folk here are speaking about a specific company with specific issues - continually wiffling on about cameras, cars and leather handbags is a complete irrelevance.

Absolutely spot on.

Then factor in the distribution system - in the UK and many other major markets, this is blighted by the elevated costs of high street shop rents,  and punitive business rates.

In the UK, I would suggest that the biggest "earners" out of your spend in a shop are as follows :

1.  The UK Govt - 20% right off the top of each sale, in the form of VAT.

2.  The shop landlord ( in most cases a property company or private commercial landlord - a few will be in property owned by the dealer.  Not many though)

3.  The combineed salary of the staff - might be in #2 for some shops, if the rent isn't prime location, high street level.  Also - remember that the 'costs' of retailing such as any discounts, reductions for display/end of line stock, FOC delivery and instalation, FOC cables are borne by the dealer if not bought at additional costs. 

4.  The local council - taking business rates at tens of thousands a year.

5.  B&O themselves - but their piece of the cake - now much less than many assume - now has to cover all distribution costs, much of the marketing, all the manufacturing, R&D, stockholding, supply chain etc etc etc.

 

The fact B&O still exist is in itself a miracle after the war, the retail slumps of the 50's and  80's, not to mention the banking scandal of the last few years !!  The Danish company still has family members from both founding families in key positions, and is ( I think) now the only independant TV manufacturer in the world, and one of the only "global" brand names to have traded continually for over 80 years.

If it needs a "sub-brand" of some outsourced, keenly priced products to underpin the rest of the brand - what on earth is the fuss about.

 

All this huffing and puffing about the Eastern supply chains is really p***ng into the wind

The way the world economy dictates how companies work at a macro level regarding what is made where is so far beyond the direct control of a company like B&O, it isn't worth even discussing - certainly for almost anything that retails at less than £1000uk

I am now finished with this topic ( probably )