We believe we are a worldwide leader in the development, manufacture and marketing
of high-quality, high fidelity audio products and electronic systems. We have
developed, both internally and through a series of strategic acquisitions, a broad
range of product offerings sold under renowned brand names in our principal markets.
We believe that we are a leader in digitally integrated Infotainment Systems for
the automotive industry. We believe our JBL, Infinity, Harman/Kardon, Mark Levinson
and Becker brand names are well known worldwide for premium quality and performance.
We have built these brands by developing our world-class engineering, manufacturing
and marketing competences and have employed those resources to establish our Company
as a worldwide leader in the markets we serve.
Our Automotive segment designs, manufactures and markets audio, electronic
and Infotainment Systems for vehicle applications primarily to be installed
as original equipment by automotive manufacturers.
Our automotive products are marketed worldwide under brand names including JBL,
Infinity, Harman/Kardon, Mark Levinson, Lexicon and Becker. Through engineering
and supply agreements, our premium audio systems and infotainment product offerings
are sold to a number of global automotive manufacturers including DaimlerChrysler,
the BMW Group, Toyota, Audi, Porsche, Land Rover, Renault, Hyundai, Kia, the
PSA Group and Volvo. Our Infotainment Systems may include voice-activated telephone
and climate control, navigation, rear seat entertainment, Internet access, hard
disk recording, MP3 playback, Windows Media Audio playback and a high-end branded
audio system.
Our Consumer segment designs, manufactures and markets audio, video and electronic
systems for home, computer and multimedia applications. Our Consumer products
are marketed worldwide under brand names including JBL, Infinity, Harman/Kardon,
Lexicon, Logic7, Mark Levinson and Revel. Our audio, video and electronic systems
are recognized throughout the world for superior sound quality and high performance.
Our home audio and electronic products are offered primarily through audio/video
specialty stores and retail chain stores, such as Circuit City and Best Buy
in North America and MediaMarkt in Europe. Our branded audio products for personal
computer and multimedia users are primarily focused on retain customers. Our
multimedia products are geared towards an enhanced sound for Apple’s iPodsOand
other MP3 digital audio players and improve the appeal and capability of these
products as entertainment systems.
Our Professional segment designs, manufactures and markets loudspeakers and
electronics used by audio professionals in concert halls, stadiums, airports
and other buildings and for recording, broadcast, cinema and music reproduction
applications. We provide high-quality products to the sound reinforcement, music
instrument support and broadcast and recording segments of the professional
audio market.
We offer complete systems solutions for professional installations and users
around the world. Our Professional brands include JBL Professional, Soundcraft,
Crown, DigiTech, dbx, AKG, Lexicon, BSS and Studer.
We believe that we are uniquely equipped to provide turnkey systems solutions
for professional audio applications that offer the customer improved performance,
reliability, ease of installation and reduced cost. With our HiQnet networking
protocol software, our Harman professional brand products can communicate and
operate together.
Our results of operations depend on the sales of audio products and electronic
systems in the automotive, consumer and professional markets. Our products are
sold worldwide, with the largest markets being the United States and Germany.
We believe significant growth opportunities continue to exist with automotive
manufacturers through higher penetration levels within existing models, increases
in the number of models offering our audio, navigation and Infotainment Systems,
supply agreements with additional automakers and increases in per-vehicle content
through the provision of integrated Infotainment Systems with premium branded
audio systems. We believe significant growth opportunities exist in the consumer
electronics market as the home and multimedia technologies continue to converge.
We believegrowth opportunities exist in professional markets and expect that
our HiQnet system will allow us to capitalize on these opportunities as this
technology simplifies the interaction of our products and provides users with
an incentive to purchase complete HiQnet compatible systems.
Customers/Industry Concentration
We anticipate that DaimlerChrysler and BMW will continue to account for a significant
portion of our sales and receivables for the foreseeable future. These automotive
customers are not obligated to any long-term purchase of our products.
Competition
The audio industry is fragmented and competitive and includes numerous manufacturers
offering audio products that vary widely in price, quality and distribution
methods. Consumer home, computer, multimedia and automotive aftermarket products
are offered through audio specialty stores, discount stores, department stores,
mail order firms and Internet merchants. Automotive and computer manufacturers
also offer branded audio products as options. Music instrument retailers, professional
audio dealers, contractors and installers offer professional products and customers
can also purchase these products on a contract bid basis. We concentrate primarily
on the higher-quality, higher-priced segments of the audio market and compete
based upon the strength of our brand names, the quality of our products, our
ability to provide integrated systems and our comprehensive marketing, engineering
and manufacturing resources.
In the automotive audio market, we compete against Bose, Pioneer ASK, Foster
Electric and Panasonic in the sale of audio systems to automotive manufacturers
and Alpine, Bosch, Panasonic, Siemens VDO, Delphi, Aisin Seiki and Denso in
the sale of electronics and Infotainment Systems to automotive manufacturers.
We compete based upon the strength of our brand names and the quality of our
products.
We believe our competitive position is enhanced by our technical expertise in
designing and integrating acoustics, navigation, speech recognition and human-machine
interfaces into complete Infotainment Systems uniquely adapted to the specific
requirements of each automobile model.
We believe that we currently have a significant share of the consumer market
for loudspeakers, primarily as a result of the strength of our brand names and
our technology. We believe JBL and Infinity are two of the most recognized loudspeaker
brands in the world. By developing our high-end loudspeaker brand, Revel, over
the past several years, we have extended our market position. Our principal
competitors in the consumer loudspeaker market include Bose, Klipsch, Polk Audio,
B&W, Boston Acoustics, KEF and Paradigm.
Competition in the consumer home electronics market remains intense, dominated
by large Asian manufacturers. This market is characterized by the short life
cycle of products and a need for continuous design and development efforts.
Our competitive strategy is to compete in the higher-quality segments of this
market and to continue to emphasize our ability to provide system solutions
to customers, including a combination of loudspeakers and electronics products
and integrated surround sound and home theater systems. Our principal electronic
competitors include Yamaha, Sony, Denon, Onkyo, Pioneer and Marantz. We also
compete in the luxury consumer electronics market with our Mark Levinson and
Lexicon brands. Our principal competitors in this high-end market include Krell,
McIntosh, Audio Research, Meridian, Linn and Accuphase.
In the multimedia market, we supply the Apple store and other retail chains
with JBL and Harman Kardon speaker systems that serve Apple’s successful iPod
as well as other MP3 players. Our principal competitors include Bose and Altec
Lansing. We offer Harman/Kardon, JBL and Infinity brands to personal computer
retail audio outlets. Our principal competitors are Creative Labs, Altec Lansing,
LabTec/Logitich, Klipsch and Cyber Acoustics. Additionally, Harman/Kardon audio
systems are built into certain Toshiba laptops. The new Harman/Kardon Drive
+ Play provides full MP3 control and interface for Apple’s iPod for the car
along with a highly visible display. Our principal competitor in the MP3 accessory
market is Alpine. This market is highly competitive and characterized by low
prices and frequent product changes.
The market for professional sound systems is highly competitive. We believe
that we have historically held a leading market position in the professional
loudspeaker market and have complemented our professional loudspeaker line by
adding digital professional electronic products and broadcast and recording
equipment. We compete by utilizing our ability to provide systems solutions
to meet the complete audio requirements of our professional customers. We offer
products for most professional audio applications.
We compete in the sound reinforcement market using many of our brand names,
including JBL Professional, AKG, Crown, Soundcraft and BSS. Our principal competitors
in the sound reinforcement market include the Electro Voice division of Telex,
Eastern Acoustic Works/Mackie, QSC, Sennheiser, Tannoy, Peavey, Shure, Audio
Technica, Fender, Marshall, Sony and Yamaha. We compete in the broadcast and
recording markets with our Studer, AKG, Soundcraft and Lexicon brands. Principal
recording and broadcast competitors include Sony, Yamaha, Neve, Sennheiser,
Denon, SSL, Shure, Tascam, Alesis and Audio Technica. In the music instrument
market, competitors for our JBL, DigiTech, dbx, Lexicon and Spirit products
include Yamaha, Peavey, Rane, Roland, Alesis, Marshall, Fender, Sony, Mackie
and T.C. Electronics. We also compete in the industrial and architectural sound
market. Competitors within this market include Siemens, Peavey and Tannoy.