Bose Corporation

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Bose Corporation

The Mountain
Framingham, Massachusetts 01701
U.S.A.
(508) 879-7330
Fax: (508) 872-6541

Private Company
Founded: 1964
Employees: 3,300
Sales: $500 million
SICs: 3651 House Audio and Video Equipment; 3663 Radio and TV Communications Equipment

Ranking 488 on Ward’s list of the “1000 Largest Privately Held Companies” in the mid-1990s, Bose Corporation is engaged in the development, manufacture, and marketing of loudspeakers, consumer and professional audio systems, automobile sound systems, television sound systems, noise cancellation technology for the defense and aviation sectors, and computer simulation software to analyze auditorium sounds. Initially producing amplifiers for the U.S. Defense Department, Bose later introduced the Bose 901 Direct/Reflecting speaker, which, with modifications, would remain the company’s flagship speaker well into the 1990s. Known for its industry innovations and the high quality of its products, Bose markets a wide variety of sound equipment popular among consumers and corporate clients, most notably automobile manufacturers Ford, General Motors, Chrysler, Honda, Nissan, and Audi. The company maintains production facilities and subsidiaries worldwide.

The Bose Corporation’s founder, Dr. Amar Bose, was born in 1929 to a political refugee from India and his wife, a Philadelphia school teacher. Bose would later suggest, in an interview in USA Today, that defending himself as young boy in a racially prejudiced America equipped him with the fighting spirit important to his success. When his father’s import business suffered during World War II, the teenaged Amar Bose convinced his father to begin a radio repair facility in the family business. There, the self-taught Amar did the repair work. Following this early experience in the electronics field, Bose attended the Massachusetts Institute of Technology (MIT), where he earned a doctoral degree in electrical engineering in 1956.

The Bose Corporation arose in part from Dr. Bose’s dissatisfaction when he attempted to buy speakers for his home stereo system in 1956. As an engineer, he had expected that laboratory measurements would indicate sound quality. To his dismay, however, he realized that measured sound and perceived sound differed. Dr. Bose directed his research efforts into psychoacoustics, the study of sound as humans perceive it, and psychophysics, the study of the relationship between measurement and perception. His research led to numerous patents and the creation of Bose Corporation in 1964 to develop and market products using those patents. Despite the later financial success of his company, Dr. Bose, professor of electrical engineering and computer science, remained on the staff at MIT into the 1990s, teaching and mentoring undergraduate and graduate thesis students.

Bose started his company at the suggestion of MIT professor Y.W. Lee, who provided Bose with $10,000 in start-up capital. That investment would later be worth an estimated $250,000, when the company repurchased Lee’s stock in 1972. So that he could continue his teaching career, Bose hired one of his students, Sherwin Greenblatt, to help develop and market a product. During their first year of business, according to a company publication, Greenblatt was the company’s only employee, and “Bose, who was [still] teaching, was paying Greenblatt more than he, himself, was earning as a professor at MIT.” Greenblatt would later become president of the company.

Bose produced its first 901 direct/reflecting loudspeaker in 1968, and its first customers were secured through contracts with the military and NASA. The 901 was based on Bose’s earlier research, which indicated that in excess of 80 percent of what audiences heard at a concert, for example, was reflected sound; sound bouncing off walls, floors, and ceilings apparently contributed to the quality of the listening experience. Bose determined that his disappointment in speakers then on the market resulted from the fact that speakers only directed sound straight forward. To achieve a better spatial distribution of sound, therefore, Bose developed the 901, which aimed eight of the nine transducers in the speaker to the rear of the speaker where the sound could bounce before it reached the listener. The 901 employed an active equalizer to allow the speaker to reproduce the audio spectrum.

Bose’s 901 series was not an immediate success. In fact, Consumer Reports dismissed the product, alleging that “individual instruments heard through the 901 ... tended to wander about the room.” Wounded by such criticism, Dr. Bose filed a lawsuit against the magazine, claiming that it had unfairly disparaged his speaker system. Litigation continued for nearly 13 years, and although Dr. Bose ultimately lost his case at the Supreme Court level, the 901 series had long since gained a reputation as one of the finer products on the market.

Critical to Bose’s success was the company philosophy, itself a reflection of its founder. Company literature stated: “Bose believes that audio products exist to provide music for everyone, everywhere—that music, not equipment, is the ultimate benefit. The Bose goal is to create products that combine high technology with simplicity and small size, to create the best possible sound systems that are easy to use and accessible to all consumers.” From the beginning, Bose directed all profits back into research and development, avowing a greater interest in producing excellent speakers than in money and keeping his company privately held, and therefore not responsible to stockholders, through the 1990s. Dr. Rose and company officials also stressed the importance of creativity at the company. In Operations magazine, for example, Greenblatt stated “Our challenge is to prod people into being innovative and using their creativity to do something that’s better. In the long run, this is the source of sustainable advantage over our competition.”

Since its introduction in 1968, the 901 speaker series underwent several revisions in which sound quality was improved and the speakers were made suitable for the digital age. Bose also applied the direct/reflecting concept to lower priced speakers in the company line and began marketing speakers to the general public for use in home stereo systems.

In the 1970s, Dr. Bose became interested in developing sound reproduction systems for automobiles, having noted that consumers, dissatisfied with the stereo equipment then standard in American cars, were purchasing Japanese systems for installation. The project seemed to present particular challenges given the glass, upholstery, and plastic surfaces in a car’s interior. Bose, however, was optimistic, later recalling in a 1990 Electronic Business article: “I thought I could actually create better sound in a car than in a room, [since] we can control where the sound goes in a car.”

Bose’s auto sound system ideas were presented to General Motors Corp. in 1979, and a verbal agreement was reached between Dr. Bose and Edward Czapor, GM’s Delco Electronics president, which resulted in four years of Bose research at an estimated $13 million to adapt car audio systems to the acoustic environment of the automobile. At the conclusion of the successful research, Bose formed a joint venture with GM to design and manufacture car audio systems for certain Cadillac, Buick, and Oldsmobile models.

Although initially slow to realize profits, Bose’s car stereos and the Original Equipment Manufacturer (OEM) division they necessitated at the company, eventually became highly successful, leading to partnerships with Honda, Acura, Nissan, Infiniti, Audi, Mercedes Benz, and Mazda. In many cases, Bose was able to design products not only for a specific model of car but also for specific options packages offered by the automakers. Bose was even able to meet Honda’s requirement that product failure rate not exceed 30 parts per million, an exacting standard. By 1995, Bose’s car audio systems would represent about one-fourth of its total sales.

Also in the 1970s, Bose began efforts to introduce its products to the Japanese consumer audio market, an effort begun with much frustration. Bose’s initial efforts in the Japanese market were failures; in fact, the company lost money its first eight years in Japan. Then, Dr. Bose recognized the problem as one in which Bose market representatives had failed to establish close human relationships with Japanese distributors. Bose decided to hire a native Japanese to head the company’s sales efforts in Japan. After interviewing several unsuitable American candidates, Bose made a few trips to Japan, during which he established social and business contacts. Eventually he hired someone who would have great success introducing Bose products to Japan and would later become a vice-president in the corporation.

Further Bose innovations involved acoustic waveguide technology, through which Bose engineers eventually developed smaller, portable speakers and sound systems capable of producing “big sound.” Specifically, acoustic waveguide technology showed that bass notes could be reproduced through a small tube or pipe, similar to that employed in a pipe organ, instead of the much larger “moving cones” used by traditional stereo manufacturers. Amplifying the bass notes via an 80-inch tube folded into less than one cubic foot of space, Bose’s Acoustic Wave Music System was introduced in 1984. The stereo system won praise for its compact, simple design as well as sound that many reviewers found rivalled that of larger and more costly stereo speakers and components.

In 1985, Bose began investigating the market for its products in television. As he had with General Motors, Dr. Bose approached a major television manufacturer, Zenith, and proposed that his engineers design a sound system, incorporating their acoustic waveguide technology to produce high fidelity sound in Zenith televisions. Zenith agreed, and the two companies entered into a joint venture which resulted in the deluxe Zenith/ Bose television, a set that featured rich sound and, since its tube was folded inside, was only about an inch larger than Zenith’s earlier 27-inch screen model.

Also during this time, Bose introduced its Acoustic Noise Canceling headset, a sealed headset designed to cancel out unwanted sound. Remarking on the need for the headset, one writer for New Scientist magazine quoted Dr. Bose “The US government pays out $200 million a year in compensation for hearing loss caused by military service. ... Hearing loss is a common reason for early retirement of pilots, second only to psychological stress.” Indeed, the headset proved valuable in military use, particularly among pilots and tank drivers. The headset also had civilian applications and could be used by small aircraft and helicopter pilots. Bose donated two of these headsets to Dick Rutan and Jeanna Yeager, who piloted their light plane the Voyager on a nonstop around the world flight in 1986. Moreover, the technology Bose developed could be tailored to cancel out noise in several environments, such as airline passenger compartments or city streets.

By 1989 Bose’s sales were estimated at $300 million, a figure that some analysts suggested was conservative. Also at this time, nearly half of Bose’s sales were derived from foreign markets; indeed, Bose speakers were outselling all other brands in Japan, including those of the Japanese manufacturers. The early 1990s would see steady gains for Bose, with net revenues increasing to $424 million by 1992.

The acoustiwave technology in Bose speakers and stereo systems made Bose products popular in the 1990s at concerts, theaters, and nightclubs. A Bose loudspeaker was even used at the 1992 Winter Olympics in Albertville, France. Consumers were also introduced to the Bose Wave radio, a small remotecontrolled clock radio suited for use in the home. The Wave boasted rich, full sound not found in other portable radios and could also be hooked up to a television or CD player, enhancing the sound capabilities of the user’s existing stereo components.

At its manufacturing facilities, Bose became a subscriber to the Total Quality Management concept, introduced by W. Edwards Deming. Toward that end, Bose assembly line workers were cross-trained and promoted based on performance. Moreover, Bose sought to build teams based upon mutual trust and respect, operating according to principles of responsibility and quality consciousness. Describing the company’s management style in a 1993 Production article, Bose’s vice-president of manufacturing, Tom Beeson, asserted: “Communicate. Spend a lot of time on the factory floor. Micromanage every aspect. Involve all of the people. Foolproof the system so mistakes can’t be made. Find the root cause of problems. Operate manufacturing with the fundamental principle: Do it right the first time.”

In a 1994 interview with Kathleen Lander of HPR magazine, Dr. Amar Bose indicated that Bose Corporation headquarters, known only as The Mountain for its commanding view of the countryside, was scheduled for expansion. The facility would be dedicated to engineering only, and expansion plans called for construction of a concert hall and landscaping to recreate the atmosphere of a college campus.

Innovative product development and streamlined manufacturing and delivery made Bose Corporation the world’s leading speaker manufacturer in the 1990s. The company maintained U.S. manufacturing in Massachusetts, Michigan, and Arizona, as well as foreign plants in Canada, Mexico, and Ireland. With subsidiaries throughout Europe, Australia, Canada, Italy, Japan, and Russia, foreign market represented 60 percent of Bose Corporation sales in 1995.

Principal Subsidiaries

Bose AG (Switzerland); Bose A/S (Denmark); Bose Australia; Bose B.V. (Netherlands); Bose Canada, Inc.; Bose GmbH (Germany); Bose K.K. (Japan); Bose Ltd. (Canada); Bose N.V. (Belgium); Stereo Advertising Corp.