Just last Friday, the big news hit that Sound United had signed a letter of intent (LoI) to acquire respected audio specialty brand Bowers & Wilkins. Strata-gee was one of the first to break the news and from the moment I hit “publish,” Strata-gee web traffic stats made it clear that you all viewed this as big news as well.
That first announcement came from the Sound United camp – and it was pretty terse. As luck would have it, for the last couple of weeks before that news hit, I had already been pursuing an interview with James Krakowski, Bowers & Wilkins’ Executive Vice President, Americas, to follow up on a previous story. Although we had been struggling to find a time to connect, when this news hit, he graciously agreed to make himself immediately available for an interview.
Learn more about what’s going on with B&W now…
You may have seen our Breaking News SYNCH circulated late last Friday in which I reported on the news that Sound United had announced their LoI in the potential acquisition of Bowers & Wilkins (B&W). The news shot around the Internet, and in a little more than 48-hours, Strata-gee website stats had generated nearly a month’s worth of activity.
The next day on Saturday, and a couple of days before I interviewed Krakowski, B&W put out a statement that clarified the situation from their view. There was broad agreement on the fundamentals of what was going on – discussions on a potential acquisition or business combination – but each statement seemed shaded a little differently with B&W clearly emphasizing the fact that these discussions “are at an early stage.”
Early and Sensitive Discussions
In a telephone interview on the following Monday morning, James Krakowski shared some more “color” surrounding the two relatively bare bones statements from each of the companies. He was, as you might imagine, somewhat cautious and chose his words carefully, as the situation is still in a very tentative state and the company bears certain reporting obligations in their home country of England.
“Over [last] weekend I was reading all the social media on this – the formal channel, the informal channel – and I looked at how many people truly love the brand of Bowers & Wilkins. So many wanting the brand to succeed and move forward…it is top of mind with everybody.
It’s great to be part of something that is that well loved globally and universally…you want to continue to try and protect that the best that you can.James Krakowski, Executive Vice President, Americas for Bowers & Wilkins
James Krakowski’s Background
Before I get to the interview, for those of you who do not know Krakowski, let me take a moment to more completely introduce you to him. Just prior to joining B&W in February of last year, Krakowski had been running his own consulting business (K Squared Business Consulting) and an AV ingtegration company (Krakhouse A/V Design) both out of Allen, TX.
But most will know him from his position before these – his nearly 20-year career at Sony. Krakowski joined Sony in 1999 as an Account Manager. After about 9 months, he was promoted to National Sales Manager, then Vice President of the Central Region, and ultimately becoming Vice President of National Accounts – which he held up until July 2018.
Krakowski has a unique combination of understanding both the roots and heritage of the specialty business, along with a more expansive perspective of broader market issues from his time at Sony. This combination allows him to appreciate the engineering and quality of B&W products, as well as seek new opportunities for growth.
Strata-gee’s Interview with James Krakowski
>Strata-gee: How did you first become aware of B&W?
Krakowski: I’ve been such a huge fan of Bowers going back to 1999. The first time I ever experienced Bowers was back at Bjorns in San Antonio during the Super Audio CD launch. It was always an aspirational brand for me.
So the opportunity to come over here at the time when I came over to be able to lead it for the Americas was to me – honestly, a blessing – because I had so much admiration. I wanted to help this brand expand its reach. Those before me had done such an incredible job to position the brand and to protect the caché of the brand…it’s what I wanted to continue on.
>Strata-gee: So what did (or do) you view as your mission here when you joined 15 months ago?
Krakowski: Trying to bridge the gap of the past and the success of the past, with the success of the future, with the right approach to expanding the distribution so the breadth and depth of the products were more accessible to those looking for specialty products in the specialty channel.
A Huge Challenge
>Strata-gee: That sounds like a huge challenge. I mean many specialty companies have struggled with just that issue – how to stay true to the fundamentals of what built and defined their brand, in the face of an evolving market with new technologies and new consumer preferences that at times can conflict with the brand’s foundational underpinnings.
Krakowski: It is a huge challenge. Any brand has that challenge. But I tell you the way that you solve part of that challenge is never to lose sight of the customer. As long as you start to reverse engineer your business strategies from the perspective of the consumer, you can always stay true to what you’re trying to accomplish.
And I say it that way because, to me, you can maintain the caché and what makes a specialty brand special by understanding how consumers are looking to engage with that brand – or look to that brand.
When you look at CEDIA, CEDIA says they have 6,000 CEDIA-certified integrators. Bowers only had a small percentage of those integrators. So what was the way to expand it without causing disruption with the core dealers we had in place – whether that was with the existing HTSA partners or other partners that had been longstanding Bowers dealers – not disrupt their business, but complement their business, understanding that consumers are choosing different ways to shop for those specialty brands.
Who Owns Bowers & Wilkins?
>Strata-gee: Who owns B&W right now?
Krakowski: Right now, Bowers is owned by [a group of] shareholders. EVA [Automation] is one of the shareholders that owns Bowers. So, there’s not a real clear statement I can make about [specifically] who owns it – other than to say that it is made up of different shareholders that own it with an independent Board that is running Bowers.
That independent Board has control of the company. David Duggins leads the independent Board, Geoff Edwards who has been with the business for 30-plus years is CEO, and there are a number of people that report to Geoff. The executive team is made up of myself, running the Americas…a peer that runs EMEA…a peer that runs APAC…and then a peer that runs product and marketing.
So, collectively, we work to make the decisions for what’s best for the brand…and the company…going forward.
On the Role of EVA Automation and Joe Atkins
>Strata-gee: So EVA Automation remains a shareholder, but are they in the driver’s seat?
Krakowski: EVA is a shareholder, but they are not part of the independent Board.
>Strata-gee: Is former owner Joe Atkins part of the picture?
Krakowski: So, Joe is a shareholder in the business as well. Joe is active in the business and provides stability to the business, based on his longstanding knowledge of the business and his longstanding knowledge of the industry.
Did B&W Know that Sound United Planned to Announce the LoI?
>Strata-gee: Did B&W know that the announcement from Sound United of the signed LoI was being distributed Friday evening (June 12th)?
Krakowski: We’re in early conversations with Sound United and see that combining two premium brands into a new group could offer a lot of opportunities. And the news around such a development was bound to cause a lot of excitement. So we certainly understand their need to release a statement.
The statement we have released on Saturday clearly noted that we’re in early discussions. And because of certain regulatory needs and filings that needed to be made, it made it public that we were in those discussions early in the process.
It Seems Like There’s A Difference Between How Each Side is Describing the Situation. Is There a Difference?
>Strata-gee: So to me, it seemed as though there was slightly different shading between the way that the Sound United statement characterized the situation, and the way the B&W statement articulated it. Is there space between your two positions?
Krakowski: No, I don’t think there’s a difference…and I think you even said that in your article on Saturday – we’re saying the same thing. You know, it’s just…early in the process…early discussions.
Strata-gee: OK, so can you say if Sound United is contemplating acquiring all of B&W in its entirety? Or do you think there may be some restructuring (i.e. selling off divisions or lines) in order to drive to a final agreement?
Krakowski: I couldn’t speculate on that.
Let’s Talk About the Formation Line
>Strata-gee: Can you share with me the status of the Formation line?
Krakowski: It’s still part of our product portfolio. We still support it. We’re still actively selling it…and still working to continue to improve upon the experience that it delivers for consumers.
>Strata-gee: So do you mean to say that there is product development activity going on with Formation?
Krakowski: How we move forward with it…there are discussions that are ongoing on how we continue to support it going forward.
>Strata-gee: I am hearing from multiple sources that Formation just has not done as well as expected. Can you comment on the success of that line for the company?
Krakowski: Has it met solidly the expectations that were set forth when they started doing the R&D? I would say – anyone could probably say – no, on that. But, does it perform? I would say that it meets the expectations that we’ve set forth for it today…what it should do.
Does it meet the consumer expectation? I think that consumers have an expectation of a UI/UX that is more in line with what they’re used to [from other brands], and what’s more of a standard in the industry today. So the product falls short, probably, of many of the consumer’s expectations of UI/UX.
But from a performance perspective, it’s still phenomenal – and delivers a great experience. But it has room to grow.
Is It True that B&W Has New Products Coming?
>Strata-gee: So, I’m hearing that B&W has new products coming…is that correct?
Krakowski: Yes, in fact we do have some new products that will be announced this month. And we have other product announcements that will be coming later this calendar year.
>Strata-gee: Can you give Strata-gee readers a sense of what these new products will be? Or what part of the line they will address?
Krakowski: I can’t because I don’t want to steal the thunder. I will say that [the upcoming product announcement] is representative of what made Bowers one of the most well-respected premium audio brands in the world. And it goes back to what has made us successful over the last sixty-four years.
Turbulent Times: The Impact of COVID-19 on Specialty
>Strata-gee: So the world finds itself in turbulent times. Perhaps most notably, with COVID-19 forcing the shut down of the economy and looking ahead to a phased-in restart, how do you feel this has impacted the specialty channel?
Krakowski: When you think about what consumers are looking for, and when you think about COVID, I certainly think there’s an opportunity for premium specialty channels, premium specialty brands – and the CE industry as a whole – to really embrace that, as consumers are looking to want to continue to digest content. But how they digest it and why they digest it is going to forever change, because of COVID.
I think the notion of cocooning and wanting to have better audio or more premium product is going to continue to accelerate. People are not going to be investing in vacations like they used to – thank God we’re not in the travel industry!
[Also] consumers are not going to be running back to movie theaters. So consumers are going to look towards investing more into their homes. If you look at other trends in complementary businesses – outdoor kitchens, pools, landscaping, home redesign – those are all parts of the global economy that are continuing to improve because of COVID, as people are looking to stay closer to home.
Employees are Committed ‘To Protect the Brand and Deliver Great Products to Consumers’
>Strata-gee: What about the impact of COVID on Bowers & Wilkins?
Krakowski: I’ve been very pleased with the team that I have in place here in the Americas and the way we’ve gone to market. You know, I didn’t have to do many of the things that other specialty brands had to do to survive. We got creative, we stayed passionate, and for that we’ve experienced some really good months during all of this.
The one thing I’d like to get across is that, no matter the “noise” of what’s happening with Bowers from an ownership perspective…what doesn’t change is the commitment of the employees to protect the brand and deliver great products to consumers.
>Strata-gee: So you got creative and tried some different things during these turbulent times. Is there anything you tried that you may continue with going forward, or do you just anticipate bouncing back to where you were before?
Krakowski: One of the things that we did is we allowed certain dealers that were very vested in our 700 series product, to sell 700 series online. That was because they had inventory positions, I couldn’t not allow them to sell that product [because stay-at-home orders prevented shoppers from coming to their showrooms]. That was a product that wasn’t historically sold online.
But that is one of the trends where consumers are going to continue to gravitate towards the online presence for making purchase decisions. So I’m not saying I won’t, but at this point in time I don’t see us going backwards to keeping it as off-line transactions. But we set very high bars of who can sell our products online and what products can be sold.
A Big Thanks
I would like to thank James Krakowski for taking the time to share his thoughts with Strata-gee readers. I should note, for the record, that Krakowski did not answer all of my questions – but he did answer all but just a few. He also did not refuse to address any of the topical areas I brought up, including a few sensitive ones.
See the entire Bowers & Wilkins product line and learn more about the company by visiting: bowerswilkins.com.