Mainstream loudspeaker company, Bose, announced today that they are purchasing Upstate New York based, McIntosh. McIntosh is one of the most iconic brands in the history of audio and bring a respected electronics brand to pair with Bose. Italian loudspeaker manufacturer, Sonus faber, also is included in the deal which brings a high end loudspeaker offering that Bose has never had to offer to the marketplace.
The specific terms of the deal were not announced.
Read about McIntosh’s House of Sound Experience Center in New York City.
The brands of the McIntosh Group Inc. help Bose stay in good graces with Best Buy as their in-store Magnolia centers. Of the establishment audiophile electronics brands, McIntosh is the last big player standing as brands like Krell and Classe’ are in effect dead. Harman’s, once mighty Mark Levinson brand is more focused on audiophile headphones and in-car, Lexus audio. While other brands have morphed and/or failed, McIntosh has picked up significant momentum in the custom installer (CEDIA) channel which add to their appeal.
Curious Question Number One: Why Not Sound United?
The McIntosh Group was in far better shape in terms of distribution and organization than the many brands than Sound United (Masimo). To say that medical services company, Masimo, has failed in owning a billion dollar’s worth of brands ranging from Bowers & Wilkins to Denon to Marantz to Definitive Technology to Polk Audio to Classe’ Audio to Boston Acoustics. The Sound United brands also come with HEOS connectivity which was why the former and now exiled CEO of Masimo wanted for overall connectivity with not just AV but their medical services products. This billion dollar investment didn’t just lead to a boom in pandemic sales as everyone focused on in-home activities but owning HEOS has resulted in a legal win over Apple that is the biggest of its kinds – likely in the tens of billions of dollars when all of the dust settles from all of the predictable appeals.
With publicly traded Masimo badly needing to rid themselves of their Sound United brands (they said as much in their recent filings so says industry watchman, Ted Green at Strategee.com) the multiple on the Sound United brands had to be very appealing with overall revenues that are far larger than the McIntosh Group Inc. Perhaps the overall buy-in for Sound United is too high but with pending Trump-era tariffs (consumer sales tax) could drive down future sales for products made in places like China which is where most Sound United brands are now made (Vietnam too)?
Curious Question Number Two: Why Buy Into the Audiophile Market After Decades of Fighting It?
If you’ve been in the hobby for long enough, you have heard the term “No highs, no lows it must be Bose”. Which is a statement to how much Bose has ignored and/or disliked the audiophile space. Now they bought their way into the business, big time. With Baby Boomer clients feeling all warm and fuzzy over the green glowing lights of a McIntosh component, will audiophiles want to buy McIntosh or Sonus faber? That is to be seen.
Bose as a company is famously litigious and that hasn’t helped their reputation with enthusiasts, custom installers and others. There will be many in that group who don’t like this deal.
Where Bose gets little credit is how they have built perhaps the single best, multi-channel sales platform not just in consumer electronics – but in any category of consumer products. Bose sells their products in every imaginable channel outside of enthusiasts audio. These channels include: big box retailers, catalog retailers, the biggest online retailers, automotive, pro-audio/sound reinforcement and so much more. Now they are players in the audiophile space – a space that they’ve purposefully ignored for decades upon decades.
What Will Bose Do With These New Shiny Audiophile Toys?
Time will tell but the best move that they could make is to fight their sue-first tendencies and somehow get over their ignore-the-enthusiasts media strategy that they’ve had for more than a generation with their namesake speakers. Simply put, audiophiles think that Bose products don’t perform well (their Bose headphones are far better than one might expect and they co-pioneered modern headphone noise cancelation) but feel that McIntosh and Sonus faber do in fact compete in the performance audio marketplace.
If the plan is to try to make McIntosh into a totally mainstream, lifestyle brand, that is a very big challenge that likely see the enthusiasts buyers look to other, more new school audiophile brands including many that come from Switzerland. Sonus faber, could be spun off if Bose doesn’t want to be in the high end loudspeaker brand.
Most companies tend to want to play with the new toy that they just bought in an M&A deal and that could be the case here and Bose has the chops to find a way to make this channel work as they do with airplane magazines, door-to-door sales or outlet stores. They absolutely can make that work if they put their time and significant resources into it. Can that be done without the support of their core clientele? That’s more questionable, but not impossible.
Will Bose show the insight and restraint to let the brands that they bought do what they do best as Berkshire Hathaway would? Nearly all companies when buying up other companies can’t resist putting their mark on their newly acquired brands. Bose needs to be very careful with that as the core McIntosh and Sonus faber client isn’t likely a fan of the mothership brand. Bose will need to earn that trust with the audiophile market who they’ve ignored for so long. That’s going to be another big check for them to write next.
2025 will see a lot of change in the home audio business. I think that we will see a number of brands and dealers exit the business. As consumer belts tighten and other expenditure priorities take precedent, it will be felt by the manufacturers and distribution. If tariffs take root, this will also impact pricing which in turn will push sales down.
Our incoming rapist-felon president needs to honor his word because he is the CEO of Truth Social and when we think of Trump we think of a man who is dedicated to the truth, right?
How is consumer electronics going to do with 20% PLUS sales tax (sorry non-college educated Trump voters but you don’t understand that a tariff is a sales tax and that THE CONSUMER PAYS FOR IT)?
I fear you are right my friend.
People like you will never know why you lost. A lawsuit might help.
Goodbye McIntosh! Bose will certainly cheapen the brand.
This is why Bose should have bought some or all of the Sound United brands. Diversity while staying more “in their lane”:
With that said, Bose is VERY GOOD at multi-channel marketing. They’ve ignored and disliked our channel for so long that this will be a BIG CHALLENGE
Thank you Jerry for making it clear that a tariff is a tax on the consumer that buys the product.
I found this article most difficult to read, particularly from the beginning of the article through the section titled Curious Question Number One. Not a disrespectful question: was it translated into English? Seriously, some of the sentences are either difficult to read or make little sense. I’d sincerely appreciate a rewrite or better explanation of what exactly is going on with Harman’s, Sound United, and how all of that relates to this particular transaction.
Sorry – I do speak English. I was going fast and didn’t have time to have my proofer take a look. In the project management triangle you get two of the three elements of cost, quality and time. You win on cost because I give you the content for FREE. Speed – I got you there. Quality? I guess I failed you there but I don’t think you will find these insights anywhere else right now (or anytime)
Harman has NOTHING to do with Sound United (did we just start a rumor?) for the record.
I did have lunch with a beloved Ex-Harman exec in the Valley yesterday but that has nothing to do with Bose, McIntosh or Sound United.