Design Tunes Up Altec Lansing

Darrin Caddes has his work cut out for him. In the dimly lit backroom of a ritzy Manhattan hotel, a dozen or so gadget bloggers and technology writers have gathered to meet with Caddes, vice-president for corporate design at headset maker Plantronics (PLT). But instead of the form-fitting ear pieces or business communications gear Caddes is known for, the soft-spoken, 43-year-old designer is surrounded by a range of gleaming iPod speaker systems, their LCD displays glowing blue and orange.

Caddes is charged with hitting the reset button on consumer-electronics manufacturer Altec Lansing, which Plantronics bought for $166 million in 2005. The Milford [Pa.] engineering firm has a long track record of innovation, including pioneering technology that gave voice to the first talking pictures, putting its stamp on everything from professional loud speakers to the audio inside Walt Disney's (DIS) Epcot Center in Orlando, and creating the first speaker system with an integrated iPod dock in 2003.

But recently, Altec has seemed anything but fresh. The company had been happy to trundle along with the same playlist even as the $1.1 billion U.S. market for iPod docks became more competitive. Its products -- a hodgepodge of out-sourced designs -- became indistinguishable in the bazaar of look-alikes made by Asian manufacturers. Unable or unwilling to differentiate itself, Altec began bleeding money.

Bland Design

As a whole, Plantronics saw revenue grow 7%, to $856.3 million, in fiscal 2008, with net income jumping 38%, to $79.4 million, from fiscal '07. But the faltering consumer audio division, which absorbed Altec, dragged down its roaring communications division, which has been boosted by a boom in sales of wireless headsets. The remnants of Altec saw net revenues slide 12%, to $108.4 million, from the year before while operating losses swelled 24%, to $35.8 million. Striking a somber note, the company's annual...