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 report pinned the blame squarely on bland design.

Caddes, a former automotive designer who held high-profile positions with the likes of BMW (BMW) and Fiat (FIA.F), was tapped four and a half years ago by Chief Executive Ken Kannapan to help transform Plantronics from a maker of humdrum corporate headsets into a purveyor of well-designed, stylish fashion accessories. (For more on Caddes, click here.) Even as Altec stumbled, overall revenue at the 4,500-employee outfit, has more than doubled since Caddes hired on. Meantime, his design crew, who work from a glitzy new 7,000-sq.-ft. studio in Plantronics' headquarters in Santa Cruz, Calif., swelled from 5 to nearly 25.

Now he's got to do it again: Executives gave him control of the Altec brand two years ago. "We'd been dying to get involved with the Altec brand since the acquisition," admits Caddes. But only when the unit faced serious difficulties would top management commit to building a separate design team dedicated to Altec. "If we're going to do this, we've got to be all in," says Caddes, who has built a more modest team that, for now, consists of two full-time designers dedicated exclusively to Altec products, with a handful of Plantronics designers pitching in.

Fresher Image

His plan is nothing short of a relaunch of the Altec brand, refreshing its image—including Web site, packaging, and point of sale displays—as well as the industrial design of its products.