Harman International Chairman, President and CEO Dinesh Paliwal calls it a game changer — not just for his company, a leading provider of sound systems for high-end cars, but the whole industry as well. Companies like Harman have traditionally developed sound systems against orders from carmakers. This is the first time a company has come out with a system on its own and is ready to sell it to more than one buyer.
A lot of work on the automated infotainment system has been done out of Harman’s laboratory in Bangalore. The prototype was developed here electronically with intellectual property from Harman labs in Germany. Over two million lines of codes were written here. This has compressed the go-to-market time, says Paliwal, by half to just six months. “In the past, it has taken us up to two or three years, by when the technology would become obsolete,” says he.
There have been substantial savings too. Paliwal does not discuss numbers but leaves behind some pointers. Normally, to develop a product from scratch can cost up to $50 million. And such a product is sold anywhere between $1,000 and $2,000. The new system will carry a price tag of $400 to $800. Though Harman has so far restricted itself to marquee names like Daimler, Audi, Lexus and BMW, the new system will help it crack open the mid
segment — Toyota, Ford, General Motors, Nissan, Peugeot and others. Several of these have a presence in India.
In fact, Paliwal chose to launch the new product from China and India — big markets of the future. Harman has set up a manufacturing plant in China. Paliwal, who studied at IIT Roorkee and began his career with Ballarpur Industries, has been a great believer in China and India. Before he joined Harman two years ago, Paliwal was group president of ABB and the chairman & CEO of its North American operations. He aggressively drove ABB to China and India — its two most profitable operations now.
For the price-sensitive mid-market segment, Harman has put features on the systems like layers, which is another first in the industry, he claims. Customers who do not want to pay can take some layers (features) off. Later, if they wish to upgrade, they can activate those layers. Paliwal has not bagged any order for the system so far. But he has told his team that he wants $1 billion in sale over the next five years. “It’s a $5-billion market. We don’t sell anything there right now,” says he.
Paliwal also plans to enter the after-sale market in India with brands like JBL, Harman/Kardon and Infinity in the next couple of quarters. The products are likely to be made by contract manufacturers in China — a good way to keep costs down. “Annually, almost 1.5 million Indians get sound systems fitted in their cars. This is the market we want to tap,” says he. But do not expect Harman to come out with an ultra low-cost line. “We don’t want to enter the low end of the market. It is a mess out there,” says Paliwal.