Harman Tries to Beat Back Beats

It was 20 years ago today (plus about 25 years) that the Beatles recorded one of the most acclaimed albums in music history, Sgt. Pepper’s Lonely Hearts Club Band, and they did it on Harman recording gear. As a reminder of that heritage, Harman International Industries Chief Executive Officer Dinesh Paliwal keeps the Studer tape deck used on Sgt. Pepper’s in his office. Despite having manufactured much of the studio equipment and touring gear used from Abbey Road to Kanye West, Harman is in the midst of an identity crisis. Today’s buyers of consumer electronics gear are increasingly drawn to products from Apple or celebrity-endorsed brands such as Beats Electronics, which in three years has won half the U.S. market for high-end ($100-plus) headphones.

Although Paliwal denies that he’s responding to Beats’ rapid advance, he’s boosting Harman’s marketing budget 50 percent to an estimated $50 million this year to challenge Beats at its own star-driven game. He’s recruited Paul McCartney to pitch JBL, a Harman brand of studio and concert gear he’s used since his Fab Four days. The ad, which aired during the Grammy Awards telecast, is the first time the former Beatle has endorsed a product.