The Case for Fanaticism

Products like the iPod, which make available groundbreaking design and technology at mass-market prices, signal a potential threat to Bang & Olufsen, says analyst Peter Nyborg Moltke at Danish investment bank Gudme Raaschou. "The question becomes, Will [B&O] continuously be able to differentiate in this environment?" Moltke says. "We just don't know." He notes that while B&O's earnings are up by 13%, its top line is still flat.

But neither Sorensen nor Lewis seems particularly concerned. If executed right, they believe, their adherence to design purity will insulate the company for decades to come. In any case, they understand that fanaticism is all B&O really has.