The Denon and Marantz brands have long been synonymous with quality but the merger of the two earlier this year by investors Ripplewood Holdings has seen the creation of D&M Professional - a new animal that is expected to strongly improve brand positioning in the marketplace. mondo*dr speaks to D&M's European General Manager Simon Curtis to find out more behind the philosophy of the fusion and what we can expect as a result...

There are some who questioned whether Simon Curtis would emerge unscathed after surgically fusing together the eminent brands of Denon and Marantz on behalf of their new investors, Ripplewood Holdings plc. The 18 months of Post Merger Integration (PMI) - which he describes as "the ride of my life" - must have seemed more like a lifetime of PMS É without the facility for a pitstop.

"I have not taken a holiday for as long as I can remember, but fortunately I'm single," he joked, when mondo*dr managed to catch up with him. How Simon and his overlords in New York and Tokyo have dealt with a number of post-acquisition conundrums (not least the complete realignment of the distributor network and giving definition to the fuzzy world of 'prosumerism' in which they excel) explains why the Ripplewood experiment will probably succeed where other incursions into our tiny industry by venture capitalists have famously failed.

For example the newly-created D&M Holdings - which occupies the now defunct Hayden Labs HQ of Chalfont St. Peter - has access to other Ripplewood-owned technologies that will open up hard-disk and webserver delivery channels. They no doubt see in Cambridge-based Rio's MP3 player technology the same advantages as Numark's canny Jack O'Donnell did when he purchased Alesis.

While Marantz had been largely involved in the broadcast and studio domain (with portable recording devices) Denon has become exclusively dedicated to DJ playback. As traditional music delivery channels have been irrevocably overturned - with emulation techniques employed to ensure an analogue style playout of digital media in the DJ world - so Denon have had to meet the cutting edge of playback demands while assimilating with one of their erstwhile largest competitors.

This, of course, is in the Pro domain. What Denon and Marantz shared was a common interest in a domestic market, burgeoning with the gradual incursion of 5.1 and 7.1 surround sound, and a growing access to the worlds of data and composite video inputs, progressive scan rates, codecs, multiroom systems and AMX/Crestron touchpad remote programming devices. This in turn led to the convergence which produced the rather ugly sub-genre of 'prosumerism', where all too often the demarcation between professionally built, mission-critical kit becomes sacrificed for the feature rich (but often inadequate) high street brands. And this is where D&M have made their most radical policy decisions.

Ripplewood Holdings LLC, originally announced the establishment of D&M Holdings, Inc, resulting from the merging of the Marantz and Denon operations, way back in March 2002.

The rationale had been to create a single global market leader from two brands firmly established in the premium home theatre, A/V consumer electronics and professional audio markets, at the same time retaining their individual identities and marketing ethos.

The sequence (and construct) of events was that D&M Holdings duly succeeded Marantz as a publicly traded concern on the Second Section of the Tokyo Stock Exchange. Ripplewood Holdings LLC, Denon's largest shareholder, also became the majority shareholder in D&M Holdings, which has 1,650 employees around the world. Royal Phillips Electronics, which owned 49% of Marantz Japan, now owns 14.7% in D&M Holdings.

All shares of Marantz and Denon were transferred to D&M Holdings, making both entities wholly owned subsidiaries, and in the new hierarchy, Tatsuo Kabumoto, former chairman and CEO of Marantz, became president and CEO of D&M Holdings.

D&M Professional was set up to provide complete audio-visual solutions for the commercial marketplace, and in Europe Simon Curtis assumed the role of General Manager, with Marantz's Mark Perrins as European Sales manager. Both men bring enormous gravitas to the operation and report to Takafumi Asano, Executive Officer, President and CEO of D&M Professional.

In Europe, D&M Holdings will administer subsidiaries in the UK, France and Germany, while overseeing sales activities in the Rest of Europe, The Middle East and Africa.

Explaining the rationale, Simon Curtis, commented, "The setting up of D&M Professional has resulted in two competitive brands sharing a common business model and a single marketing channel."

While contemplating the huge potential for the future he is aware that Denon's rich pedigree needs to be protected. On either side of the millennium Denon have come to dominate the professional playback and DJ markets, since their award-winning twin deck CD player, the DN-2000F, became the industry standard for club DJ's.

Barely a year has gone by recently in which Denon haven't stretched the technological envelope, picking up top industry awards in consecutive years for the DN-2600F (Best DJ CD Player), and DN-D9000. The world's most advanced dual CD player for DJ's was equipped with Alpha Track, allowing playback of two tracks from a single CD at the same time - a world first.

That tradition now looks set to contininue, via the recently released Denon DN-S3000 table top single CD player, which has firmly established pole-position for the cost-conscious MP3 generation of DJ professionals.

Simon Curtis is confident that this heritage will be nurtured under the ownership of a company that manages in the region of $4 billion worth of equitiy capital in New York and Tokyo.

"What's significantly different this time," he ponders, "is that unlike most other mergers within the commercial sound and light industry we are not the cornerstones of the business - we are actually relatively trivial within the Ripplewood estate."

But it is notable that having acquired both brands for their penetration of consumer markets, Ripplewood have been prepared to back the respective profiles in the more specialised pro sectors.

In fact Simon remembers that the first question asked by D&M chairman Merle Gilmore during the PMI process 12 months ago, was whether 'professional' was even viable.

The answer was self-evident since the Pro division can tap into a corporate backbone broken down into five key elements and working groups. "The upside is we can use the back office integration structure and bring D&M together with an absolute net gain," says Simon. "Also they see a particular opportunity in the commercial audio field in Europe É a growth which they don't see in domestic hi-fi.

"It's almost a win-win situation in which we are able to piggyback onto the consumer distribution structures (IT, logistics, administration, sales and marketing)."

However, globalization has never been an easy concept to implement. On the other side of the world the traditional economic mistrust along the American-Japanese axis is slowly being overcome.

In 1988 Sony's purchase of CBS Records was symbolic of the Far East taking control of Western consumer habits for the first time - and yet just six years later Japan's own economy had collapsed, and for the first time foreign organisations were allowed to acquire Japanese interests.

As Simon Curtis says, "With the Ripplewood takeover, a lot of people in the Japanese workforce are having to come to terms with the fact that this is a Japanese company where many of them have been employed for over 30 years, which has now been bought by a US investment company. Suddenly they don't work for the Japanese anymore and they have never known this in their entire life. The Marantz/Denon integration is therefore a culture the Japanese find difficult to understand."

Meanwhile on this side of the globe there has been an instant corporate recognition - from company president Victor Pacor on down - that the United States of America functions in a very different way than the somewhat less than United States of Europe, which is subject to all kinds of regional complexities.

As a result the respective PMI procedures quickly slipped out of sync. "Europe is immensely complicated," notes Simon. "In Asia and North America the complexities are different - as are the economies of scale. North America finished their PMI six months ahead of us because they were only dealing with two companies. But it's entirely logical to consolidate into a single business model."

The biggest European difficulty (outside the UK) was in rewriting the distribution map - moving the brands out of the consumer domain into a pro network of consolidated distributors. "What's been particularly acute to the Denon situation is that most of our distributors were legally contracted to the consumer division," says Simon. "But it was central to our philosophy to harmonise Denon and Marantz distributors, focusing on exclusive and professional distributors instead of consumer hi-fi in Europe, where our distribution has traditionally been poor." This should enable Europe to chase the momentum created in the UK.

"It's been a very complicated and time-consuming process; you wouldn't try and change your entire distribution network in the timescale we've done it in - let alone everything else as well. We also have to accept that the new distributors are never going to come out of the blocks running."

While Ripplewood are comfortable to set a medium-to long-term strategy with their production forecasts, the distributors recognise a new dynamic. "At the first distributor seminar the mood was tremendously positive and we came to them with a lot of exciting solutions," says Simon.

In pinpointing areas of under-performance, D&M Professional are already implementing changes in process engineering, leading to a more efficient speed to market, with their new dynamic distribution pool responding to the promise of bringing products to market from conception in less than four months.

Given the improved resources available, Simon Curtis is confident that D&M Professional will meet Ripplewood Holdings' expectations of an improvement in brand positioning within the marketplace. "They are right to expect this," he believes. "Look at the net gain. Where Marantz now has the strong, credible position in broadcast pro audio that Denon used to have, Denon itself is now focusing heavily on DJ.

"I'm hard pushed to to think of another company which has brand leadership in both broadcast and DJ - it's an extraordinary situation."

As indeed has been Simon Curtis's whole adventure since joining Hayden Labs 12 years ago. "I was area sales manager in the days when we had Sennheiser, Stanton, Denon, Dual and Sherwood - as well as Nagra." After five years or he so he felt he had achieved everything possible in hi-fi. Hayden had a small Commercial division run by Ian Downs. "So when I went to my MD Eric Barrett and asked if there was anything else I could do he invited me to get involved in Pro on a part time basis.

"A lot of our Pro accounts hadn't seen anyone from the company. We had an enormous amount of contacts to go after and (Eric) agreed to pay me 1% of all pro sales. In the first month I made £18 - but 12 months later I was making so much money he had to stop!"

It was obvious that the whole Pro market (particularly in DJ products) was going through a revolution - which coincided with Denon introducing the DN2000 twin CD player. "Because it was 'DJ' it terrified them," remembers Simon. "But it was the turning point of Pro business in the UK and in seven years Denon Pro went from a turnover of £200,000 to £5m."

The fire remains in his belly. Today, his flamboyant, impulsive style is in stark contrast to the more considered approach of his colleague, Mark Perrins. "We are quite different in a lot of ways," he agrees. "I have great respect for Mark; he's a nice guy and his commitment and intention are beyond question. A lot of people wouldn't have been able to deal with the consolidation and we are not even half way there yet."

In fact he is convinced there are still a lot of pages in the book to be written. "We are already twice the company we were - but we haven't started yet."

Denon will produce four new products and Marantz three pro audio broadcast devices before the end of the year, including two new prototypes of Denon's solid state MPEG players in a half-unit box. One will be in hard drive format, the other with a PCMCIA plug-in É and both will be networkable to offer infinite options.

But the biggest problem facing Denon (and companies like them) is the lack of European market statistics, making it almost impossible to make informed decisions in the absence of core analysis. "There are so many OEM brands with market share and yet no-one has any idea of true market value," believes Simon. "With the technological advances available, in which the PC will have a major part to play, our biggest challenge will be to distance ourselves from the copy brands in the market which rely almost entirely on one manufacturing source, and one sales offer."

The Ripplewood manufacturing resource is already proving its worth as companies like Denon and Marantz align themselves ever more closely to the computer industry. "For instance, DSP writing and cheap technology have already enabled us produce the DN-X1500, which is one huge DSP engine," Says Simon.

Ultimately, he believes, the business will evolve organically into a dedicated sales and marketing operation. "Acquisition is never far from Ripplewood's line of sight - and with the obvious economy-of-scale advantages there are already several other companies they are talking to," he reveals.