Audio visionary works flat out

David Pearson, chief executive of loudspeaker company NXT, tells John Dunn why the world will soon be flat

Oxford law graduate and former head of Sony UK, David Pearson, (left) has just celebrated his first 100 days as chief executive of NXT plc, developer of flat panel loudspeakers. After a career working for companies such as Procter & Gamble and Mars, he joined NXT as it completed its transformation from traditional loudspeaker manufacturer with brand names such as Mission and Wharfedale, to a high-tech licensing company developing and licensing out flat panel loudspeakers and speech recognition technology.

Why did you take the job?

It was a very exciting opportunity. The company has developed a new standard in loudspeaker technology, which has not changed much in 80 years.

We can make a business case for using NXT technology in many markets. For instance, the traditional car loudspeaker is heavy, takes up a lot of space and is a low quality, commodity item. Yet people want good audio – just look at the after-market. Our speakers are flat so we can take a panel in the door or the parcel shelf and create amplified sound. It saves weight, space and cost and acoustically, the sound is as good in the back of the car as in the front.

The same argument applies to TV loudspeakers. We’ve demonstrated a flat speaker for a 32-inch television. Because it produces a more even sound, you don’t need to turn the volume up, so there is no distortion.

Some 350 million mobile phones were sold last year. Our transparent flat panel speaker can turn a mobile phone screen into a speaker, so you can have a bigger screen for better internet access. And you won’t have to hold the phone to your ear.

But do commodity markets such as cars and mobile phones want your technology?

Car manufacturers put emphasis on saving weight. Our technology may be higher cost, but because of the weight saving, the overall cost is lower.

Everyone we’ve talked to is interested in our technology. We have 170 licensees. Some of the big boys have not signed up yet, but their reaction is positive.

What are the challenges facing you in your new job?

There are three. The first is to turn the technology into serious mass market products – that means building business for our licensees.

We also want to establish a successful business in speech recognition technology. Then we want to create and develop consumer brands based on those two technologies that secure us long-term revenue streams.

But how long can you go on making losses? You lost £4.5m last year and are forecast to lose money this year and next.

Our analysts say we can expect profits in three years and so we will continue to burn cash for that time. Our burn rate is £10m a year but with it we’re inventing and patenting technology that we can use to turn into profitable revenues – that’s our assets. So far I’ve seen nothing but `buy’ recommendations by the City.

Why licence? If your technology is that good, why not make it?

Back in 1973 Wharfedale invented open-back headphones and Sony and Phillips wrote to ask for a licence. Wharfedale said no, they were going to dominate the world – tiny little Wharfedale in Leeds! So Sony and Phillips made their own open back headphones. Wharfedale took them to court and ran out of money. It was a great invention but Wharfedale blew it by being greedy.