A Classic Gets Remixed
For an independent manufacturer of stereo components, the standard black metal box wasn't good enough anymore.
By Maggie Overfelt

(FORTUNE Small Business) – Walk into any stereo store and you'll see row after row of black rectangular slabs, all with glowing blue lights. That's how stereo components have looked for decades, and that's what Richard Schram, founder of Parasound, an audio equipment maker in San Francisco, wanted to get away from. For the past few years Parasound has slowly begun selling a line of components designed to be friendlier and more accessible. This winter, the most recent example, Parasound's Halo D3 universal disc player, hit the market.

Since its founding 25 years ago, Parasound has kept a low profile but has earned a reputation among audiophiles for well-designed equipment at moderate prices. Components sell for $150 to $6,000 and are available through independent dealers. (Michael Tilson Thomas, music director of the San Francisco Symphony, uses Halo products professionally and at home.) About ten years ago, facing increasing competition from large mass-market companies such as Sony and high-end specialists such as Bose, Schram started to think about revamping his line. "The user experience has shifted in the audio industry," says Schram, 59. "It's no longer perceived as Dad's hobby that no one touches. We wanted to differentiate ourselves from the larger Japanese companies, which are very feature-oriented. We wanted our product to be less intimidating."

Specifically Schram wanted components with fewer knobs, rounded edges, and light-colored chassis. (The color choice was more than simple aesthetics: With consumers increasingly researching stereo equipment online, he wanted his products to show clearly on web pages.) To guide him, Schram hired Walter Raczynski, founder of Control Alt Design, a Chicago industrial design firm.

Raczynski, now 56, arrived with strong opinions. "The slab-like aluminum frame was the single most homely aspect of the design," he says. Raczynski flew to San Francisco for the initial discussions, and six weeks later Control Alt presented sketches for a new stereo frame that became the foundation for the Halo line. The first redesigned products, two amplifiers and an AM/FM tuner, were shipped to dealers by early 2002. The buzz from its design drew coverage from magazines such as Men's Health and Playboy, leading to a spike in the number of dealers carrying Parasound components. Twelve months after the redesign, sales were up 40%. Today Parasound posts annual revenue near $20 million.

Below, Schram and Raczynski comment on Parasound's original surround-sound controller (left) and the redesigned version, which came out in 2004.

For links to Parasound and other firms in this story, visit fsb.com.

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Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.