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Dueling racquets.

Is titanium a miracle metal or a marketing mirage? For these two companies - and the fans they're trying to woo - it's a bit of both.

The top two American racquet makers are locked in a fierce bragging war over who has the bigger stick. Not in size, mind you, because in this contest, lighter is actually better. Bigger in strength, innovation, and, most important, staying power. It is a technology and marketing skirmish that has pitted long-languishing Head against industry leader Wilson and has brought buzz to a business decried for a decade as being more boring than those Wimbledon whites.

The volley was first put in play four years ago when European turnaround tycoon Johan Eliasch purchased Head Tyrolia Mares Group, maker of skiing and scuba diving gear as well as Head tennis equipment. Once an innovation leader - Head developed the process for manufacturing the first composite racquet, which Arthur Ashe used to win major tournaments in the mid-1970s - the company had sidelined much of its R&D over the years and, as a result, saw a drop in both worldwide operating income and U.S. market share (it currently trails leader Wilson here by some 20 percentage points). But Eliasch, who prior to becoming CEO of HTM was chairman of London's Equity Partners investment group, knew that Head wasn't alone in the development doldrums. "The tennis industry has been starved for innovations in the last 30 years," Eliasch says. "We thought it was high time to come up with something exciting, something that really makes the player better."

Indeed, since tennis' U.S. heyday in the 1970s, only a few major technological breakthroughs have impacted both the game and a company's market share, including replacing those heavy wooden racquets with a light but powerful graphite.

At the same time, tennis has ceased to be one of the nation's top pastimes, slipping, like a tournament player off his stride, from No. 9 to its current 21. "The tennis category has seen a considerable dip in the last few years, largely because young people are finding other things to do with their time," observes Cory Bronson, managing editor of the trade publication Sporting Goods Business.

With fewer new players buying racquets and the more experienced ones using graphite frames that, unlike wood, last for years without cracking, sales had dropped dramatically. The industry needed innovation, something that would make players eager to purchase that hot new thing.

"Look at the computer industry," says Howard Brody, professor of physics with an expertise in tennis physics at the University of Pennsylvania and a consultant to sports companies. "Even if your PC fully meets your needs, you're left with the nagging sense that it is hopelessly out of date and you had better go out and get the latest product." For Eliasch, computers - and other branded products - offered invaluable lessons in how to succeed. "We know that you have to sell something that is value-added to the consumer if you want them to pay more," he says.

Eliasch, who has a scratch handicap in golf and has participated in qualifying play for the British Open golf tournament for several years, saw the titanium rage in that industry and knew he had found his technology. In golf clubs, however, titanium sits side-by-side with the graphite; in mountain bikes, the titanium is isolated in a tube, because titanium doesn't easily bond with other materials. But because tennis racquets must be light, Head engineers wanted to weave the two materials together. After trial and error lasting a year and a half, the engineers developed a proprietary system whereby titanium strands are woven in with the graphite to create a unified composite. The company is mum on how it accomplished its technological feat, which Kevin Kempin, vice president of product production at Head USA, notes is only performed in one Head factory in Austria (photo, above).

Familiarity with technology is something Head has had plenty of experience with in recent years. In the past half-decade it almost totally automated its highly manual factory. Robots have replaced all those people sitting around sanding the racquets after they have been molded (one robot sands inside the hoop; another sands outside), and painting and decorating them (decals are still put on by hand, as is the crucial "layup" process of putting all the materials into the racquet). "We have some pretty amazing robotic capabilities now, with one robot passing the racquet on to the next robot, and so on," Kempin marvels.

Although the final titanium racquet produced through this process has only 1 percent titanium in it, Head claims that the metal's strength provides players with greater control and maneuverability at a lighter weight - a previously unheard of 8 ozs. unstrung, some 33 percent less than competitors' products. "Because titanium takes stress in all directions, you can take out a lot of the layers," Eliasch explains.

A day on the tennis court convinced Eliasch he had a winner in his hand. But he and his marketing staffers worked to ensure everyone in the industry knew so, too. As Kempin explains, "The U.S. market is very much a show-and-tell market when it comes to technology." Kempin says Head was cognizant of Nike's Air line, which had not succeeded until someone decided to put a window into the shoe so people could visualize the previously hidden attributes. So Head put its own windows into its racquet, allowing the titanium/graphite weave to be seen by the player. It also painted part of the racquet in shiny silver to mimic the metal inside. Of course, the feather weight speaks for itself right in the store. "Consumers [TABULAR DATA OMITTED] have a 'wow' effect when they pick it up. They can't believe how light it is," Kempin says.

The resulting line of titanium racquets had the industry's full attention the moment it was introduced in October 1997. One of the line quickly became the world's No. 1 selling racquet last year, and the heated demand helped the company surge in unit sales past Benetton Sportsystem's Prince Sports Group to reach the No. 2 position. In the U.S., its market share in the $100 million pro-specialty and sporting goods stores (which doesn't include mass market chains like Kmart) nearly doubled to 21 percent. And because the racquets sell at a 20 percent premium over previous lines - they retail from $149 to $269 - margins have soared. "Head helped bring new life into the racquet industry," enthuses Sporting Goods Business' Bronson.

Not surprisingly, executives at market leader Wilson were less than happy to watch Head's action from the sidelines. Mindful that its paramount position - in both sales and status - was being chipped away, Wilson swiftly brought out its own line of titanium racquets, even while totally disparaging the product. "You have to be in the titanium game, because it's the wave," president Jim Baugh says, although he claims the metal is "a lot of marketing without much substance." A similar position echoes from Wilson's general manager of racquet sports, John Embree. "Since titanium makes up less than 1 percent of the racquet, it doesn't offer any performance enhancing features," he says. "It's marketing fufu, like a negligee - there's not much there."

Nonetheless, Head's headway sparked Baugh to hunt for innovations of his own. "The leading brands are always the ones who lead through technology. I want to be the leader in both market share and technology."

And if anyone could do it, industry watchers believed, Baugh certainly could. He had been named president of the Wilson Sporting Goods Co. (a unit of Amer Group of Helsinki, Finland), in 1996 from his position of general manager of the racquet sports division. During his tenure overseeing racquet sports, he more than tripled Wilson's U.S. market share, from 15 to nearly 50 percent. Prior to Wilson he had worked at Prince, where he is credited with growing annual worldwide sales from $4 million to $65 million in six years.

Baugh called a meeting with Wilson's materials supplier, the Japanese company Toray Industries, and asked what it could supply that was better than graphite - and better than titanium. "I knew they were supplying lighter, stiffer, stronger materials to the space program so I asked, 'Why can't we use them for tennis?'" Baugh recalls.

Wilson designers worked on proprietary CAD/CAM software to come up with various possible designs for a racquet using this high-tech material. Since each racquet contains between seven and 10 layers, numerous possibilities exist for angling the layers in different formations. Head sizes, length of racquet, weight, balance and string pattern are some other variables the computer took into consideration. The design process alone took a full year, two to three times longer than normal, with more than 50 iterations seeming so promising test molds were cut.

But for Wilson, the resulting racquet was worth the wait. Introduced this past November, the Hyper Carbon weighs just over 8 ozs., about the same as Head's titanium line. According to Baugh, it improves player performance for most non-pros, who benefit from its power and low weight.

Wilson ultimately got a three-year-exclusive on Toray's "ultra-high-modulus" carbon. The company claims the material is four times stronger and four times stiffer than titanium in its raw state - and 65 percent lighter. "We're using 20 percent of Hyper Carbon in the racquet, rather than the less than 1 percent of titanium, so there's a real difference in how the racquet will perform," Wilson's general manager Embree boasts. It's a material that NASA has used for its space station and airplane makers have put into its wings, but Baugh knew it needed a catchy consumerish name to make its mark in tennis. "NASA didn't give it a name because they're not a marketing company. We are, so we branded it 'Hyper Carbon.'"

Hyper Carbon's entrance into the market last fall put the battle of the sticks into full swing. A public relations and advertising blitz led to some coups for Wilson, such as when Tennis magazine christened the Wilson product "the stiffest and most powerful racquet in the game," while the New York Times claimed that it "promises to blast past the titanium models and become the power racquet for weekend hackers."

At $350, it is also the most expensive, although players don't seem to be minding. They are snapping up the racquet so quickly that it became the No. 1 seller in pro and specialty shops for the fourth quarter last year, Wilson executives claim, even though it didn't ship until well into the quarter. Embree says the racquet quickly garnered a 13 percent market share at the pro shops, leading to Wilson's decision to introduce three other Hyper Carbon racquets this spring.

But while outsiders are thrilled that racquet makers are finally using innovative materials and high-tech manufacturing to come out with exciting products again, not everyone is convinced that either of these racquet lines will ultimately save the market - or the game. "Both of these racquets probably will make you play a little better," physics professor Brody believes. "But $350 better? If you regularly split sets with someone, maybe it will help you win one more. But it won't take a marginal player and turn him into a great one."

Nor is it likely to solve tennis's larger problem. "This is not the savior of tennis," Brody believes. Sporting Goods Business' Bronson agrees. "Much of tennis' problem lies at the grass roots, where kids aren't taking up the sport," he says. But, he notes, the high cost of the materials means that the technology in these new racquets will never filter down to the beginner crowd.

All of which means that, for now, Head and Wilson are driving sales for each by giving the club crowd a reason to trade up their racquets. For the long term, however, innovations that make playing easier and more enjoyable will also have to be more affordable to lure in those coveted new players and move tennis up in America's pastime ranks again. It is likely that whichever company is able to ace that situation will be the true winner in the tennis wars.

Having a Ball

The bounce and weight of tennis balls is tightly regulated by the United States Tennis Association, but that hasn't stopped manufacturers from searching for innovations - especially as interest in recreational tennis, and therefore the purchase of sanctioned tennis balls, remains dull and lifeless.

The overall process of making the balls at Penn Racquet Sports hasn't changed much in decades, says Dick Olson, director of technology and quality. A quarter-million balls a day roll through the company's assembly line, where rub bet is mixed and shaped to form two half cores a controlled amount of air is pumped into the cores before they are sealed together, felt is bonded to the outside, and steam is applied to fluff the felt. But increasing amounts of the process are controlled by computer, to remove both manual labor and its attendant cost, and to better ensure that each ball precisely meets the USTA standards for bounce, rebound, and the like. Most recently computerized has been the initial step of weighing the ingredients that make up the core compound, a process that until this year was done by a man with a scale.

An average of some 90 balls a day are tested to ensure they meet the specifications; balls are dropped from 100 inches, for example, and timed between the first bounce and the second. based on the time, a computer calibrates whether the first bounce was between the requisite 53 to 58 inches.

Less technologically complex but likely to do even more for Penn's market share (the company was recently acquired by Head) is its other new introduction: the dog ball. Debuting fall of 1998, the dye-free sphere means an end to yellow ink running all aver the carpet near the slobbering canine. A package of two balls retails for some $4 to $5, nearly twice the price of their canary-colored cousins, yet the market so far has been brisk - not surprising considering that pooch owners outnumber tennis players some 10 to one.
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Title Annotation:tennis racquet makers; includes related article on tennis balls
Author:Davids, Meryl
Publication:Chief Executive (U.S.)
Date:Aug 15, 1999
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