Steinway Musical Instruments, Inc. (NYSE: LVB) manufactures pianos under its Steinway & Sons, Boston, and Essex brands, and band instruments through the Conn-Selmer division, which includes 18 brands. Founded in 1853, Steinway Musical Instruments currently has over 2,200 employees and 14 factories. Steinway is the world's premier piano maker, with its piano division accounting for most of the company's EBITDA. The company's ticker symbol, LVB, was inspired by the initials of Ludwig van Beethoven.
The "All-Steinway" designation is becoming a requirement for reputable conservatories and music colleges worldwide. 2009 revenues were derived geographically as such: 51% U.S., 26% Europe, 7% Japan, 6% China, and 10% other. China is a particularly appealing market for Steinway because Chinese culture values music and views Steinway pianos as status symbols. Steinway opened a Shanghai showroom in 2003 and Chinese piano sales tripled from 2006 to 2009. 
Steinway Musical Instruments owns and operates Steinway Hall, a 17-story office building located on West 57th street in Midtown Manhattan, two blocks from Central Park and three blocks from Trump Tower. This 217,000 sq. ft. property is listed on the company’s balance sheet with a $23 million book value. The company's factory in Queens, New York is carried at a book value of $3 million and includes 450,000 sq. ft. of building space on 12 acres with views of Manhattan. 
Steinway Musical Instruments has just one loan covenant, which requires it to maintain a credit facility in excess of $20 million. Management used market turmoil in Q1 2009 to repurchase $10.9 million in senior notes at prices ranging from 65.5% to 68.0% plus interest. On November 5, 2009, management made a private offering of up to 3,400,000 shares to Samick Musical Instruments at a price of $16.00 per share. Samick immediately purchased 1,700,000, resulting in a cash payment of $27.2 million, which Steinway Musical Instruments’ executives planned to use for debt repayment and general expenses. Samick also had the option to purchase the remaining shares at $16.00 by March 31, 2010.
Steinway Musical Instruments’ CEO and Chairman are former investment bankers who bought the company in 1995, and took it public a year later. They own all Class A shares and have 80% of shareholder voting power. A significant portion of each man's net worth is directly tied to Steinway and their interests are aligned with those of other shareholders.
Steinway's greatest asset is its brand name, which is synonymous with dignified performance and luxury. Steinway pianos are the profession's gold standard and status symbols in high society. 98% of active concert pianists exclusively perform on Steinways. Famous Steinway Artists include Duke Ellington, Irving Berlin, George Gershwin, Billy Joel, and Cole Porter. However, the company does not pay for endorsements. Instead, it uses the Steinway Artist program to partner with top musicians and ensure they always have access to Steinway pianos. In contrast to Steinway, other piano companies pay performers to use their instruments.
Steinway pianos are also status symbols used in interior decorating. Few people buy Steinways purely for decorating purposes, but many owners keep non-functioning pianos because of the status they confer. Due to their image and elegance, most well-maintained Steinways actually increase in price as they age. The company encourages customers to view their pianos as investments, and cites studies that found Steinways are better investments than other luxury goods because they typically double in value over 10 years.
Steinway pianos are so valuable because the company has a superior production process that lasts a year, requires 12,000 parts, and uses 125 patented processes and components. Steinways are still made by master craftsmen using primarily hand tools. In contrast, most of Steinway's rivals produce pianos on mechanized assembly lines. They sacrifice quality to meet cost targets and produce inferior products that have shorter longevities and sound worse than Steinways.
A cult of craftsmanship has developed around Steinways, which are built for performance rather than a price point. The company is truly committed to making the best pianos in the world, and the reputation and product that result give Steinway significant pricing power.
Forgery and counterfeiting are not concerns for the company because the sound of a genuine Steinway is unique. Asian manufacturers tried to reverse engineer Steinways but failed because they lack the training and knowledge to make handcrafted components. To date, all new piano manufacturers have opted for automated processes rather than try to replicate Steinway's system.
Steinway effectively has a monopoly on the top-tier piano market because it is the only piano used by noted performers and its reputation for quality and elegance is unrivalled. The company's competitive advantage is rooted in its superior craftsmanship, which creates the best sounding and most durable pianos in the world. The competitive advantage has become more pronounced as rivals mechanize their production processes, resulting in pianos that sound artificial and lack durability. Steinway's culture obsesses about quality, and the company's Boston and Essex brands were introduced in the 1990s to offer mid-tier pianos without diluting the Steinway brand. The company does not license its trademarks.