GATINEAU, Que. — CompTIA Canada celebrated its 25th Breakaway at this year’s annual System Builder conference.
The meeting was the setting for one of the year’s most notable deals.
NEC Corp. said it is buying back a company it shared with Mitsubishi, ending a joint venture between the display
giants that lasted five years.
The company, called NEC-Mitsubishi Electric Visual Systems, was supposed to marry Mitsubishi’s strengths in CRT development, manufacturing and sales and NEC’s strengths in PC monitors.
However, the rapid migration of buyers from CRT to LCD technology forced the end of the relationship.
“Four years ago, in 2000, the joint venture was created that benefited both companies,” Clark Brown, vice
president North American sales for NEC-Mitsubishi, said in an interview during the conference.
“NEC brought world-leading LCD technology; Mitsubishi brought world-leading CRT aperture grill technology.
“What we have seen, though, is CRT volumes decline more rapidly than expected. So it was time for both companies to go their separate directions. And it was a success and it was beneficial to both companies.”
According to Brown, NEC will see increased growth opportunities because it will have more access to R&D from NEC. He said NEC products will be unchanged and that existing products in the field will be supported.
Starting in April, Mitsubishi Electric will manage its Mitsubishi brand monitors, which had been sold by NM Visual.
Bruno Pupo, area director for NEC-Mitsubishi Canada, said no staffing changes here are planned. Customers will be able to contact their sales reps as usual.
The end of the joint venture will also mean greater focus on the NEC brand in North America, Pupo said.
One NEC-Mitsubishi reseller thinks the deal will benefit NEC.
“NEC-Mitsubishi has been losing market share for a long time,” said Frankie Wong, president of Elco Systems Inc. of Markham, Ont.
“I think this move will be very positive. NEC is a channel-friendly organization and they will invest more money in the channel and become more competitive in the market place.”
NEC-Mitsubishi made quality products, he said, but priced too high compared displays from Acer and BenQ.
“We need someone in this monitor market to balance out the business between the LGs and Samsungs to the Acers and BenQs,” he said.
In response to Wong’s comments, Pupo stressed that NEC sees the deal as a chance to capture more market share.
“This will expand our exposure,” he said.
“We have some great technology products that belong to the sister company. In the market place it gives us a great opportunity to bring a total solution to customers. It widens our scope from an R&D perspective. There are products that are not yet on the market that will be accessed by the NEC subsidiary.”
NEC Corporation, a $47-billion provider of computer and communications solutions, will rename and re-position NEC-Mitsubishi as an NEC display solutions company.
The deal takes affect March 31. Financial terms were not disclosed.
System builders also learned that Altec Lansing has decided to separate its PC speaker product lines for the retail and white box markets.
This is the first undertaking of its kind in the company’s 63-year history. On March 1st, Channel Connect program system builders no longer compete with retailers on price. Typically, customers squeeze retail pricing against system builders to force a discount on Altec Lansing speaker systems sold with white boxes.
The product differentiation is a way to better support the needs of system builders, who usually operate at lower margins than their retail counterparts, Larry Johnson, Altec Lansing’s Canadian sales director, said in an interview.
“We are partnering with these people to make them more money,” said Bob Santella, Altec’s national sales manager for system builder and enterprise sales.
“It’s tough to make money turning screws making computers. How as a vendor can I help them? That’s the kind of mentality we’re taking with this channel. We’ve got to make them more profitable. If they’re there tomorrow, we’re still here,” he said.
The company’s new line for system builders includes a spectrum of products, including powered audio speakers, inMotion portable audio speakers, laptop audio speakers and what are called interactive audio products — namely speakers.
The products are designed for users of all kind, with certain products targeted for the education, government and corporate sectors.
Santella couldn’t project how the new program will affect the margins of system builders.
“It’s difficult to say because each different sector they’re going into is different. You’ve got government, education, the end user and distribution. The numbers always change.
“Our job is that we want the attachment, we want value-added to whatever you’re putting out into the market.”
“A speaker manufacturer has never done this before,” commented Teddy Chan, owner of Hamilton, Ont.-based Alliance Computers Inc.
“I think this is the biggest thing that’s ever been done to support the channel.”
Chan said that manufacturers of other products, such as printers,
have offered similar initiatives for system builders.
He added that Alliance Computers benefited when manufacturers differentiated their products for the white box and big box channels.
Altec Lansing also announced at the conference a new channel support initiative giving white box manufacturers a more competitive price point system.
It is designed to help them purchase a wider array of products at a better price.
Johnson added this initiative will increase margins.
“As altruistic as that may sound, Altec made it clear that the Channel Connect program is being put into place to better its already strong market share,” he said.
“The systems builders aren’t making huge margins and it’s been very tough for them to grow through the years,” Johnson continued.
“It’s not that we’re going to give them excessive margins. It’s just for the first time Altec is playing at a margin level that they need to support. By getting behind them, they’re getting behind us.”
NetStor expanding in Q3
NetStor Technology Group Inc. is planning to open offices in Ottawa and Vancouver in the third quarter.
Based in Markham, Ont., NetStor provides sales, marketing and logistics support to the manufacturting industry.
“NetStor offers manufacturers the ability to move their products into a solution,” said president Steven Cheung. “We encompass storage and networking solutions around components.”
NetStor was founded in 2003. The lion’s share of its revenue comes mostly from the U.S.
The company hopes to triple its revenue to US$6 million in 2005, Cheung said.
A familiar face resurfaced at Breakaway this year. Jim Mandala, long-time GM of Epson Canada and then founder of Handspring Canada, has joined Samsung as national sales director.
Mandala did not waste any time settling in to the position, unveiling a Diamond Builder Program. With it Samsung wants to sign the top 20 system builders in the country.
It is offering to pay for system builder advertising that competes against Dell and includes Samsung products.
The program will also offer top level pricing and extra margin to help the system builders compete against price aggressive retailers.
According to Mandala, this program will be a high six figure investment for the subsidiary.