NEC: A reporter’s notebook

I arrived in Chicago at 7:05 Central Time, almost two hours before my meeting with NEC Display Solutions of America. Chicago is called the Windy City, but with a temperature of 95 degrees Fahrenheit it was more like the hot city on this day. A quick way to find out what 95 is in Celsius is by subtracting

the temperature by 30 and then dividing that by two. In case you were wondering it is 32.5 degrees Celsius.

Today, NEC Display Solutions is in an incredibly overcrowded market. CDN earlier this year counted 42 different vendors in the LCD monitor market. I would find out later on that NEC tabbed it at 52 vendors. But this company, coming out of the NEC-Mitsubishi agreement, has formulated a strategy of differentiation and is looking to educate the channel that LCD display technology is not a commodity item.

8:58 AM: I arrive at NEC, based in the Chicago suburb of Itasca, Ill., only to find out that the company operates two buildings. Of course, I’m in the wrong one. I’m in the Visual Systems division, where NEC makes projectors and large plasma displays. Amanda Dvorchak, a PR specialist, kindly guides me to NEC Display Solutions, which is just a block away. More on NEC Visual Systems later on.

9:10 AM: Finally arrive at NEC Display Solutions and Tim Dreyer, PR manager/marketing for NEC, greets me. He has set up my one-on-one interview with T.J. Trojan, the president and COO of NEC. Trojan is one of the good guys in this industry. I met him in the late nineties at Breakaway conferences and he impressed me with his knowledge of the Canadian channel. Two years ago NEC-Mitsubishi made the 20-year NEC veteran the first American-born president of the company.

9:15 AM: Tim and T.J. take me on a tour of NEC’s Business Solution Center. The two show me how LCD displays can be used in a restaurant, healthcare facility, financial services firm an airport. NEC brokered deals with more than 30 other companies, ranging from graphic cards developers such as Matrox, to enclosure manufacturers to develop specific vertical solutions for the channel. This is all part of Trojan’s plan to differentiate NEC from competitors.

9:30 AM: I start the interview with Trojan. The first topic is obviously about the NEC-Mitsubishi split. Quite simply, Trojan said Mitsubishi shut down its CRT production facility and so there was no need to continue the partnership. We continue the interview by talking about the Ingram Micro situation. Trojan and Dave Walsh, the former vice-president of marketing for Ingram Micro Canada worked together. Walsh ran the NEC Technologies’ Canadian subsidiary. Trojan basically was scratching his head about Ingram’s recent dismissal of Walsh and Murray Wright.

The conversation slowly turns to the incredible amount of vendors he competes with. NEC figures there are 52 different monitor vendors in the market. He believes that the majority of them are trying to make the LCD monitor a commodity product. Trojan flatly refuses to concede that LCD monitors are a commodity item. “We have high end, high value and high margin products. It (NEC product line) shows us as a technology company, while the others do not,” Trojan said.

10:00 AM: Trojan has to bow out early because he has to kick off NEC’s monthly worldwide sales conference call, but promises to be back to answer all my remaining questions. In comes Hans Baumann, senior product manager, product marketing for NEC.

Baumann’s mandate is the large LCD display market. He talked about how NEC displaced plasma screens at the new Toronto Airport Terminal 1 by addressing image retention in LCD. The Toronto airport could see that flight information screens were starting to burn onto panels permanently. Baumann said that with the new NEC technology its panels can be operated around the clock for more than 50,000 hours as long thier features are used properly. For example, they can’t be left in sunlight or in 120-degree weather.

The margins are much better than desktop LCDs. According to Baumann, resellers can earn between 20 to 35 per cent on the 40-inch LCD monitor. The company has released its Digital Signage Technology Suite consisting of 32-inch, 40-inch and 46-inch LCD displays.

10:20 AM: Trojan returns and we start talking about how the Canadian channel is more powerful than the U.S. He believes that Canadian VARs are more loyal and are less likely to support vendors who sell direct.

Trojan also details to me that NEC has given the Canadian operation complete autonomy, while scraping the old North American region strategy it once had. Trojan adds that he realizes Canada is a separate market and believes the Canadian team headed by Bruno Pupo will do very well on its own.

11:00 AM: I finish my interview with Trojan and Jeff Blankensop, regional manager solution selling group comes in to talk about the Display Solution Partner Program and his recruitment strategy for VARs.

He, like many other executives, believes there is a convergence happening between professional audiovisual resellers and IT resellers.

Blankensop believes educating both channels will be the key. “They should not exclude one another,” he said. IT VARs have the knowledge of the network and software, while the AV VARs know displays, cabling and wall mounting. “We see both working together.”

Margins in this area are between 12 and 15 per cent on the whole solution, not including services, he added.

The company is looking to increase its base of resellers in areas such as airports, retail, dynamic digital signage, quick service restaurants, call centres, medical and large corporations.

11:20 AM: I give my regards to Dreyer and Blankensop and leave to make the short drive over to NEC Solutions (America) Inc., the visual systems division of NEC.

11:30 AM: I arrive at NEC Visual Systems division and meet up again with Dvorchak. She introduces me to Bob Guentner, product manager, portable projectors for the division.

Guentner admits that the two NEC divisions rarely work together and in some instances compete with each other.However, he stresses that both NEC entities would cater to whatever the customer wants in the end.

The visual systems division covers education, government, large business, home theatre and retail, but lately the hottest segment is small to mid size businesses.

It has released the VT 245 specifically for SMB. At US$1,495 it is really portable weighing only 2.2 pounds. The company has also released the LT180 for independent business owners, Guentner said. “These people may run a home office and use the projector for Friday night movies.”

The margins are pretty good at 10 to 30 per cent and could be more if the reseller includes specialty lenses.

On the plasma display front, the division is trying to dispel the myth about plasma over LCD displays. For example, plasma displays are not more expensive than LCD monitors.

According to market price as of June 2004, provided by Guentner and Dvorchak, 42-inch XGA plasma is US$95 per diagonal inch compared to US$120 per diagonal inch on a 40-inch LCD monitor.

12:00 PM: Guentner and Dvorchak take me on a lab tour of and I get to see Austin Powers International Man of Mystery on a 60-plus inch screen from a projector mounted on the ceiling. It looks impressive, but I wonder why projector manufacturers in general can’t choose another movie besides the Austin Powers trilogy. I know it’s about showing the colours and what the projector can do, but mix it up already.

12:20 PM: The tour ends. I thank Guentner and Dvorchak, when Guentner ask me if I can pass along his regards to Dave Walsh, a former colleague of his. News certainly travels fast. It must be the wind?

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