No surprise to this divorce

GATINEAU, Que. – Resellers should not be surprised that NEC ended what was an historic joint venture for displays with Mitsubishi yesterday. What looked to be a shock announcement that sent the channel players here at the CompTIA breakaway conference scrambling to understand of the deal really was

just a no-nonsense decision that had to be made eventually.

NEC has a tremendous brand: Its Multi Sync line is celebrating 20 years in the market. That is no small feat in the IT industry, where change is the only constant. Until recently NEC technology was always considered to be leading edge, if not bleeding edge.

But competitors from South Korea and Taiwan have been able to match it in the market place. These competitors were also willing to play the price game, while NEC took a pass. NEC has always been a 100 per cent channel-friendly company that wanted resellers to earn some semblance of margins. Very noble for sure, but in the end the partnership was not working. NEC-Mitsubishi lost market share in the past two years.

The joint venture between NEC and Mitsubishi, which started in 2000, was made because NEC wanted to boost its CRT lineup in North America. On many levels this partnership was very beneficial for both companies.

However, with CRT monitors rapidly losing market penetration NEC no longer needed CRT solutions. Quite frankly, the vast majority of customers are replacing CRT monitors with LCD flat panel monitors.

However, Bruno Pupo, area director for NEC in Canada, said the subsidiary will continue to provide CRTs to those who still want them.

The other aspect to this deal is that for NEC to really compete it needs to arm itself with leading edge or bleeding edge technology, something the company was well known for in the past. Pupo believes this will be possible now that Mitsubishi is no longer in the cards.

In a sense, NEC will be able to free-wheel with technology. We’ll see if the strategy works.

The other point is NEC wants to establish itself as a leader in LCD TVs. With the cross-over in IT to consumer electronics, NEC will be better positioned to do this. The confusion with the two brands will no longer be there.

Greg Myers, vice-president of marketing for Tech Data Canada, who at one time was a senior executive at NEC Canada, said of the deal, “”What goes around; comes around.””

He also believes that this deal speaks to market conditions, however he was surprised that there wasn’t a co-announcement combining NEC Visual Solutions with NEC Solutions, the other side of NEC that sells projectors and plasma displays. By combining the two, Myers believes it would give NEC a better competitive situation against others.

I have to agree. It would make sense for both NEC divisions to work together, just as the end of the Mitsubishi partnership made sense. It just was time to move on.

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Jim Love, Chief Content Officer, IT World Canada

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