The shelves of IT retailers have perhaps never been filled with a more diverse range of products these days, but many of them aren’t traditional wares.
Media centres, DVD players, MP3 players, home theatre projectors, large flat panel TVs and digital cameras are elbowing PCs video cards and
notebooks for space.
As a group these are known as consumer electronics (CE) or consumer digital products, but many have two things in common: the personal computer and the Internet. Through the PC, manufacturers believe, images and music will be manipulated and transmitted by consumers.
Encouraged because such devices carry higher margins than PCs, IT distributors are adjusting their marketing strategies to meet retailer demands for more of these products. They’re adding specialists, creating new divisions, hunting for new products and, in some cases trying to lure traditional CE vendors to distribute product through them.
“”We’re expecting explosive growth in the CE category in 2004,”” says Tim Billing, senior director of sales for direct and consumer markets at Ingram Micro Canada.
“”It’s becoming a very significant part of our business today.””
Here’s how four of the biggest distributors are handling this new demand.
Ingram Micro Canada created a CE division last year headed by John Henderson, formerly of LG Electronics, and backed up by Andrew Thomson, formerly of Hitachi Canada.
“”The CE and IT industries are coming together to become one industry,”” says Billing, “”and I think the links between them have become very blurred.””
Brand-name manufacturers such as Hewlett-Packard, Epson, Viewsonic, Sony, BenQ and Samsung are broadening their traditional lines of PCs, printers and monitors to include flat panel home TVs and DVD recorders, he notes. Lately off-brand manufacturers based in China have been moving into this market.
Some of these companies will be lured to Ingram by its distribution offerings, Billing says, especially vendors who service resellers themselves. Ingram can offer everything from standard distribution to logistics alone.
Tech Data Canada hasn’t moved as aggressively. “”We’ve never had a strong focus in the retail space,”” observes company president Rick Reid.
“”Obviously we have a choice: We can decide to remain out of it, but with the convergence of the CE world with technology products it doesn’t look like a prudent thing to do.””
By contrast, the company’s U.S. headquarters recently set up a specialized digital environments business unit to round up what it calls “”pro audio-visual”” products for business and homes. These products include large flat screen TVs, in-wall and in-ceiling speakers, PC-managed home environment and security systems and the associated wired and wireless networking.
This division compliments the already established digital imaging business unit, which carries typical CE devices such as cameras and scanners.
“”When we look at digital solutions we see convergence, with things moving towards the PC or PC-type technology as the central control for a lot of these other elements,”” explains Karl Werner, director of the advanced technology group at Tech Data in Clearwater, Fla.
“”If you’re good at doing the infrastructure of a back office you should have the ability to move to towards an audio-video solution.””
So far Tech Data Canada hasn’t set up a similar division, but Reid has an eye on the market: two of his staff will be at this month’s Electronic Home Expo in Orlando looking at products.
Not that its VARs here have been pushing for CE devices. “”The reseller that’s been focused on the SMB marketplace is having trouble connecting the dots as to where consumer electronics fit in the business community,”” says Reid, “”although it’s not hard to identify some of the overlaps with projectors and large screens. But most of the VARs we know today aren’t going today to change their programs to sell TVs and DVDs for the home. However, there are a lot of very strong retail VARs, both large and small, that want some incremental products.””
Echoing Billing, he predicts Tech Data Canada will become a logistics engine for some consumer electronics manufacturers.
Synnex Canada hopes to hire between five and seven sales and marketing specialists this year with broad knowledge in consumer electronic channels so it can push more product, says company president Mitchell Martin.
“”Last year we put together a portfolio of five of six vendors with products we hadn’t sold before and did a road show for our major retailers,”” he said. These included names such as Largan (digital cameras), Lite-On (DVD video recorders), Mercury (digital cameras, MP3 players and speakers), RIO (MP3 players) and Mitac (the Mio PDA). Reaction was very positive, but he wouldn’t give more details.
Like the other majors, Synnex hopes to attract CE vendors by touting its IT distribution network. “”There’s been constant discussions over the past couple of years (with such manufacturers), but I think things are starting to present themselves as opportunities.
“”Discussions between us and consumer electronic manufacturers will continue to heat up.””
Finally, EMJ Data Systems, known for concentrating on small and mid-sized resellers, has noticed the trend but isn’t hunting for new lines. Instead, it’s relying on CE products from manufacturers it already carries, such as Apple Computer.
CE gear amounts to no more than 10 per cent of what EMJ sells, says president Jim Estill. However, he predicts that five years from now that will double.
Resellers should be cautious, however: In a recent report on the future of wireless home and portable digital video technologies touted at January’s Consumer Electronics Show in Las Vegas, Forrester Research predicted consumers won’t adopt these new devices soon. Some won’t be out until late this year; others are still expensive while others need fast wireless home Internet connectivity.
