NEC-Mitsubishi: The Big Picture

With its product sales booming, and solution-provider ranks growing,

NEC-Mitsubishi Electronics Display of America made a dramatic turnaround in the 2002 VARBusiness Annual Report Card (ARC) survey. Out of six contenders, the company swept into first place in every subcategory in the display technology category, moving up from last year's last-place showing.

Product sales led the way in capturing the attention of solution providers, says Al Giazzon, NEC-Mitsubishi's vice president of marketing. "That gave them the opportunity to start looking at our company and our programs [for VARs," Giazzon says. Adds T.J. Trojan, NEC-Mitsubishi's senior vice president of sales and technical services, "Over the last couple of years, our revenue and market share have increased in a very tough economy and even tougher market. We have done that with the help of the channel,and without selling direct."

In winning the top spot, NEC-Mitsubishi displaced ViewSonic, the company that had garnered first place for the previous five consecutive years. NEC-Mitsubishi took the top scores in all subcategories,product innovation, support, partnership and loyalty,with subcategory scores ranging from 73 to 80 points. ViewSonic finished second overall in a tie with AOC.

Despite the lean budgets in a reduced-size economy, customers have been loosening their purse strings to purchase flat-panel, or liquid-crystal display (LCD), monitors. Some are choosing the new monitors with new systems, but many others have been eager to add the LCD to an existing system, even if they are too thrifty to buy a new CPU or other component upgrades, says Rhoda Alexander, director of monitor research at iSuppli-Stanford Resources, San Jose, Calif.

According to iSuppli-Stanford Resources, U.S. end users bought a total of 2.1 million LCDs during the first quarter of 2002, up from 498,700 in first quarter 2001. "The market quadrupled in that time," Alexander says. Sales of almost 3 million LCDs are projected for the same period in 2003.

Of standalone monitor-makers, NEC-Mitsubishi ranked in first place, holding roughly 12 percent of the market and selling 527,200 LCDs during the first six months of this year, according to the analyst. ViewSonic, next among standalones, held some 8.7 percent of the market and sold about 378,800 LCDs during the first half of 2002, iSuppli-Stanford Resources reports.

Grabbing onto the LCD market opportunity, NEC-Mitsubishi has been working harder in the past year to communicate its commitment to the channel, through which it sells 100 percent of its product, Giazzon says. "We feel we had been doing a good job all along, but maybe we hadn't spent enough on awareness," Giazzon says.

During the past year, the ranks of NEC-Mitsubishi's solutions providers increased by roughly 20 to 30 percent, says Giazzon, who declined to specify how many VARs are aligned with the company, but did say the number was in the thousands.

NEC-Mitsubishi's highest subcategory score, an 80, was in product innovation. The vendor offers more than 50 models of monitors. Some of its major products are the AccuSync CRT monitors aimed at systems builders, with estimated prices ranging from $140 to $539, and the 18-inch LCD1880SX, at $1,299 and the 15-inch LCD1550X, with a $499 estimated price tag.

Overall, Giazzon says, monitors are gaining more attention because of their increased status in a system purchase. "Customers are now looking at their monitor purchases with more attention, because it can easily cost as much as their PCs," Giazzon says. "This has been a major move as customers realize that standalone monitor companies can deliver the best technology and price."

NEC-Mitsubishi offers a "very solid product," says Bob O'Donnell, research director at IDC, Mountain View, Calif. The company has also been very innovative in its sales and VAR-support programs, he adds. For example, NEC-Mitsubishi is willing to recycle customers' CRTs when they purchase LCDs, an especially important issue in a state such as California, which requires monitors to be recycled, he says.

Alexander says the aesthetic appeal of LCDs is one of the major lures for customers. For example, customers tend to be interested in the color of cabinetry besides the technology involved, she says.

Ahead of NEC-Mitsubishi, Dell and Gateway sell the greatest number of LCDs, but only because they are bundled with an entire systems package, Alexander says. NEC-Mitsubishi claims the third-largest market share.

While the LCD market has increased, the number of CRTs sold has been declining, she says. ISuppli-Stanford Resources put U.S. sales of CRTs at approximately 39.4 million units in 2000, 32.44 million in 2001 and, with actual figures from the first half of 2002 combined with projections for the last two quarters, at 23.1 million for 2003.

Alexander adds that supply, which was tight at the end of 2001 and beginning of 2002, has since improved across the board.

The Channel Is King

Trojan and Giazzon both emphasize that NEC-Mitsubishi was increasing its efforts to sell through the channel rather than attempting to seek other avenues of sales.

"While other vendors seem to have decreased their focus on the channel, we increased our efforts," Trojan says. "This gave us a chance to better inform VARs about our channel programs that support a variety of channel-focus segments, including government and education, systems builders [and professional CAD/CAM."

At the same time, NEC-Mitsubishi introduced or enhanced programs including extended warranty, trade-in and disposal to enhance profitability opportunities, Trojan says. The programs include System Builder Select, offering special pricing and support on the AccuSync CRT line; ChanneLink, offering awards and incentives on NEC products; ProPartner Select, providing exclusive pricing and rebates on NEC MultiSync FP and the Mitsubishi Diamond Pro Series CRT and Integration Select for LCD monitors.

A faithful VAR of NEC-Mitsubishi monitors,unless the customer requests otherwise,Ace Computers, Arlington Heights, Ill., relies heavily on the monitor maker's AccuSync high-end CRT line for systems builders, says John Samborski, CEO at the $30-million-a-year solution provider.

Samborski, who is on the advisory board of the North American System Builders Association, says he was impressed that NEC-Mitsubishi listened carefully to feedback from the advisory group and implemented most of its suggestions.

"NEC signed up to be a member of the organization," and was allowed to sit in on focus groups, Samborski says. "It asked what we wanted in a program [and bundled in our computer systems."

Samborski says an especially valuable offering is NEC-Mitsubishi's three-year warranty, which covers the replacement of a failed monitor with a new model rather than a refurbished one. "That's been very satisfying for customers," Samborski says.

Giazzon says that NEC-Mitsubishi's monitor mix is split approximately 50/50 between CRTs and LCDs in unit volume, and roughly 30/70 between CRT/LCD in revenue volume. He says that margins may be slightly higher on high-end CRTs used for professional applications.

The array of products offered by the company continues to represent almost a dual line,from the former companies of NEC and Mitsubishi, which had merged sometime in July 2000. "Our goal was to make one and one equal more than two," Giazzon says. NEC-Mitsubishi is now a wholly owned subsidiary of Tokyo-based NEC-Mitsubishi Electric Visual Systems, a joint venture established by NEC Corp. and Mitsubishi Electric Co., with annual sales of some $2 billion worldwide, including $850 million in North America.

Giazzon indicated that NEC-Mitsubishi won't be resting on its laurels in the upcoming year, but will continue to work to improve products and programs.

"It's a very dynamic market, and it changes quickly,only the fast survive," Giazzon says.

ViewSonic Fights Back

Meanwhile, the previous winner isn't ready to concede its preeminence in the field. As far as its relationship with the channel, ViewSonic will continue doing what it has done for the past 10 years, says Jeff Volpe, vice president of sales, Americas. "We have been a channel-centric company for 10 years," he says. "We built a model around the channel,we deploy all of our products through VARs and retailers." Volpe says he doesn't think NEC-Mitsubishi's rise indicates a drop in ViewSonic's relationship with the channel: "Our feedback was that VARs were very happy with ViewSonic and our commitment to the channel, and that they continue to make profits."

Nevertheless, Volpe admits that when the ARC voting occurred a few months ago, ViewSonic's lineup of products was in transition, and many of the newer and stronger products ViewSonic now sells hadn't yet been introduced.

"Today, we have the most robust lineup of LCDs," Volpe says, referring to a full line of beige, black and two-tone (black on metallic) monitors, ranging in size from 15 inches to 23 inches. Three of the newer LCDs,and highlights of ViewSonic's lineup,are the 18-inch VG800, with a $799 estimated price tag, and the 17-inch VG70 at an estimated $699,both two-tone monitors. The VE155, a 15-inch monitor with black and beige options, costs approximately $379.

Volpe says ViewSonic sells roughly an equal number of CRTs and LCDs, but that revenue for LCDs accounts for some 60 percent of the company's sales, and that segment is growing. But, he adds ViewSonic has a head start in some new areas where solutions providers can break into new markets and turn a profit.

Volpe says ViewSonic is "early out of the gate" in a new arena,wireless display technology. It introduced its Airpanel 100 Smart display monitor in August, which connects wirelessly to the panel and sells for an estimated $995. In July 2001, ViewSonic launched its ViewPad 1000 tablet PC with fully functional wireless connectivity. An updated version was released this past July, with an estimated price tag of $1,995.

"We will continue to improve our services and program this year so our VARs will continue to look to ViewSonic as their display provider," Volpe says. He indicates that will include providing incentives, Web-information access and "all the things VARs are asking for." n

Linda Sadlouskos is a freelance writer based in Basking Ridge, N.J. You can reach her at [email protected].