Seeing the light

Technological developments and changes in customer behaviour have turned the Middle East projector channel on its head, which is creating a wealth of opportunities for the reseller channel.These are interesting times for the projector hardware market. The advance of new technology — particularly the rise of LED in the business-to-business arena, a growing range of highly portable ‘Pico’ projectors and, in the consumer market, increased demand for 3D products — promises to take projector hardware into a new phase of adoption.

In education, the projector vendor’s traditional mainstay, there has been a noticeable fall in the number of larger tenders. And that means manufacturers have now set their sights on these business and consumer prospects, with high expectations that the channel can help them create and develop customer bases in these sectors — even in such challenged economic times.

“We all know the difficulties of the worldwide economic situation,” said Aman Khan, marketing and communications manager at vendor Acer. “In the Middle East region, the market has been more or less flat. Public administration — specifically education, the single largest buyer segment for projectors — has been affected to a certain extent, with no major tenders actually decided in 2009 due to budget constraints.”

In October, market analyst Futuresource Consulting reported that while the first half of 2009 had been flat — 1.3 million units were sold globally, but in real terms that was a 16% year-on-year drop from the same period in 2008 — the prospects were brighter for the second half, particularly in emerging markets like the Middle East.

Despite the gloomy wider economic forecasts, this tallies with the experiences of key vendors in the region. Ian Gobey regional manager at NEC Display Solutions, agrees that because education has been the biggest spender in the projector market, the reduction of large tenders has had a significantly slowing effect. But there are signs of recovery.

“The regular channel business has also suffered but has recovered robustly in recent months to the extent that many vendors have shortages, specifically on DLP projectors,” he said. “Retail has been impacted but overall this is not a huge segment for NEC, although we do have models that fit in that segment quite nicely to service the SME market.”“We have witnessed an overall slowdown in all sectors and across all segments,” said Sam Oommen, projector product manager at Canon Middle East. “The downturn has also witnessed a drop in sales on the high- and mid-segment projectors; various projects related to the hospitality industry were either postponed or stalled,” he added.

To the outside eye, manufacturers’ over-reliance on education looks a touch complacent, and there is a sense that they are now engaging the channel more aggressively to kick-start campaigns for the hearts and minds of the business, hospitality and entertainment markets.

“I believe we can do better,” acknowledged Gobey. “NEC was relatively late opening up a regional office in the Middle East, a clear mistake in my opinion. During 2009, we have signed a number of new partners, all highly capable, and our selection criterion is clear: can this partnership take us to the number one market share position?

“Additional investment will be put into channel training, market by market, for selected partners. We’ll be providing access to information and promotions via the NEC Solutions Plus channel programme, and our CRM system should speed up access to pricing and technical information for project quotes.”

Most vendors operate a traditional model for their projector lines, with distributors handling entry-level and midrange sales to resellers and retailers, and systems integrators and AV project specialists covering the enterprise market. But as Gobey says, it can sometimes be difficult to differentiate as projectors become a more strategic purchase at lower levels of the market.

“Today’s customer needs have been increasing and are looking at total packages that provide a complete, turnkey solution,” commented Oommen at Canon. “Everything from the panning and installation to the servicing of projectors and training staff in the use of our products.”

“Our commitment to channel partners extends beyond mere product placement,” said Acer’s Khan. “By constantly monitoring the purchasing trends of its customers, Acer is able to tailor its entire product development and marketing strategy to suit the needs of specific target customers, indirectly helping the channel as a result.“In the near future, we will have partners more dedicated to projectors and we will focus on retail and tenders — specifically in education. We have been able to do satisfactory business with partners across the region but we have been able to sign up new partners for 2010 and expect better market penetration. We’ll be participating in events targeting the education sector, and do more special promotions in retail with POS, shelf-space and other marketing activities.”

But a greater emphasis on the retail sector, however necessary, also raises the question of value and pricing — something vendors who claim to be serious about the increasingly technology-savvy consumer market will have to weigh up very carefully.

NEC, for example, wants to expand its network of specialist Pro AV resellers to deliver high-end projects while growing its distribution channel for volume sales. So does Canon. “In the UAE, we work with multiple partners, mainly in order to have better focus through IT dealers, and for the XEED range, which is specific to the AV/system integrator,” explained Sam Oommen.

NEC’s Gobey emphasises value, reliability and an attractive cost of ownership as key selling points, combined with a decent retained margin. Of course, these qualities are essential for enterprise resellers and their customers, but they don’t necessarily resonate in the same way with consumers buying from retail.

“Consumers are looking to make investments in hobbies and pastimes that they can conduct at home, with quality and reliability guaranteed,” said Harold Fernandes, general manager at Dubai-based AV and projector supplier Abcom Solutions.

“For the past year, one of the biggest influences on the home cinema projector market has been the exponential increase in the household penetration of HDTV and Blue-ray,” said Fernandes. “Also, the use of projectors for video games has not only increased among hardcore gamers, but also the new market of so-called ‘non-gamers’. The growing popularity with families is set to give the projector market even more of a boost recovering from the downturn.”

In short, he warns, don’t ignore the potential of Computer Street as a revenue stream. High quality home projector technology is now available to — and expected by — the consumer at lower prices than ever before.“The performance gap between commercial and high-end brands has closed to a large degree, but the price gap has not,” cautioned Fernandes. “The result is that many of the most cost-effective digital home theatre projectors are coming from the commercial brands these days. The high-end vendors make fine projectors, for sure, but price and value are the issues.

“Computer Street is a place that any volume vendor with hopes for Middle East growth should not underestimate. It generates some of the highest revenues in the region. The amount of vendors already based in the region is testimony to the fact that the power retail segment needs to be treated seriously. The fundamental principles of price and availability still make the retail channel tick, and competition is encouraging retailers to go to new lengths in an effort to beat their rivals.”

But at enterprise level, projector sales are more likely to be part of a major integration project comprising technology chosen for its strategic value to the customer’s business. Vendors will certainly be raising the training stakes for partners who will need to differentiate their offerings according to increasingly diverse technical capabilities.

Acer’s Khan says that any customer primarily concerned with image quality will want to see more evidence of high contrast ratio and Brilliant Colour Technology, for example. Home cinema consumers and IT directors in education will drive demand for full HD and 3D projection combined with low power consumption.

NEC’s Gobey plays down the adoption rate of LED technology, although market watchers insist that it will quickly help to bring projector capabilities to mobile devices in a way that will have a major impact on the SME and consumer sectors — once content creators are able to find a way of turning delivery into a sustainable revenue stream.

“There are interesting developments with some vendors moving faster than others,” said Gobey, “but the trend is typically that when the technology is ready for real world applications and has proven durability, it will hit the market quickly. “3D-ready DLP will become more widely available, although adoption will be held back by the lack of 3D content in key areas such as education. Ultra short throw projectors will be more widely available in 2010. However, there are some optical trade-offs and some user segments — particularly heavy users — are advised to choose wisely: one perceived upside could easily be replaced by a less desirable downside of compromised optional performance,” he warned.

Enter the value-added reseller. For channel partners at the higher end of the market, the good news is that the diversification and advance of projector technology will create plenty of opportunity for consultancy.