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Tech Data Buys Scribona

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Scribona OfficeScribona, Scandinavia’s broadliner distributor with revenues of 873 million Euro, grows tired of cost-cutting, krona-pinching and closing offices ...and sells out to pan-European rival Tech Data.

Scribona had 14,456,937 reasons to sell out as that matches their latest losses in Euro on their 2007 Annual Report. (Based on today’s currency exchange.)

Tech Data, driving a good bargain, will pay only the net asset value for inventory, some intellectual property, material contracts, office equipment and ”certain other” assets, plus a premium for Scribona’s operational assets (from €13.5m to €16.5m, depending upon performance criteria). Note the word “plus” as many of the industry gossips think the premium is the total sale price.


Scribona recently had offices and operations in all Nordic countries (with more than 6000 resellers and systems integrators). To reverse losses, they downsized their Finnish organization, closed the Malmö regional office, and their Danish operations.

"Through this transaction, Tech Data will gain a talented team of highly experienced distribution employees that will help strengthen our operations and drive stronger relationships with our key vendor partners and customers," saysRobert M. Dutkowsky, CEO of Tech Data Corporation.

On one hand, Tech Data has just bought itself the leading position in Scandinavia.  On the other hand, the way things are going in Scandinavia distribution, you might lose that hand.

How Tech Data Tells It

Flatland, Battleground for Displays

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Hans Kleis, CEO of Sharp Electronics EuropeIt’s no secret that flat panels have made a lot of money for retailers, VARs and distributors in the past few years, certainly far more than high-def DVD. Yet, the news about the skirmishes in the DVD wars got far more attention than the equally decisive battles in display technology at the moment.

Growing video usage, VISTA, and aggressive pricing are skyrocketing sales of wide-format LCD desktop computer monitors over the next five years, making this the dominant format by 2009, iSuppli Corp. predicts.
Worldwide sales of wide-format LCD monitors will grow to 146.9 million units by 2011, rising at a “whopping” CAGR of 74.3% from only 9.1 million units in 2006, says iSuppli, a market research company not prone to overusing the word “whopping” in their releases.
On the side of LCD TV, they have supplanted cathode-ray and compete with flat panel plasma in the home theater market.

Like any war, behind the gunfire is an intricate web of political and commercial alliances, joint ventures, consolidation, and outright surrender.

Let’s start with the short but action-packed story of plasma, once the leading hopeful in display technology. Instead LCD kicked plasma butt (by increasing quality, size while decreasing price faster) and the industry started writing off plasma. Many makers like Philips jumped off, leaving the ones standing to form a survival group known as the Plasma Display Coalition (members are Hitachi, LG Electronics, Panasonic and Pioneer).


Just as many thought they could write off plasma, last year PDP made a come-back and the strong support of Panasonic (showing its first 150 inch in Europe) puts plasma as a solid alternative in some applications. Then last month stalwart Pioneer said it will stop production of 42-inch and smaller panels and buy instead from Matsushita or Hitachi.

If that saga in plasma isn’t enough to hold the attention of partners trying to follow vendor machinations, try the LCD side of the flat panel battles.

Sony, for example, cut a deal to joint venture a state-of-the-art LCD panel production line with competitor Samsung. For understanding the scale of market impact, imagine HP and Dell doing that in PC production.

Then last month Sony cut another deal to buy into another competitor’s new 10th gen LCD factory (Sharp). While some are trying to paint Sony as back-stabbing Samsung, it seems like Sony simply is doubling down its bets. Or tripling its bets: Sony is investing heavily in its own OLED technology that some say may replace LCD in about 2015.

Meanwhile, Sharp has slapped Samsung with a patent lawsuit. Philips has sold out of its partnership with LG Philips Display so LG gets to re-brand. Toshiba recently forged an alliance with Sharp to procure LCD panels of 32-inches (while Sharp in turn agrees to buy from Toshiba some of the chips used in its TVs).

Because of that new alliance, Toshiba has to sell its shares in IPS Alpha Technology, an LCD production joint venture with Hitachi and Panasonic. Hitachi is also planning to leave the venture, selling shares to Canon who may want to buy the whole company.

All this is about the last six months. Whew!

Change the names, dress the players up as socialites and you have the right script for a prime time soap opera. Get the picture?


How to Save the Corner PC Shop

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The role of the local PC shop seems to be an endangered species, hunted by Big Box retailers, stalked by etailers, and ignored by vendors. In an industry where low price has been the mainstay diet of the predators, the PC shop will become extinct…unless it reinvents itself.

Here are some suggestions that might help.

You need a fresh look at your business.
Step back, try to look at it as if you are seeing it for the first time. What do you see? Pretend you are a business consultant. What suggestions would you make?  If this is hard for you to do, do yourself a favor and visit someone’s corner PC shop and start this exercise all over again.

ID and personalize your customer groups.
Best Buy implemented a customer analysis that divided their typical customers into recognizable groups. Best Buy even gave each profile a name to personalize the customer for the sales force.  Who is your Buzz? In this exercise, you’ll want to figure out the buyer characteristics of today’s customer base.

Think like your customer.
If you identified Ludwig the Heavy Gamer as one of your customer groups, then you’d better get some experience with massively multiplayer online games (MMOs).

If you’ve been a computer dealer for 15 years or more, chances are likely you are not part of the Facebook generation. You need to know how and why today’s buyers use their PCs, their notebooks, their devices. If you don’t know Twitter, MySpace, Flickr, You Tube, Revver, Digg, Skype, Meembo…then we suggest you use Google to get acquainted.

Once you’ve identified your current customer base, you’ll have to decide whether to focus on consumers or small business.
It’s very unlikely you can do both. To help you decide which way to go, we suggest you create a “local map of opportunity.”  Most dealers miss what is in front of their noses while looking for greener pastures. The local map should show circles of 5, 10 and 20 km. Inside each circle, you should identify businesses of interest by using local newspapers, Yellow Pages and local knowledge.

You can’t hit a target you’re not aiming at. Once you know what business is around you, you need to group them by industry and size. If you are a Very Small Business, your easiest target is other VSBs, so try to match up. Proximity will be your strongest weapon and understanding their business model a must.

If you target consumers, your local map wants to identify where, how and why groups of like consumers come together. Schools, sports clubs, hobby clubs…because consumers “flock” and follow their leaders—hopefully straight to your shop!

Walk around your shop and take a visual audit (but write it down!)
Does your shop reflect the appetites of your target group? Do customers come in, take one look and turn to you, “Can you help me find something?” How could you divide the store to give the customer an easier way to find product and grasp the product concepts?

What’s in your store window? We traveled around Hannover looking today at PC corner shops. Sorry to report we saw out-of-date displays, boxes that have been bleached by the sun (obviously at least a summer ago and not in this weather!) and a tendency to use the window as storage instead of bait. OK, we saw a few signs shouting about deals, discounts and prices but we never saw Emotionomics – projecting the sensory-emotional connection that sucks in buyers and drives successful retail.

Promotion costs money so more than likely you are stuck with guerilla marketing
, using creativity instead of budget to promote yourself to your target audiences. You should communicate your value-added proposition in a succinct way, maybe even with humor or memorable style.

You also need to establish yourself as an expert in your promotion. Strike at the weak spot of the Big Box players: they eternally have problems to attract and educate a salesforce. You need to show both your expertise and your longevity.

Shop carefully for your product mix and widen the disties you use.
Big box will carry the A brands. You can, too, but you won’t make money. You should provide challenger brands and alternative brands…but only those you can truly stand behind.

It’s all about service, support and know-how.
You may lose some customers to price but there are more important things to customers: convenience, respect, timeliness, availability and all the other points that frustrate buyers at Big Boxes.

And when all else fails, maybe you’ll want to follow the example of A&D Computer, a computer store in a small town in New Hampshire in USA. Inspired by customers having problems with Windows Vista (compatibility issues with older software and trouble adjusting to the interface), this local PC corner shop hung out a sign that got more response than any other in its history.

The sign says simply: We Remove VISTA.


EC to Spend Billions for Industrial R&D on Embedded

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Just before CeBIT opened, the European Commission launched a €2.5 billion Joint Technology Initiative called ARTEMIS to address embedded computer systems that – while running almost unnoticed by users – improve the performance of all kinds of machines: from cars, planes and phones, to factories, washing machines and televisions.

An enormous opportunity for systems integrators that shifts commercial attention to industrial B2B commerce, more than 4 billion embedded processors were sold last year with the global market worth €60 billion and growing annually at rates near 14%. Forecasts predict more than 16 billion embedded devices by 2010 and over 40 billion by 2020.

The share of embedded systems in the value of final products is expected to continue to rise in key industrial sectors (e.g., by 2010 over 35% of the value of your auto will be attributable to embedded electronics).

"Invisible computers embedded in all devices of industrial application can have a tremendously positive impact on Europe's economy", says Viviane Reding, EU Commissioner for Information Society and Media. "…This is why €2.5 billion of European public and private research investment into embedded system over 10 years is very worthwhile, ensuring that European technology remains at the forefront worldwide..."

To promote economies of scale, cost savings and much shorter times to market for products based on embedded computer technologies, and to keep European industry at the forefront of global developments in these fields, the EU is pioneering this entirely new way of funding research in Europe.

The Commission and the EU Member States who wish to participate will pool their public funding with universities and industry, including many innovative SMEs, by setting up a public-private partnership.

While research funding in embedded systems so far tends to be fragmented in small projects funded by individual Member States and agencies, the new "open" consortium – under the name ARTEMIS – allows Member States and the Commission to co-operate and co-finance pan-European research initiatives focused on a strategic agenda set by Industry itself. ARTEMISIA, the Artemis Industrial Association currently has more than a hundred members (50% R&D organisations, 22% SMEs and 28% corporate members).

ARTEMIS will be fully operational within the next few months as organisations based in Brussels with their own rules, own staff, premises and budgets. Their tasks will include coordinating research through calls for proposals and funding of research projects of European scale.

The European Commission also launched a second Joint Technology Initiative called ENIAC which targets nanoelectronics.

For more information on Joint Technology Initiatives, see:

Top 10 Trends for Consumer IT

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Oh, how we envy those Tier 1 companies with their big budgets and their ability to spend their way to success. Being big comes with a series of challenges that make SME’s cringe. Below are the Top Ten trends that high volume retailers and vendors will confront in 2008.

Cash & Credit Crunch
Headwinds from the macroeconomy (outside of our industry) now cloud the outlook for the business climate and the consumer spending environment for retailers. The European Bank says “a perfect economic storm” is on the horizon. Let’s not talk ourselves into a recession but acknowledge the reality of America’s mortgage and foreclosure crisis, UK’s Northern Rock fiasco, France’s Société Générale’s rogue trader scandal, Germany’s government-backed bailouts of German banks, and Spain’s new reliance on ECB finding for their banks.

A solid credit rating and healthy balance sheet will serve retailers well during 2008 as they again demonstrate why cash is king. With consumer spending constrained by economic weakness and tight credit, the marginal players in the industry are in for a tough time. Companies who struggled to grow sales last year, even when growth was robust, may have increase borrowings under their credit lines, if they haven’t already done so, to fund operations. Financial and credit managers from distributors, retailers and vendors should observe these trends at

Search for Perceived Value
Retail in affluent economies is an emotion-filled business where product purchases are driven by consumers’ desires to satisfy wants, rather than simply meet needs. In an environment where consumers have a lot of reasons to feel unsettled about the economy, retailers need to demonstrate value-added on top of compelling prices and quality merchandise.

Growth for Private Brands and Branded Non-Brands
The increased penetration of private brands is not a new phenomenon, but with retailers and disties facing tough market conditions for 2008, the allure of direct sourcing will result in acceleration. The capabilities of retailers’ internal product development teams have improved, but building a brand from scratch is never easy, so the more common strategy involves entering into exclusive distribution agreements.

Interesting note: in what appears to be an oxymoron, there’s a trend to successfully brand Private Label

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