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Ingram Sees Opportunity As CE, IT Overlap

3/08/2004 02:00:00 AM Eastern

Santa Ana, Calif. — As the overlap of consumer electronics and IT products continues to grow at retail, Ingram Micro North America believes its computer industry expertise can help CE manufacturers and retailers as they compete against IT companies.

Kevin Murai, president of Ingram Micro North America, said his company's experience in IT can provide the CE industry with cost-effective sales training, customer service and installation functions. This is vital as more custom installations become more IT-intensive. So far Ingram Micro's roster of CE partners consists of BenQ, Epson, Microsoft's Xbox, Samsung, Sanyo and Sony.

"This market is evolving. Everything is going to digital media and there are many changes. Current A/V installations are in need of a network backbone, a CPU controller for [home networking] systems. This is a different level of technological competence and knowledge of how data systems work will be vital," Murai said.

Through Ingram Micro's partnerships with service companies, installers and sales training operations, the CE industry can "access our field deployment, our service network, and we can provide sales training programs on many of these new products for retailers," Murai said.

CE manufacturers who become Ingram Micro customers and who want to provide sales training to retailers will pay for the program. Those retailers who buy products from Ingram Micro will be able to tap into its nationwide network of installers to provide customer service, he noted.

Aside from technological convergence, there is market overlap on two levels: PC-based suppliers entering the CE market and new Chinese-based manufacturers entering the U.S. market with aggressive pricing. Those twin trends are now on the minds of many traditional CE suppliers and retailers, with the fear that profits will quickly evaporate for many high-end display technologies in particular.

Murai said, that while some new manufacturers have entered the market with low-end pricing on the high-end, "brand identification and innovation are still important. The problem for new Asian manufacturers here is that they don't have any brand awareness, so that's where Dell and Gateway come in and provide a market."

He said what Ingram Micro can do for many in the CE market is "sell the whole solution," products, installation, service and retailer education, to keep established brands ahead of the game.

The CE industry has long prided itself on being more user friendly in the design of its products vs. the PC industry. Murai defines the term "user friendly" as "the entire consumer experience. The typical A/V product is becoming more complex. While user friendly involves manufacturers' designs it also involves solutions, so the customer has a positive experience" when the system or products are installed at home.

The advantage that IT players have over CE, Murai said, is cost-effective distribution. "The overall market for CE is on the edge of exploding. These products will be networked, so proper training and installation are vital. In this regard IT distribution has been driven by low margins and high volume sales, making it more efficient. The market has forced it to be as efficient as possible."

He also pointed out that traditional CE distributors are historically "smaller, local distributors" and acknowledged that direct sales from manufacturers to major retailers and the involvement of buying groups are part of the mix. On the other hand "IT distribution's legacy consists of large, national distributors" with the wherewithal to support supplier, retailer and consumer needs.

While Murai said that his company's program is "still in its early stages" they are looking at buying groups to see how it can partner with those organizations to provide their members with Ingram Micro's service and training programs.

As he put it, "With digital media in the mix demands will be on faster [home] networks and more storage." While home systems will be installed, "consumers will want new components" to replace old ones, or expand systems, and those products will have to be explained, sold and installed. Murai maintained, "We see digital convergence as an opportunity for us" and the clients Ingram represents.