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O'Hara Outlines Changes At 'Global' Thomson

6/23/2003 02:00:00 AM Eastern

Sidebars:
RCA, Scenium Distribution Are Thomson Keys

To borrow an old bromide, it's not your grandfather's Thomson and RCA anymore. Or you father's. Or even your older brother's. One could tell the difference by where Mike O'Hara, executive VP/consumer products marketing and sales, sat down for an interview with TWICE and held a press conference, here, last month.

The location? A studio in the CBS Broadcast Center on West 57th Street in Manhattan. When I mentioned to a Thomson executive who greeted me that David Sarnoff, the founder of RCA and the National Broadcasting Company, was probably spinning in his grave about the setting of the press event, he laughed, "Remember, CBS is now a customer!"

His answer is a big part of Thomson's new persona. Thomson, formerly Thomson MultiMedia and owned outright by the French government, is now a publicly held firm that in the past couple of years has bought Technicolor, a major movie industry supplier and optical media duplicator, and Green Valley, a supplier of digital broadcasting equipment.

So indeed, CBS is a customer of Thomson, and by association, RCA. And while the ultra-competitive Sarnoff might not be turning in his grave, the changes Thomson has undergone have made many retailers feel a little dizzy.

Aside from the significant corporate developments just mentioned, during the past couple of years Thomson has changed in the following ways:

The "globalization" of its consumer electronics business to take away what O'Hara called "the redundancy when we had the regional structure" (see story, p. 4) which has "improved our global designs and time to market, giving us more products and more frequency";

Introduced the Scenium brand into the U.S. that over the past two years has been the company's upscale digital video and home theater line;

Re-established RCA's audio heritage with the development of MP3, among other digital audio products for portable and home uses;

Established DSI Systems as its distributor to small local chains and independent retailers to efficiently serve those types of retailers;

And moved its accessories operation from Deptford, N.J. to Indianapolis, re-naming it "Consumer Solutions," as well as buying Recoton's accessories business. (TWICE, June 9, p. 1)

And these changes don't include the GE Atlinks phone line.

With all these changes the perception among many loyal Thomson retailers, who have sold the RCA and GE brands when they represented their respective independent companies, have been left wondering, "How committed is Thomson to consumer electronics?"

O'Hara was adamant in his answer to that question. "We have absolutely no intention to de-emphasize consumer products. Have we hidden that we have gotten into other areas? Absolutely not. Do we hide the fact that we have new businesses? No." But he did add, "Thomson is a different company, as we have diversified… we are less of a CE-focused company."

However O'Hara explained that Thomson wants to be viewed as "a leader in the video image chain" and its new structure has "created a prioritized focus on four strategic brands. Those brands are Technicolor, Green Valley, RCA and Thomson. While we utilize other brands, such as GE, these are the main brands."

He added that the brands are keys to the "video image chain" and that "CE products are integral in what we do. It keeps us in touch with customers and retailers. This is a very important leverage point as innovations come out of the content side and out of Hollywood."

The globalization of Thomson's CE operations should be of vital interest, and great benefit, to its retailers, O'Hara said. "We now have optimized our resources and our labs. We no longer had duplicative efforts in R&D around the world. Now lead R&D operations specialize in specific technologies."

One of the benefits of Thomson's changes is realized in its new product introductions, O'Hara said. "We are introducing this year our largest digital launch ever. Many digital TVs, digital audio devices, LCD TVs and home theater." (TWICE, June 9, p. 1)

Scenium, which was introduced in the U.S. as Thomson's upscale video brand two years ago in line with its positioning worldwide, has benefited from globalization. The brand, which will add upscale home theater components this year, benefits from "global consistency," O'Hara said. Thomson's restructuring allows the company to economically develop world-class designs and world-class technologies "and offer more in line with where the Japanese are and RCA traditionally was."

Speaking of the RCA brand, O'Hara said "it still has a huge awareness level," but that Scenium "is designed to be a catalyst of that repositioning. Again, we are [benefiting from] a franchise that has a very high awareness level, RCA."

He added that RCA is and will continue to be a "broadly distributed, mass consumer brand." While Scenium will continue to carry the higher end video and home theater products, RCA will not just accept technological hand-me-downs from the newer nameplate.

"We may do some segmenting within the RCA brand, in positioning distribution strategy," O'Hara said. Within the RCA brand Lyra will continue to be a sub-brand to represent MP3 products, "and we are continuing to look at lifestyles, how consumers use products and utility, to see if those products will fall into the RCA brand."

When told of retailers complaints that while the trade likes RCA and Scenium offerings in the past year or two, they couldn't get enough product, O'Hara candidly stated, "Like others we have issues bringing some of these new digital devices to market." Again the key in this area is "globalization, which is helping us perform better, designing better products and getting them to market faster."

The Thomson executive noted, "At the end of the day if you speak to any senior merchants their key is the supplier scorecard, which includes how a supplier takes care of them. New product introductions and shipping them are key elements. The ongoing execution in service has to be of the highest quality. We are committed to that, to differentiate ourselves vs. the competition."