Computer resellers were urged to tackle the opportunities and threats they face in the emerging digital home market at the Leading Edge Group’s recent Convergence-themed dealer conference.
More than 300 independent dealer members from its computer, Internet and telecoms groups gathered for product, merchandising and marketing tips from suppliers as well as marketing and business trainers.
While the technology road map for the digital home is a work in progress, Leading Edge Computers (LEC) general manager, Ross Whitelaw, told dealers from 90 LEC stores across the country that they were losing out on existing business if they were not already on the bandwagon.
Dealers were still proving reluctant to dip their toes into non-traditional IT markets, such as digital cameras, Whitelaw said.
“Harvey Norman’s single biggest product category — which represented the most dollars earned in December — was cameras,” he said. “You should be making more out of cameras than you are out of inkjet printers.”
IT resellers could take advantage of their strengths in computing and networking to take ownership of the digital home market if they establish themselves as the solution provider of choice with customers, according to Pro Business Systems managing director, Peter Rowe.
Chairing an LEC dealer forum on convergence, Rowe told dealers to stay abreast of the rapidly changing technology and become accustomed to addressing the needs of the consumer market.
As digital home technology moved beyond the first wave of early adopters and technology fans, resellers would need to retool their sales approach and customer communications, he said.
“Understand it, know about it early, provide a full solution and differentiate yourself,” Rowe said. While the low penetration of home broadband had inhibited the take-up of networked entertainment in the home, by restricting fast access to rich media content such as music and movies,
Rowe said the current broadband price war would help bump up subscriber numbers. Consumer desire for home entertainment and other home network services such as security would also contribute to the growth of the digital home market, he said.
One reseller already taking on the convergence challenge is Max Mayne.
His business, West Connect in Bacchus Marsh, Victoria, encompasses mobile telephony, Internet service provision and computing.
Mayne said that overlapping market territories would challenge the industry. “The convergence technology crosses through traditional territorial boundaries and doesn’t know traditional supply channels,” Mayne said.
The manufacturers producing these technologies were attempting to gain control of customers and the delivery route, he said. The best option for resellers trying to maintain a foothold in this evolving channel was to stay close to the customer and know the technology.
The content at the heart of the digital home includes music, movies and television as well as the storage and sharing of personally-created images and data, such as digital photos.
By looking beyond the technology which provided the framework for the digital home, traditional IT resellers had an opportunity to differentiate themselves against retail competitors, Pro Business Systems’ Rowe said.
He claimed Harvey Norman had identified itself as a supplier of technology but had not done a good job of tapping into consumer needs.
Resellers needed to focus on those needs, rather than the technology itself, he said.
One reseller who has begun to promote his business as such a solution provider is David Kerr from Biz Comm in Alice Springs.
After 12 months of sending out a regular newsletter containing information about new technologies and products, the company was building a profile with customers, Kerr said.
“We get people calling us and asking us questions,” he said. “Their assumption is that we know everything about it.”
As convergence brought the IT channel into the realm of traditional home theatre and audio, IT resellers were moving into a market with much higher price points and different expectations, Rowe said.
In the home theatre field, resellers were looking at a luxury market, in which the ability to tailor complete solutions would be key.
“Become the trusted advisor,” Rowe said. “Convince the customer that you are the only guy who knows how to do this stuff.”
Time spent nurturing such sales would be rewarded by the big ticket nature of the sale, he said.
The benefits of a successful move into the home theatre market from pure IT were obvious: “Would you rather be scrambling for $100 bucks a box, or $50,000?” he asked.