Tight margins and aggressive market conditions have forced NEC to exit the entry-level LCD monitors market.
The vendor will stop selling its Hannover and AccuSync series 15-inch, 17-inch and 19-inch models locally, and concentrate on its mid- and high-range series. National channel manager of commercial solutions, Daniel Hancox, said NEC could not compete with other brands in the entry-level market and was losing money.
"It was affecting us in an area where we are very strong, which is our public display area. We had to keep that pricing slightly higher to offset the margin lost in the entry-level market," he said.
NEC planned on placing a big emphasis on the medical, colour critical and public display market this year. It would focus on from 32-inch to 65-inch screens, Hancox said. The vendor will also launch an 82-inch monitor in September.
"There aren't as many competitors in that space and we have a great range and quality products for that market," he said. "We are also going to concentrate on our digital signage network."
NEC's entry-level LCDs were distributed by Ingram Micro, Dicker Data, Multimedia Technology and EDsys. All will continue to have access to NEC's remaining products portfolio.
"We have spoken to these distribution companies and they are in same boat. They have realised there is just no money in the entry-level space and they are quite happy to change with our direction," Hancox said.
NEC's exit from the low-end LCD business follows a similar decision by Mitsubishi last July. IDC PC hardware analyst, Liam Gunson, was not surprised to see some players drop out of the crowded market.
In the overall PC monitor market for Q3 2007, NEC was in 12th spot, with 2.1 per cent of market share.
"NEC has been able to stay close to that mark in the last few quarters and remained relatively stable in terms of how many units they ship on a quarterly basis, but they didn't have the growth that some of the other players have seen in the market," Gunson said.
"It's a very cut throat market. With a lot of margins thinned out, you do need to be doing reasonable volumes to be making money, particularly in that entry-level space."
Multimedia Technology purchasing manager, Michael Muscat, said NEC's decision to exit the entry-level LCD market was disappointing.
"It is a good quality product that was positioned well and it leaves us with a bit of hole in our line-up. We are negotiating another supplier," Muscat said. "We are still doing a lot of business with NEC. Their competency has started moving towards the large screen display both in the consumer and commercial space."
Dicker Data sales manager, Chris Price, was not surprised by NEC's decision and said vendors had to set aggressive pricing conditions if they wanted to remain competitive.
"We were kind of expecting it," he said. "We are looking for another entry-level vendor to fill that gap. We currently supply LG but we need another vendor to specifically fill that market."