ARN's Paul Zucker and Brad Howarth recently met with the man who has been charged with turning around the fortunes of AST in Australia. David Henderson (left) has a long track record with notebook manufacturer Toshiba, but his new $US2.5 billion company makes most of its sales with desktop machinesARN: How long have you been on board at AST, and how have things changed in that time?
DH: I joined AST Computer on July 15 and have been working hard since then to introduce a more vital culture into the company, to strengthen relationships with customers and build new relationships with groups such as prospective customers, distributors and resellers; it has been a busy, but satisfying four months. Since I took over the management of the Australian operation we have had a few changes in middle management due to the new culture and our new focus on the channel; but these positions were quickly refilled. The new people who have come into the organisation are highly focused on channel development and have expanded our skill base in managing and working with resellers.
ARN: I understand that you've made a radical change from largely direct to through the channel. Why is that?
DH: AST has enjoyed the privileged position of being the largest supplier to the corporate market (see IDC's most recent Micro StoreBoard report) and we now aim to develop our market share in other segments, specifically small- and medium-sized business, government and education. It is critical to our success in these market segments that we endorse and support the channel - traditional resellers and distributors.
ARN: What sort of response did you get from the key resellers and distributors you signed on?
DH: My discussions with the major resellers and distributors in Australia have been very heartening. They have responded very positively to AST, giving them an aggressive, competitively priced, high-quality range with the added advantage of our built-to-order facility at Silverwater. This response has translated into support from 15 of the major traditional resellers and three distributors.
ARN: What about the second tier of resellers? Typically who are they and what do they get from working with AST? After all, isn't one brand name the same as the next?
DH: They get aggressively priced, high-quality product with comprehensive international service support.
By selling our products they can feel confident that they are delivering to their customers a brand name product, with all the credibility and reliability associated with a leading brand, at a price far lower than competing leading brands. Because our products are so reliable the resellers will not see their margins eaten up by costly post-sales support and they will improve their customer loyalty.
Also we offer them a full range of products from notebooks to file servers, including PentiumPro power and multimedia, and the products meet the needs of the commercial and retail markets. The second-tier group, as you call them, tend to be resellers who have a geographical focus (ie they sell within a limited geographical area) or are a value-add reseller selling and supporting specialist application software into vertical markets.
ARN: What will you be offering in the way of sales support and materials, training and protection, such as price and obsolescence?
DH: There is a comprehensive range of incentive programs and of collateral including technical and sales training. These programs and distribution of the collateral is co-ordinated through our distributors.
Also we are smack in the middle of an extensive advertising campaign designed to stimulate demand in all market segments but specifically small- and medium-sized business.
ARN: How does the Samsung connection work and will it affect your Australian operations?
DH: Samsung is the major shareholder within AST and both organisations work closely together where there is synergy. To date the synergy has been focused on manufacturing, research and development and component supply.
ARN: Regardless of how well a subsidiary does in Australia, the head office has to do well too. Is that a problem for you?
DH: The PC industry has always been an exceptionally demanding industry. In my reckoning there has not been one of the top 10 vendors that has not gone through some form of reassessment as they strive to remain competitive and profitable. Our organisation is reinventing itself in light of the changing demands of today's customers. That responsiveness is demonstrated in AST's investment in our build-to-order facility in Australia. So although our head office is working through some financial issues, they have not stopped investment in the redevelopment process, which will ultimately deliver a far stronger company.
ARN: What is the range of AST products and roughly what are the proportions you expect to sell in the next year?
DH: AST systems meet a variety of computing needs. The company's brands include:
Advantage - Consumer multimedia systems
Bravo - Feature-rich and affordable business desktops Ascentia - High-performance, professional notebooks Manhattan - Corporate server solutions including PentiumProThe great majority of our sales are currently in desktops but we are actively working to increase sales of notebooks and servers.
ARN: How have sales been over the past year and how will they be over the next year?
DH: At AST Australia we are aiming to grow twice as fast as the market in 1997. This growth will come specifically from our small- and medium-sized market sectors and education.
ARN: AST has always been big in corporate sales. How difficult has it been converting these customers to dealing with the channel?
DH: Resellers were involved in some way in most of our major accounts. Those relationships still exist and we are gradually increasing the reseller involvement where possible.
ARN: You assemble locally, but isn't any claim at local content a bit of a con?
DH: We don't claim to have local content (unless you want to include the build-to-order facility and the 15 people we have employed there). Build-to-order is not about local content, it is about offering the customer what they want and being efficient and cost-effective at delivering it.
ARN: Everyone has discovered "build-to-order". Isn't this just a buzzword too?
DH: Outfitting an assembly plant and employing a team of people to run it is not just a "buzzword" - it is offering our customers a key benefit. Instead of telling the customer what you have to sell, you ask the customer what their standard operating environment is, what network they are running, what other systems they might already have in place, and you build systems to meet those standards. Also, everyone hasn't discovered build-to-order; many of our competitors sell only preconfigured stock.
ARN: Now, it's time to 'fess up. What's the real reason why so many PC vendors have rediscovered the channel in 1996?
DH: As the PC becomes pervasive the channel is critical to service that demand. Small- and medium-sized business accounts for in excess of 40 per cent of the business; no single organisation can truly service those customers without working with and through the channel.
Tel (02) 9952 6400 Fax (02) 9904 8535
Info: www.ast.com (includes Web Support, a feature that allows users to e-mail questions directly to AST's online Support Team)