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Keeping margins monitored

Keeping margins monitored

Profit margin and customer satisfaction are the golden eggs in reselling computers, regardless of how big or small the transaction may be. Under the current climate of hardware price erosion, it's not always easy to keep margins at a satisfactory level. In the end, it is the best upsellers who will reap the spoils. Gerard Norsa discussed with a couple of monitor distributors just how the humble computer screen can assist in the pursuit of making a deal bring home a little extra bacon.

Rather than simply looking at the monitor as just another component within a computer system, according to their distributors, resellers should be identifying the computer screen as a valuable upsell opportunity There is no doubt it is an upgrade which nearly all computer users can immediately relate to.

Or, as one reseller put it when asked: "Upselling on monitors is an easy sell because the benefits are right there in front of you to see."

In these days of falling hardware prices and margins, the monitor shines as a possible oasis of profit for resellers because it is easy to upsell to better margin products. Differing from many of the other upgrade options which can be run past sales prospects, the quality of a system's visual display is easily demonstrated.

One distributor ARN spoke to claimed the monitor works so well as an upsell that consumers are often more willing to pay $200-$300 more for better quality view- ing than they are for less expensive RAM, storage or processing power improvements.

Paul Thompson, national marketing manager for Vantage Point Technology, a Panasonic distributor, said those other upgrades then become further upsell opportunities to complement improved display performance. Therefore, at the very least, it would appear monitors certainly represent a good component from which any upselling endeavours could be kicked off.

Thompson feels that for too long many resellers and assemblers have been using the monitor as a means of cutting costs in the pursuit of forging big deals and acquiring market share.

Extra spice to the bottom line

Meanwhile, according to him and other monitor distributors, the smarter, service-providing and value-adding reseller is viewing the monitor as a great way to add a bit of extra spice to the bottom line of large or small sales.

Additionally, the increasing standardisation of corporate buyers to 17-inch screens presents a good reason to revisit old sales and introduce clients to new features, benefits and pricepoints of what's on offer in today's monitor market.

Despite steady growth in the sales of high-end professional models and the corporate standardisation to 17-inch models, Australian monitor distributors indicate demand is still stronger for the low-spec 15-inch variety than it should be.

Thompson can see the price trap many resellers are in, but said the rewards are there, in terms of better margins, if they introduce larger and better monitors into the equation.

"There are still a lot of resellers who buy the smaller 15-inch monitors because of the price competition they face when trying to sell," Thompson said.

"They really should be offering better monitors to their customers. They need to take a look at what else is available and demonstrate to their customers the difference made by spending a few extra bucks on monitors."

Thompson feels this reluctance to broaden the range of monitors being offered to users is a stance taken at their own peril in more ways than just missed profit. He feels it can also be introduced as a genuine value-added service.

"Often they won't consider introducing a better quality monitor unless their customers specifically ask for them," he said. "Once customers look at a good screen they will be prepared to consider paying a few extra dollars.

This makes for a win-win situation between a reseller and its client, Thompson suggests. "Then, the customer is happy because they get a better system and the reseller is making a better margin.

"In all computer sales, the main thing is to deliver the best front-of-screen performance. Resellers shouldn't be sitting any of their clients in front of screens without good performance. It is bad for their eyes and has been proven to affect the productivity of workers.

Significant improvement

"It can be sold as a goodwill thing, because that's what it is. If a reseller can show the price differential is not that great for what can be a significant improvement, then it is a bonus for the client. When customers have better monitors demonstrated to them, the benefits of the extra investment really sell themselves."

Fabio Grassia, managing director of distributor Natcomp Technology, said he has found most of the users his customers are dealing with these days are jumping straight from the 14-inch models to better-featured 17-inch monitors when upgrading.

"People read. They know well enough the benefits of bigger, clearer screens," Grassia opined. "They are looking to the future, not just the present and are receptive to the idea of 17 inch pretty much being the standard in 1999 and beyond."

Grassia's company distributes a broad range of the strong-selling, Taiwanese-made Proview monitors, with a channel extending into retail, OEMs and integrators for digital graphics and other professionals. He was dumbfounded that many resellers were missing a great opportunity by not even offering their clients the latest products where the performance improvement is so obvious and the margins more attractive.

"If they don't show it off - they are never going to sell it," he said. "The problem with a lot of people in the reseller market is that they keep trying to sell products off a brochure where they should be carrying more product.

"In retail, that is why so many customers are starting to go to Harvey Norman stores. They hold a lot of stock of quality monitors and get the sales - picking up great margins along the way. The Harvey Norman attitude is that 'nobody else has got it, we're showing it off and we've got it in stock'."

Grassia believes many resellers are also making the fundamental mistake of not building brand loyalty with their customers.

"At the end of the day resellers have got to stop thinking short term and start to look at the big picture," he said. "A lot of the resellers are out there continually swapping monitor distributors for a lazy dollar or so and it does them more harm than good. If someone is offering a monitor at a cheap price it is only a short-term solution.

The advantage of having consistency in your product range - especially where sales are aimed at corporate markets - should not be ignored, Grassia said.

"Getting to know brands better means getting to know all the features and if salespeople understand the features they will sell the product more comfortably every time."

Grassia also feels there is a lot to be gained from demonstrating monitor upgrades by direct comparison between a standard item and one of better specification. From his observation, it works just as well for both dealers as it does for those selling further up the scale.

"A lot of our dealers have a set-up on their premises positioning a standard monitor with a top-end offering next to it. It will have some sort of self-demonstrating program with the upgrade price clearly shown," Grassia said.

"Often there is not that much difference in terms of the total sale. Once the customers see the difference the extra investment makes they will go for it every time if they can afford it."

Both Grassia and Thompson agree the biggest trend in the monitor market at the moment is the standardisation towards 17 inches while the increasing demand for high-end 19-inch and 21-inch models continues from professionals and gamers.

The biggest buying motive is still price, but increasingly size and picture quality are factors. "If they can afford it (bigger, better monitors), they will buy it," said Grassia. Or as Thompson so aptly put it: "Anyone who has ever worked with a 17-inch monitor will attest it is unsatisfactory to have to go back to a smaller one."

17 inches now standard

Chris Lau, local monitors product manager at Panasonic - which sells to tier-one OEMs, distributors and government/education - said people have well and truly standardised to 15 inches and beyond while confirming there is more and more standard call for 17-inch monitors.

He indicated there is significant demand for high end at retail level and it is important to enquire about what customers are using their systems for. As virtually every function these days involves graphics, he said simple demonstrations such as photo imaging quality, multi-page viewing and gaming, to name just a few, easily demonstrate the benefits and hook the customer.

"It is a chord that can be struck with consumers in terms of upselling," Lau said. "A bigger monitor is one of the most visually impacting features of a computer because the customer is staring straight at what they are going to buy the whole time.

"A lot of retailers don't want to outlay the costs of putting on displays, but our statistics show it really works," he said. "The bigger monitor attracts better profit for the reseller and it is one of the components customers can really see the benefits of."

Big droppers

"Prices on high-end monitors have been coming down dramatically," Lau added, saying 19- and 21-inch models have been "big droppers", especially on LCDs. This is making them more attractive than ever. Some machines originally selling for $4000 are now retailing for less than $2000 while 21-inch screens are "30-40 per cent cheaper".

Lau said that although prices are still dropping on monitors, the erosion was temporarily stemmed late last year after all manufacturers experienced demand-created supply problems with some of the raw components needed.

"But as demand increases, economies of scale make them cheaper to manufacture, which naturally drives prices down," he said, adding that it is a trend he expects to continue.

Products

With such a huge variety of different monitors available with vastly varying specifications, there is a constant flow of new products adding to user options. Here are a few of the newer offerings being made available and providing good opportunities for resellers.

Hitachi

Released in August last year, Hitachi's attempt at capturing a slice of the 17-inch performance monitor market comes in the form of its CM641 product.

Boasting a 15.9-inch viewable image area, it is capable of displaying 1280 x 1024 resolution images at a flicker-free rate of 85Hz. It will also support up to 1600 x 1200, but at a lower refresh rate.

Targeted at the office professional running Windows or Macintosh applications, the CM641 is a flat-square construction with a black matrix Invar shadow mask and dynamic focus.

The monitor features Hitachi's digital on-screen display technol-ogy known as "Easy Menu", enabling easy set up of complex functions like those for pin-cushion, trapezoid and rotation with five factory pre-set programs and 20 user programmable.

Complying with ergonomic and ecological standards, the CM641 also features an anti-static AR coating to minimise glare.

Weighing in at 17kg, the 412 x 402 x 426mm monitor is still reasonably sized for desktop at $1299 RRP.

The Hitachi CM81X and its more expensive CM813 sister are 21-inch monitors which feature new high accuracy tube and gun as well as EasyMenu digital control and VESA DDC plug-and-play standards.

The CM81X series offers 22 per cent more viewing area than Hitachi's award-winning CM75X 19-inch range.

The CM813 supports 1856 x 1392 resolution at 71Hz refresh rate, with the standard VESA resolution of 1600 x 1200 supported at 90Hz. The CM811 works with the same resolution at 75Hz. Both are naturally targeted at professional users of desktop publishing, imaging, CAD and engineering applications.

The retail prices of CM811 and CM813 are $3399 and $4499 respectively, with low cost of ownership thanks to EPA-compliant advanced power saving system.

Panasonic

Panasonic claims to be leading the charge towards minimising the amount of space taken up by its increasingly popular S-series or (standard-type) 17-inch range. The latest PanaSync SL70 sells on a stated 14 per cent less cabinet depth than conventional monitors in this size bracket. With dimensions measuring 410 x 416 x 382mm, the 17.2kg unit is up to 62mm shallower than others.

The SL70 runs horizontal frequency range operating from 30kHz to 70kHz (vertical frequency from 50 to 180kHz), it boasts 300 x 225mm display area and 1280 x 1024 resolution. Its RRP is $1090.

Meanwhile, the latest 21-inch PanaSync/ProTMP110 flat square digital monitor has a horizontal synch range of 30-115kHz, a maximum resolution of 1800 x 1440 NI and an improved dot pitch. It uses a DQ-DAFTM gun for sharper corner images. It also enjoys anti-glare, anti-reflection and anti-static coating.

The 15-inch PanaSync S50 flat square digital monitor may be too small for some, but it is much better featured than the standard offerings of just a few years ago. It supports a maximum resolution of 1280 x 1024 with a dot pitch of 0.27mm while also featuring crystal pigment and silica coat.

The S50's RRP of $520 makes it ideal for all users, the P110 costs $3640 and is well suited for graphic artists and CAD/CAM users.

Philips

Philips is expecting increasing demand for its range of 21-inch high-resolution Autoscan monitors, the Brilliance 201P and the Brilliance 201B. With resolution at 1800 x 1440, the 201P more than meets the requirements for performance displays in the high-end market segment. It is designed to handle even the most demanding of graphic applications on PCs, workstations, X-terminals, and Apple platforms.

Quality wide-area viewing of multiple on-screen windows, extensive drawings, and either a simultaneous display of wire-frame and solid models or adjacent on-screen display of two document pages gives it applications in many industries.

Features and benefits include a 19.9-inch viewable image size, a high-con-trast Black Matrix Invar tube, multi-compatibility and optional USB module for true plug and play.

The 201P carries an RRP of $2500.

The Brilliance 201B is more of a general-use large-screen monitor. While still targeting professional users, it is aimed primarily at CAD/CAM, DTP, database, logistics or financial and accounting applications under Windows. These are users requiring a large, high-resolution monitor with advanced features but are looking for a better price-to-performance ratio. Recommended to retail at $2240, it also features an optional USB module and Philips software but has a slightly lower Autoscan rating.

Another recent announcement by Philips involves more attention to after-sales service.

A new onsite warranty scheme covering its full Australian range will deliver a top-of-the-range replacement monitor for a faulty unit within four working hours.

Leoptics

A new name on the Australian market for monitors is Leoptics which is manufactured in China for the Taiwanese-based manufacturer of the same name. Introduced to Australia by hardware distributor Bu-Tek Industries, the 15-, 17- and 19-inch monitors use Panasonic's shorter length CRTs which makes space-saving benefits a sales feature.

A Leoptics 17cp monitor retails at $490 and features 0.28mm dot pitch, 1280 x 1024 resolution, flicker-free 85 refresh rate, a horizontal frequency of up to 70kHz and optional USB hub.

Contacts:

Hitachi Tel (02) 9888 4100

Panasonic Tel (02) 9986 7400

Philips Tel 1800 658 086

Leoptics Bu-Tek (distributor) % (03) 9558 9788


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