September 29, 2003

TABLE OF CONTENTS
News

The RetailVision Award Winners
RetailVision Wrap-Up by ChannelMedia Staff
Photos from RetailVision
How to Turn Browsers into Buyers by ChannelMedia Staff

Top10@Retail by Keith Newman

Research

Third Party Players – Can They Survive In Retail? by Jana Munford
Q&A with Computer Associates – Tony Graffeo

Community Raw Meat, Fish and Rebates by Roger Lanctot (Beyen Research)
Changing Channels by Steve Cross

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NEWS

Awards

 

Best Product: Hardware

Archos Technology
Maxtor
Micro Solutions
Palm
Planon System Solutions

Winner: Maxtor


Best Product: Productivity Software

Corel
Executive Software
MediaRECOVER
Panda Software
Susteen

Winner: MediaRECOVER

Best Product: Accessories

American Power Conversion (APC)
Fossil
Gemini Industries
iBIZ
Orange Micro

Winner: American Power Conversion (APC)

Best Product: Edutainment/Entertainment Software

Ahead Software
Brighter Child Interactive
MUSICMATCH
NoviiMedia
PalmGear.com

Winner: Brighter Child Interactive


Best Product: Peripheral

LaCie
Micro Solutions
Pegasus America
Planon System Solutions
Wacom

Winner: Wacom


Best RetailVision Merchandising:

Adobe
Belkin
Gemini Industries
Logitech
Palm

Winner: Belkin


Best RetailVision Strategy:

Belkin
Gemini Industries
Maxtor
Palm
Z-Tel

Winner: Palm


Best RetailVision Presentation:

Gemini Industries
Imation
Maxtor
Palm
Synapse Micro

Winner: Synapse Micro

Best New Technology:

iBIZ
MediaRECOVER
Palm
Planon System Solutions
Z-Tel

Winner: Z-Tel

Best Vendor:

American Power Conversion (APC)
Belkin
Gemini Industries
Maxtor
Palm

Winner: Palm





NEWS

RetailVision Wrap-Up
By ChannelMedia Staff

   Sponsored by:

While it was hot at the JW Marriott Desert Ridge Resort & Spa in Phoenix last week, the site of RetailVision Fall 2003, it was even hotter inside the spacious resort as a swarm of Retailers were treated to a bevy of exciting new products. RetailVision's new Self-Scheduling System was a great hit as more Vendors were able to secure key appointments with the specific individuals they were looking to meet with, perhaps to support their boardroom presentations. Henry Cho MC of the famous “The Best of RetailVision Awards”(TM) Dinner, Laser Light and Fireworks Show and a fun biker party (sponsored by Ingram Micro) put an exclamation point on an exciting few days of hard work and play. And while some Retailers suggested that there weren't many "blockbuster" new technologies or products, others suggested that incremental improvements in features and benefits will help Retailers sell more products this holiday season. "We are teed up for a great fourth quarter because of products like the ones here," said one major Retailer.

Leading the way were players like Palm, Maxtor, APC, Computer Associates, and Seagate but also exciting new companies like Ogio, Ingenio, GetConnected, Securikey, Advueu and MediaRECOVER.

Computer Associates, for example, used RetailVision as the venue to launch into the retail market with eTrust EZ security software package. The products, eTrust EZ Antivirus at $29.95 and eTrust EZ Armor security suite at $49.95 for a 12 month subscription with product and virus signature updates included. CA, the world’s fourth largest software company, is counting on its strong brand name, television advertising, excellent packaging and security expertise to increase sales of this fast-growing product category. Vice President, Steve Gohres, was ecstatic at the Event as many Retailers gave CA’s products and channel strategy a thumbs up (and large opening orders!).

Koenigsberg & Associates is a premier high technology management consulting firm that was established in 1997 and specializes in two areas, which are Sales, and Marketing Consulting Services for Software Developers and Vendors. They also provide hosting and consulting services for Vendors and Manufacturers for industry events and trade shows such as RetailVision.

Their core competency is assisting Computer Software companies to launch new products and or increase their sell through and dealer base of existing products. This includes providing marketing, packaging, merchandising, and sales strategies through various reseller channels. Our specialty is interviewing various s/w publishers to determine if they can successfully launch s/w products into various retail channels through a commission or license based agreement.

AOL 9.0, which was packed with new features and content, was introduced at RetailVision to a large group of Retailers and Vendors. "We have become much more user focused," said AOL executive, Paul Ewert. New features include spam filtering and other key security and privacy features. In addition, the new software includes a computer check up feature and loads of new content of the music, video and radio variety.

Watch These Companies:
We need to take just a minute to thank those Retailers who pointed me in the right direction on some product stuff and other concepts: Jeff Kirshblum (Harmony Computer), Steve Glatt (Mall), Christine English (CompUSA), Kevin Jones (Micro Center), Jackie Trilling (DataVision), Scott Reddy (Buy.com) and Dan Freeman (Zones). I found the Fossil Palm Pilot watch on my own (I gotta’ get one!!). But, everybody loved this software product from Novii that turns your Palm Pilot into a remote control. Even opens your garage door. Gemini Industries also made a strong showing with a broad assortment of consumer electronics and multimedia products. The Company also received several "Best of Award" nominations. With Dwayne and Steve Bellow leading this company to the next level of its growth in the computer retail channel, we can expect exciting things.

Ogio - Entering the computer industry with its top of the line notebook cases and other backpack products, the leading "X-Gen" brand is prepared to grab some share at the higher end of the category. We also expect a lot from former Targus sales leader Dow Jones, who has taken the sales reins at Ogio and is looking for a select few channel partnerships.

Ingenio, makers of EyeTop, the first ultra portable video screen, was one of the more exciting products at RetailVision. "Eyetop allows users to view images privately, securely anywhere, anytime. You feel like you have a 14 inch screen about four feet away," said Laurent Hercz. The product is available with a Suggested Retail Price of $299. For more information contact lhercz@ingineo.net.

PriceGrabber - Launched a new feature called Shopping List - all of your parts or products on a shopping list and then where you can source each product or the cheapest source for all of the parts and products. The Canadian version of PriceGrabber will be launching in Q4.

MediaRECOVER - Image recovery software for people who lose images from digital cameras. Every digital camera user will lose an image. There are 23M digital cameras and lots of users who are losing data. Recently launched, MediaRecover is distributed through PRO and is looking at partnerships with leading Retailers and distributors. They also won the award for Best Product: Productivity Software at RetailVision. For more information contact koreyb@mediarecover.com.

Griffin Technologies has launched two new products for the retail marketplace, including ControlKey and ControlKey Platinum. The well-known enterprise security firm has taken a hardware approach to security with a USB security key that looks like a flash drive. The company's first product is launched under the Securikey Brand and will price at $59 and $99 respectively and ship this Fall.

Digital River - The leading electronic software distributor is looking to bring downloads to brick and mortar Retailers. Gregg Wilkes, Vice President of Channel Sales, is leading the charge. "Glad we had the opportunity to talk about the ability to impact their bottom line on the delivery of electronic goods. Retailers understand that there is no shipping cost, returns, shrinkage and those costs go to the bottom line. The products are virtual, the profits are real," said Wilkes.

Some hot new software products from Elibrium, who is starting to make a big impact as a republisher of software, bringing some great stuff to market from smaller companies. As we all know, the little guys can juice up the market. Anybody remember uninstallers, anti-virus software, or memory software (or web cams)? Those genres were all introduced to the market by small companies. Hey Retailers, next time the Elibrium folks stop by, give them a listen. Look for Elibrium’s new anti-spam product. I use it and it’s great, “Ella for spam control”.

PALM had a world premiere on the first morning of RetailVision for the new products from all their partner companies. A couple of fun little products for the PDAs, then they showed the new version of Documents to Go from DataViz. That is one big gun for mobile professionals; now reads and saves WORD and Excel docs in native mode….no conversions. Even Microsoft can’t do that on a handheld. Palm also won 2 awards at RetailVision: Best Vendor and Best RetailVision Strategy.

MUSICMATCH, a regular attendee, was at RetailVision to show off the newest jukebox, V8, which is absolutely great! Sure beats the crummy stuff that came with my MP3 player. By the way, I only “rip” my own music CDs that I bought and paid for. Downloading music off the Internet without paying is stealing. Pure and simple. Okay, soapbox time is over. Back to work. Deacon Johnson walked me through the new product and the company’s plans, some of which I have only under double-secret probation. Keep an eye on these guys.

Our old friends from Aladdin showed up again, after a long absence. I’ve been beating up their Prez, old pal Jon Kahn, to get back in the RetailVision swing. Looks like it worked. They had some top-notch meetings with key retail partners. Aladdin’s Internet Cleanup software is on a tear through retail. I just love the box, with these sort of “alien” shades looking out. Nice family of products, WIN and Mac. Aladdin just announced a deal with Channel Sources, longtime supporter of RetailVision, to represent the Aladdin line to retail. Veteran Exec VP, Tom Fitzsimmons and his crew will have Aladdin stuff everywhere shortly. You go, guys!

Phantom Technologies was in stealth mode with some really incredible new “3-D sound” peripheral. All very hush-hush, but look for these guys. Our own Steve Cross is involved.

Panda Software finally showed up at a RetailVision. The consumer product line is anchored by an entry-level service, Titanium, and a professional version, Platinum. Titanium is easy to set and forget while Platinum has advanced configuration options and an intuitive personal firewall with networking features for the small business or gaming studio. Cammy Christy and BKA are collaborating to lead the charge for this European-based outfit with very strong anti-virus technology. They kill in Europe. But in the States can they beat Symantec, McAfee, and all the others? Stay tuned. What a fight this one is turning out to be. Reminds me of the old uninstaller wars 10 years ago.

LaCie introduced an impressive array of storage peripherals designed by the legendary team at Porsche. LaCie has teamed up with the renowned design firm to bring you products that combine modern form and crisp design. Coupling LaCie’s history of excellence in its industry with Porsche Design, a world leader in timeless design and performance, this new family of drives features highly-defined style and superior performance. Keeping with the design philosophy of F.A. Porsche, “A formally coherent object needs neither ornamentation nor enhancement. Its neat, clean lines suffice; they should be invariably understated, obvious and never stray from the product’s spirit and purpose.” The LaCie Hard Drives Design by F.A. Porsche reveals a chic one-of-a-kind style that only the famous Porsche Design team can deliver. Its clean lines and mirrored finish add a contemporary element to your desktop or workstation. In other news, LaCie partners with CompUSA to launch a new line of Storage Design by F.A. Porsche. LaCie and TechData sign distribution agreement to increase support to the channel.

Seasonic Electronics announced the debut of its Super Tornado ATX 12V Power Supply, a breakthrough in PC power for gamers and other power PC users. The Super Tornado, positioned for the Do It Yourself (DIY) and replacement PC segments, offers a silent, ultra-quiet 120mm Cyclone cooling fan and patented S2FC intelligent speed technology, giving users the quietest and most efficient performance possible. Perfect for Intel Pentium 4 CPUs Version 1.3 and higher, The Super Tornado features a unique, horizontally-mounted 120mm fan that is 50% larger than typical power supply cooling fans. Not only does the larger size reduce noise by eliminating the need for a second fan, but also the horizontal mount prevents lubricant leakage while assuring 0% chafe on the fan bearings. Together, these design innovations produce exceptionally low noise, slower speeds, low wear, and longer overall fan life. “The Super Tornado is definitely cool and quiet. Even more, however, it’s energy saving and environmentally friendly,” said Cathy Chang, Marketing Manager for Seasonic Electronics. “It’s energy efficiency is a near-perfect 99%, compared to just 50% for many other power units. The Super Tornado is an excellent choice and a great value for any PC builder, rebuilder, or do-it-yourselfer.”

GetConnected - Everyone you talk with is looking to increase margins by leveraging cross merchandising opportunities and up selling customer to buy solutions rather than just point products. To that end, one very exciting company is Get Connected. GetConnected can enable you to enter these lucrative categories quickly and cost-effectively. GetConnected is the leading provider of aggregated comparison-shopping and POS solutions for selling broadband, wireless, digital video and other digital services. In less than 90 days, deploy a best-in-class content management system for service plans, pricing and promotional information; the most sophisticated street address, phone number and/or zip code-based service qualification; and a closed-loop order processing and transaction reconciliation system for 35 telecommunications service providers. Join the likes of Best Buy, Dell, Micro Center and Motorola, all of whom have deployed GetConnected POS solutions at retail, on-line and in call centers. For more information, visit www.getconnectedinc.com or e-mail merchants@getconnected.com.

For the computer gaming junkie who can't ever leave his/her computer, StarTech.com is introducing a product, Video Game Jockey, that allows you to play any game console with any PC monitor. The Video Game Jockey supports full audio pass through, so you'll be able to hear your games through your PC's speakers or headphones. Plus you can switch between your console games and PC with only the touch of a button, so you'll be able to quickly check your e-mail during breaks. The Video Game Jockey also allows you to connect VCRs, DVD players, and camcorders to your computer monitor, and since it is a pure hardware design, no software or drivers required, it even works when your computer isn't turned on. It's a steal at under $80.

Actiontec is a steady participant, and long-time industry guy Mike Ehlenberger knows just how to make an impact with the Retailers. Actiontec was showing off a new line of Bluetooth products. I went nuts for the USB Wireless Bluetooth Adapter. Forget about cables and wires from now on, this product line will be a gas! Can’t discuss the other products Mike told me about, yet. By the way, Actiontec still makes hay with analog products…MODEMS!!!! Believe it? Apparently half the country won’t pony up for broadband, and Actiontec handles that half.

Olympus displayed the whole line of digital cameras in the Levin area: terrific stuff that attracted a lot of interest from the Retailers, e-tailers, and catalogers. Olympus’ retail line includes everything from inexpensive starter cameras for a couple hundred bucks to professional grade; what a great line of products. They just killed with a new 6-megapixel SLR digital camera with interchangeable lenses - Pro product for about $2199. I own an Olympus digital, and one of their point-and-shoot film cameras (a rare black Epic Stylus with zoom), along with my other rigs. Love the small Olympus cameras. Great optics. And apparently, great retail programs. Incredible technology.

Continental Promotions and long-time adversaries TCA Fulfillment were both in attendance, pitching their rebate programs to both Retailers and Vendors. Interesting market, if you get my “drift” (inside joke – drift is what they call the uncashed rebate checks). Over the years, and in various incarnations, I’ve used them both for rebates and other promotions - two great outfits. TCA President, Mike Metro, is a longtime supporter of RetailVision and has done an outstanding job building TCA into a real machine.

The folks at Maxell were in fine form with a complete line of media. Once again, a real player in the market coming to RetailVision to make a splash with the retail decision makers. It’s funny, because companies like Maxell can get an audience with anybody they choose, and yet they choose to come to RetailVision. It just makes sense to leverage the Event, and they do it well. Led by Don Patrician, the entire Maxell team is professional and committed to the channel.

V-Com’s steady VP of Sales, Travis Sehestedt, was flogging the new retail boxes for their league-leading utilities, and the new boxes were designed by all-around good guy and VP of Marketing, Jeff Hyman.

Advueu - While the Advueu brand is new to retail, their management team is not. The successful OEM LCD TV and monitor company announces their new brand into retail at RetailVision. Advueu will be working with select retail accounts and not buying groups. With D&H, they will have programs in place and manage and service the accounts. They currently offer LCD TVs: 15, 17, 20, and 30" wide.

Ahead Software presents the award winning CD and DVD burning software. It is very easy to use. Nero 6 the digital media suite (video, audio, photo, data storage, backup, DVD play back) supports 28 languages and customized user interface. According to TechVT, “there’s a ton of new stuff in Nero 6.” First off is a nifty set of wizards that offer a simple point-and-click path to whatever you want to burn or play. Nero 6 offers software to cover just about anything you can burn to a CD or DVD. PC Magazine states, “If you are looking for an all-in-one toolkit that can create and burn content onto nearly any type of DVD or CD, then Nero 6 Ultra Edition is tough to beat at the price."

Life Balance is an award winning coaching software from Llamagraphics that helps personal and business schedules (i.e. multiple projects, home schedules, etc.). The software, which runs on PalmOS, Windows and Macintosh, is preparing to launch at retail. For more information www.llamagraphics.com.

Brighter Child Interactive - One of the leading children learning software companies brings their strong PBS brand and quality, reasonably priced learning software directly to retail. Brighter Child offers multi faceted children learning software complete with PC based software, interactive work book and flash cards. The combination of PBS characters and learning tools has made Brighter Child a bright star at RetailVision. They walked away with “The Best of RetailVision Award”(TM) for Best Product: Edutainment/Entertainment Software.

You should have seen the new cameras from Veo, the number 2 guys to Logitech. Like Avis to Hertz, they try harder. Will Banta is always on the lookout for retail partners, and Veo has the product line to fit whatever demographic you’re aiming at.

Where’s Waldo? Chris Waldo is VP at FutureDial. Different approach to this whole PDA/cellphone deal. Turns out that everybody has the smarts in their phones already, and FutureDial unlocks the capabilities of the phone you already own. On the shelf at Best Buy, Micro Center, Fry’s, and Radio Shack, it’s a kind of hot synch every user can benefit from. Could be a sleeper on a breakout.

Sometimes you just don’t know what you’re going to hear. I sat down with Tina Campbell COO, at Buffalo Technology who some of you know from stints at AAFES, Warehouse, etc. Buffalo is #2 worldwide to Linksys in consumer wireless. Who knew? The Japanese parent company is publicly traded on the Nikkei. A real player worldwide making a big bet on this continent. I wouldn’t bet against Tina- smart, hard-working. Keep an eye on this one.

Chenbro Micom is new to RetailVision, but not new to the market. Probably one of the top manufacturers of computer boxes in the world; they’re real innovators. I’ve looked at their manufacturing prowess, and it’s substantial. Chenbro is looking for Retailers who also build their own lines of boxes. Huge delivery capacity from state-of-the-art factories in Taiwan.

PalmGear.com is just as the name implies: stuff for the PALM. Their motto is: “the source for your Palm Powered world!” Retailers with a significant handheld business should take a look at the lineup of software and accessories from PalmGear. Very deep offerings in a critical niche. How about building collections of software titles geared for your target demographics?! They’ll do it - innovative thinking.

The good folks from Visioneer haven’t missed a RetailVision in years, and this one was no different. President Murray Dennis flew down (he usually drives his fast sports car to RetailVision, if you didn’t know). Now very deeply involved with Xerox and Xerox licensing activities, Visioneer is a stand-out in imaging.

Final Draft has been a fairly steady attendee, and even though it sounds like a niche product, it’s fairly broad in reach. Apparently, everybody thinks they can write and has this idea about the next great play. Final Draft is the “go-to guy” for all those aspiring writers. It’s a big hobby.

The DataViz guys, Andy Mercier and my old road warrior pal Rob Hoxie, just can’t stay away from RetailVision either. Always something new going on in handheld computing, and their stuff really makes it happen in PDAs and convergence devices. I wrote about their new version of Documents to Go earlier, but you should look at the whole line of DataViz products for mobile computing. Excellent stuff.

Fuji Film had a neat lineup, with one standout camera that has a fallback mode where it shoots 3 mega pixels, and then an active mode where you toggle it to 65 mega pixels. Now that’s imaging!

Remember JC Whitney’s catalog of car parts? Well, Startech.com is the JC Whitney of computer parts, and is now manufacturing stuff under their own name for the home convergence market. Not sure I like the names for the products, but I sure like the products. That market is really growing.

I mentioned the Fossil Palm Pilot watch (OS4.1) earlier, but Fossil is also working with MSN in launching a watch using a phenomenal application of FM (radio) push technology with a wristwatch that displays whatever channels of info you select: sports, stocks, weather. It’s like having all your personal preferences for an electronic billboard right on your wrist. Fun stuff. The MSN watch is around $129. The Palm watch is $179-$199.

Experienced people keep popping up in new roles. Mike Del Vecchio (Seiko Instruments, Citizen) is leading the charge at Pegasus with a $79.95 pen device that transmits “digital ink” without all the cost and hardware. Simple, slick, and based on some Israeli technology, the product was nominated for Best Product: Peripheral. Could do some real volume, as it's selling well in Europe already.

Service Provider Central was focused on those companies who serve the retail marketplace but also focus on services to Vendors.

ChannelPartner - Efficiency and the ability outsource channel field sales management. Channel Partner also provides detailing, merchandising and training services. "We can cover events for the cost of what it takes some channel sales people to rent a car," said Steve Wilson, Vice President of Sales and Marketing.

Tentoe - Content management system specializes in connecting Vendor product information to their online retail channels. Their focus is on rich media but it delivers everything from press releases, PDF to Powerpoint presentations. Tentoe helps online customers gather enough information to make an educated purchasing decision. Tentoe keeps customers on the Retailer's site longer, limits returns and closes sales.

Zomax –A consumer electronic supply chain solution. Consumers demand the latest technology at the lowest possible price. Retailers require guaranteed product availability and demand high inventory turns. As an experienced supply chain services provider, Zomax delivers the scalability and reliability to overcome these challenges.

Aqueduct – Increases sales and marketing channel performance for nearly 100 clients through web-based managed services. Aqueduct’s solutions connect manufacturers, dealers, Retailers and distributors by streamlining business processes such as product and services information delivery, leads management, co-op advertising and post-sale services.

Levin Consulting – You’ve left the Event pumped but where is the real opportunity? You got great feedback and made some solid contacts. But now, what? Levin Consulting, the largest and most experienced channel consulting firm, quickly assesses where you are, where you should be going and how you should get there. Jim Kalasky, Vice President, states what makes them successful is a very thorough list of recommendations and strong communication. Thanks to Barry and the Levin team for helping RetailVision.

In the meantime, my hat is off to Philip McKay, Pete Prentice and his staff. Awesome job! Thanks, folks.

If we missed you and you would like to be included in an upcoming issue of ChannelMedia please contact Keith Newman at knewman@sbcglobal.net or our Chief Correspondent and columnist Steve Cross at steve@crosschannel.com, 702-492-7472. Also, see Steve’s column at the end of this newsletter.



NEWS

Photos from RetailVision
By ChannelMedia Staff

    

MediaRECOVER


APC


Brighter Child Interactive


Wacom


Belkin


Palm


Synapse Micro


Z-Tel


Palm



NEWS

How to Turn Browsers into Buyers
By ChannelMedia Staff

Recent research from Nielsen//NetRatings shows PriceGrabber.com is the fastest growing shopping comparison site. With new tools and programs, the company is rapidly bringing new services to shoppers, stores and manufacturers.

At RetailVision, PriceGrabber detailed three ways it helps brings buyers and sellers together. The site provides comparison shopping and product information on over 3.5 millions items. Channel Engine helps manufacturers provide expanded shopping options off their own web sites. Market Reporter presents information gleaned from activity on PriceGrabber.com to provide useful market data.

Millions of active shoppers visit PriceGrabber every month looking to make purchase decisions. Hundred of online stores tap into this group by listing inventory on PriceGrabber to get qualified sales leads with a high rate of conversion to sales. The PriceGrabber team provides their merchant partners with responsive technical and business support as well as online reporting and account management tools.

PriceGrabber offers manufacturers a cost-effective medium for gaining exposure, promoting products and increasing revenue. In addition to visibility on the shopping comparison network, PriceGrabber can provide manufacturers with Channel Engine, a flexible tool to manage the path between your web product pages and the point-of-sale. The system is set up to support authorized retail channels and to send customers to preferred online merchants. It’s easy to promote value-add providers as well. Manufacturers can also monitor sales and revenue with reporting tools.

The newest reporting tool in PriceGrabber’s arsenal is Market Reporter. Market Reporter provides detailed information about market trends and pricing derived from monitoring shoppers’ activities on the PriceGrabber site. This nearly real-time data can provide valuable insights to help make crucial business decisions such as how to price a product or where to deploy R&D funds.

With access to timely research and buyers, PriceGrabber is quickly becoming resource for manufactures, merchants and anyone else involved in the retail process.

NEWS

Top 10 @ Retail by Keith Newman

Sponsored by:

At Deadline: CDW agreed to purchase most of the assets of Micro Warehouse, which recently posted August sales of more than $900 million. With Micro Warehouse's assets, CDW becomes the nation's leading distributor of Apple products. The purchase price for the assets being acquired, including inventory, is approximately $22 million.

1. CompUSA is celebrating its grand opening of its new retail store in Frisco, Texas on August 22, 2003 at 8:00 a.m. CDT. This marks the second CompUSA store in the Frisco area. Frisco is ten minutes north of Legacy Business Park, home of J.C. Penney, Electronic Data Systems, Murata Business Machines, Dr. Pepper, Fina, and Frito Lay. Both Dallas/Fort Worth and Love Field Airports are within a 45-minute drive, making the trip to either coast only four hours away. Frisco is approximately 71 square miles with a population of 40,000 residents. ARS feels that the opening of this location will increase CompUSA’s market share in Texas by providing a store in a high volume area, well populated, business district. The grand opening will include giveaways of consumer electronics products including computer products and accessories. Provided in a first-come, first–served basis, customers will receive vouchers to select from various prizes including PCs, 17-inch flat panel LCD monitors, DVD players, digital cameras, HP and Samsung printers, Web cams, software, and other devices. In-store giveaways include HP products including HP Photosmart 735 digital camera and a Photosmart 7350 printer. Winners of the HP products will be selected from a random drawing. Also attending the event will be former Dallas Stars player and assistant to the GM, Guy Carbonneau and former Dallas Cowboys player Randy White. Separately, CompUSA’s e-mail advertisement promotes 10 to 50% off select merchandise, valid from August 13 to August 16, 2003. Special offers include 15% off Intel Celeron processor-based notebooks (excluding built-to-order, prior purchases, clearance, demo, and open box items), 30% off select Microsoft software products, 10% off most PDAs, and 10% off all digital cameras $299 or more.

2. CDW-G named 12 inaugural small and disadvantaged companies for its new CDW-G Small Business Consortium, which enables these businesses to tap into CDW-G’s e-commerce services and distribution capabilities to more effectively compete for federal IT contracts. All consortium members sign an annual CDW-G partnership contract, not limited to any specific project. In the pursuit of an opportunity, the businesses work directly with the customer and bring in CDW-G when they need products to support their service engagement or want to offer customers CDW-G’s value-added offering that includes custom PC configuration, asset-tagging services, and CDW-G Software License Tracker. This enhances the small business overall offering and further increases CDW sales of its Service offerings.

3. US Internet retail sales realized a year-over-year second quarter increase of 27.8%, and a 4.6% quarter-over-quarter increase to $12.48 billion, according to the Commerce Department. In comparison, overall retail sales increased less than 5%. This compares favorably to last quarter, in which Internet sales fell 13.4% compared to the previous quarter, however, this is in comparison to fourth quarter that traditionally has the highest sales. E-commerce sales as a percentage of total retail sales were 1.5%, unchanged from the prior quarter. However, the Commerce Department figures differ greatly from those reported by comScore Networks Inc. The first-half-year growth, as calculated by the Commerce Department indicated online sales were up 26.9%, yet comScore reports 15% growth for the first half. The discrepancy may be the result of strong auto sales, which the Commerce Department includes, but comScore does not.

4. Good Guys selected two Evant software solutions to standardize its merchandising and demand chain operations for its 71 Western US stores, to be deployed in September. Good Guys will use the Evant Merchandise Planning that will enable its merchants to control inventory via open-to-buy, responding quicker to inventory changes. Following this deployment, Good Guys will implement Evant Demand Planning and Replenishment to coordinate Vendors, distribution centers and stores to streamline demand chain business processes.

5. During the season typically targeted toward the back-to-school consumers, OfficeMax launched a multi-media campaign that focuses on the business customer. The campaign that targets small business customers parallels its back-to-school campaign targeting mothers and students. Local and national television commercials will air, in addition to advertisements in local and national newspapers. OfficeMax stated this was the largest scale marketing campaign it had undertaken, and ran simultaneously for two weeks; it is estimated that OfficeMax will reach 83% of the 123 million adults in the US aged 25 to 54 at least six different times.

The business event marketing campaign will occur between August 10 and August 24, and include the following offers:

- Buy 2, Get 1 free on all Avery Binders, Inkjet and Laser Labels and all Smead filing supplies.
- Xerox Copy Paper 10 ream case for $19.99.
- Free ream of recycled pager with any empty inkjet cartridge return.
- $50 off any CopyMax Server order of $150 or more.

Depending on the results from the dual campaign, the back-to-school season next year may focus on the business community. The back-to-school season is the second biggest for Retailers, and many products promoted can be cross-marketed to the corporate customer easily.

Staples offers over 50,000 classroom supply lists, collected from elementary and secondary teachers nationwide, as part of its Staples Teacher Supply List Source program. The program allows teachers to create detailed supply lists either online at the Staples Web site, or at a Staples retail location, which are posted both online and in-store at 1,500 stores, based on the location of the schools. Additionally, Staples offers a generic supply list for each grade that was developed in cooperation with educators, and the Retailer has teamed with the Boys & Girls Clubs of America to provide supplies for disadvantaged children nationwide. The program is part of Staples’ attempt to differentiate itself from office supply and consumer electronics Retailers. Making it easier for the customer, may result in stronger traffic and sales for Staples.

6. Best Buy has begun selling subscriptions to RealNetworks, Inc.’s Rhapsody digital music service in an attempt to offset weakening CD sales through Internet music sales. Best Buy customers can sign up for a 14-day free Rhapsody trial at one of Best Buy’s 560 retail locations nationwide or through the Best Buy Web site. A subscription to the new Best Buy Rhapsody service costs $9.95 per month and allows customers to listen to music from the major record labels, or to burn songs onto CD for 79 cents each. The two companies will share revenue from subscribers. The partnership allows Best Buy to incorporate its online and offline businesses, and enables RealNetworks to reach a larger audience. The online music service has been developing for the last several months, beginning with the introduction of Apple’s iTunes Music Store in April. Rivals have commenced to offer their online music services, and last week, MSN announced its newest European music service.

7. RadioShack created a “business innovation team” led by Chairman and Chief Executive Leonard Roberts to identify and analyze emerging growth opportunities in strategic business alliances, licensing, new markets, and innovative products, and created a position of vice president, new business development headed by Andrew L. Berman. The goal of the team is to determine how to best leverage the company’s assets and advance the company’s vision and Solutions Strategy that includes providing cost-effective solutions for electronics needs and business growth opportunities, rather than merely new product or service applications in ways that are creative, innovative, and add shareholder value. Three groups will be involved in the team: a group of RadioShack’s chief leadership including President and COO, Dave Edmondson; a group of advisors for the Board; and the newly created position of Vice President, New Business Development headed by Andrew Berman, who will be tasked with maintaining the goals of the team to strengthen RadioShack’s position as a leading electronics Retailer. Previously, Berman was Senior Vice President, Sales and Marketing for CipherOptics, Inc., where he was responsible for revenue growth and developing strategic alliances. In the current competitive retail environment, Retailers attempt to differentiate themselves from rivals in ways that do not incur excessive additional expenses.

8. PC Club now offers LindowsOS computers in over 50 stores, marking the largest Linux retail launch in the US, as PC Club is the first major chain to offer the consumers the choice. PC Club is an authorized LindowsOS dealer with LindowsOS certification that ensures its software works with Linux. In addition to a line of computers preinstalled with LindowsOS 4.0 that offers a savings of $50 to $300 over comparable Microsoft Windows computer, PC Club offers a full line of software and accessories for Linux computer purchasers. The products can be purchased at a PC Club store or ordered online.

9. In a new ad that airs during the US Open Men’s Finals and the NFL’s kick-off, IBM promotes the Linux operating system and the company’s claim as a leader in the free software system. The ad, created by WPP Group’s Ogilvy & Mather, closes with the slogan, “Linux. The Future is Open. IBM.” For IBM, promoting a technology that it does not own plays an important role for the company as it conveys how consumers can use PCs and mobile phones for capabilities that they may be unaware of, and to reach a more diverse audience. In recent years, promoting Linux was part of IBM’s strategy to increase sales for its computer servers. The new ad campaign includes newspaper, Internet, and direct advertising. IBM’s thought is that by making the Linux market bigger, IBM’s share will be bigger. Although IBM is only one of many manufacturers that use the Linux operating system, increasing the overall interest would benefit the company, as companies move toward a unified system to facilitate ease of interoperability.

10. ARCHOS announced at RetailVision the appointment of Hyder Rabbani to President and Chief Operating Officer. Rabbani will report to Henri Crohas, ARCHOS Founder, Chairman and Chief Executive Officer, and will be based in the company’s Irvine, CA office. At ARCHOS, Rabbani will direct the company’s aggressive growth, centered on its award-winning audio, video and storage devices such as the popular Cinema-to-Go and ARCDisk lines. Rabbani’s operational efficiency, leadership and effective sales and channel management will help ARCHOS accelerate the distribution and production of their latest and most innovative products. Rabbani is a 17 year technology industry veteran, with more than 10 years driving global sales and strategic alliances for consumer products at Intel. While with Intel, Rabbani oversaw the company’s Europe, Middle East and Africa sales organizations and grew revenues more than 270% in 18 months. Rabbani was also Vice President of Sales and Business Development at MUSICMATCH, a digital music software and services company, where he was responsible for the worldwide channel, the negotiations, and the marketing and engineering for all OEM programs. His work at the digital music leader resulted in some of the company’s largest and most strategic business alliances, and broad expansion of the company’s channel program. “ARCHOS is in the unique position of being an industry pioneer with a long history of innovation – at a time when the consumer electronics industry is exploding,” said Rabbani. “I am stepping into a tremendous opportunity with one of the most impressive portable entertainment companies today, and I’m thrilled to give ARCHOS the management to move it aggressively forward.”




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RESEARCH

Third Party Players – Can They Survive In Retail?
By Jana Munford
Business Unit Manager, Printer Supplies Group
August 14, 2003

Third party supplies have finally found their place within the retail channel and customers are starting to open their arms with acceptance. Although these supplies have been in the retail channel for sometime, they have always struggled to survive and compete against the OEM brands. What turned around the future of third party supplies in retail? The office product superstores made a very smart move and started to offer branded supplies.

Office Depot and Staples are currently the leaders in product selections for branded third party inkjet and laser supplies. OfficeMax just expanded its line of branded cartridges to include inkjet supplies, although OfficeMax’s branded inks include compatibles for Canon, Epson and Hewlett-Packard printers. OfficeMax will definitely need to expand its branded ink selection to meet customer demands for ink supplies.

The benefit of Retailer branded supplies over other third party players is the brand recognition. Customers trust a Retailer branded product over other third party supplies mainly because of the Retailer’s product guarantee and return policy. Additionally Retailers are offering incentives to purchase their branded supplies. There is nothing more troublesome to customers when they cannot locate their inkjet or toner cartridge replacements. No one wants to travel to more than one store to find the right consumable product and most times customers are purchasing supplies when they are out of ink or toner. Since more than half of inkjet and toner cartridges are purchased through office product superstores, the Retailers are enticing customers into the stores with large product selections and low prices. Once the customers are in the store they are able to learn about the Retailer’s branded supplies.

All three of the office product superstores offer some type of in-stock guarantee for consumable products and several of the guarantees offer discounts on branded supplies. Staples and OfficeMax are giving customers a $10 off coupon that can be used on the purchase of a branded inkjet or toner cartridge if the Retailer is out of stock of the OEM cartridge. Office Depot is not offering this same incentive, however, the Retailer has its ink depot. This is a store within a store concept and a dedicated sales person is assisting customers with their purchases. Purchasing the Office Depot branded supplies are rather easy since the Retailer typically merchandises its branded supply next to the OEM product.

By offering an in-stock guarantee the office product superstores are reassuring customers they will only need to make one stop to find their consumable product and then the Retailers are luring customers to branded supplies through incentives such as discounts and educated sales staff. With these types of incentives it will be difficult for other third party players to compete within retail. This leads us to the big question; can a third party player survive in retail against the office product superstores’ branded supplies? There are definitely some obstacles but the key is finding the right niche. Most consumers who purchase compatible or remanufactured supplies are very price conscience. When you think of Retailers that offer competitive prices you often think of Wal-Mart. Wal-Mart is known for its everyday low prices. The mass merchant channel is an open niche for those third party supplies. Here third party players will find customers who are willing to try a new product because of its lower price. Target is another mass merchant that leads with its product selection and lower prices.

Although it took some time, the office product superstores wised up about third party inks and learned that branded supplies is the way to go. Overall third party players can survive in retail but know they must target a niche customer. This will create challenges for third party players but it is not impossible to compete in retail.




RESEARCH

Q&A with Computer Associates,
Tony Graffeo, General Manager, my-eTrust

Q: We thought Computer Associates was an enterprise software company. What are you doing at RetailVision?

A: You are correct, CA is a leading global software developer and Fortune 5000 company with annual revenues in excess of $3 billion dollars. Nearly all of CA's revenue comes from enterprise software licenses. Two years ago, my-eTrust.com was launched as a web borne store for personal security software. The success of my-eTrust has lead CA into the retail market. When you combine the CA brand, TV awareness advertising, and industrial strength products at a great price, these are many of the key ingredients for a successful tenure in the retail market.

Q: We love a good fight but realistically, do you think you can challenge folks like Symantec and Network Associates in the security, virus software category?

A: Absolutely. CA always welcomes a good challenge and we are a leading security company. We believe that only a current top security company like CA can truly compete against the big two. In addition to our security brand leadership through Unicenter for network management and on-demand computing, BrightStor for data backup and management, All Fusion for application life cycle management and CleverPath for portal software applications, eTrust will also become a leading brand. Additionally, CA currently has the number one retail accounting package in Canada through our ACCPAC subsidiary. We also see chinks beginning to appear in some of our security competition.

With over 1,000 viruses being introduced monthly on to the Internet, there is clearly room for a strong third vendor. Our experience and leadership in enterprise security from protecting the largest companies, governments and financial institutions in the world provide consumers with outstanding value. As a matter of fact, the same virus signature that CA includes in our 12 month subscription is available to consumers at the same time we provide it to our enterprise customers. How do you like that for value?

Q: What is your uniqueness to users and to Retailers?

A: There is nothing unique about having the right products at the right price and at the right time. Our uniqueness to consumers and end users is providing CA products that are EZ to use, EZ to update, and EZ to afford while leveraging our enterprise expertise with industrial strength products and at a great price. We rejected the "fork lift" upgrade model some of our competitors use and believe its time has come and gone. We want your parents to be able to use the Internet safely with products that are EZ to use and this has been part of our product design criteria from day one. Retailers will like CA because of our product margins, business ethics and values, and focus on profitability. We are coming to market through Ingram Micro with destroy in field and a product consignment model. We want to get paid when our Retailers get paid. This is how you build strong partnerships and it also helps keep costs and inventory levels in-line by creating a win for our customers with great pricing, solid margins for our Retailers, and profits of CA share holders.

Q: Is this one product test or do you have a deeper product road map for the consumer/SoHo space and retail channel?

A: As I mentioned previously, CA has 5 brand units that represent over 1,200 software applications. We will be introducing security products for the small business market in the fall. We have plans to introduce some productivity management software for small business in the spring of 2004. The data management and network management market for small business also looks very interesting. You have to crawl before you walk but our bet is CA will be off and running as we continue to bring software solutions to the retail and small business markets. Why do I say this, because we can and will....Thanks, Tony Graffeo (General Manager, my-eTrust)



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COMMUNITY

Raw Meat, Fish and Rebates
By Rober Lanctot

Rebate offers for computer hardware and software are proliferating at retail. While retail advertising frequency for software was up 9.3% in the first half of 2003, advertised software rebates were up 22.9% for the same period. Computer hardware advertising frequency was up 21.2% in the first half, but ads including rebates were up 41.2%.

The shift means that more than half of all computer hardware offers include a rebate and more than three quarters of all productivity software ads include a rebate. If you are rebate averse and looking to purchase a computer hardware product or productivity software, you may have a tough time finding a good deal without a rebate attached.

And on the software side, that scourge of publisher profitability, the net-to-zero rebate (a rebate for the full price of the product) is alive and well. NTZ rebates jumped 68.5% in the second quarter of 2003 following a 21.8% increase in Q1. For the first half of 2003, NTZ rebates represented more than 27% of all advertised software offers, up from 22.2% in the same period of 2002.

What does all this mean? It means a lot of things. It means consumers are getting a great deal, if they can be a little patient, and manufacturers and publishers are willing to take a sacrifice to support the retail market. It also means that the market is still too soft to be weaned off of rebates. Some categories - computer monitors, media and desktop and notebook computers – are so rebate-centric that the suppliers can’t compete without offering rebates and praying for low redemption rates.

Retailers use their suppliers’ rebates to drive business. Without customers in the stores, there’d be no business to be done. To add urgency to this equation, technology products are like fish or raw meat. They don’t age well. Suppliers have to do whatever they can to maintain sell-through velocity.

Rebates are here to stay. Therefore steps need to be taken to make the rebate redemption process as slick as possible. More Retailers have begun printing out extra receipts to facilitate the redemption process and more rebate redemption companies have set up web sites for consumers to check the status of their rebates.

With sales of computer hardware and software products still somewhat sluggish, it is important that the industry maintain consumer confidence in the rebate process. Even when consumers fail to follow the redemption instructions properly, chances are they will firmly believe that they have done everything correctly and demand fulfillment of their rebates. Nobody wants to see crabby consumers cluttering up the in-store help desk.

The marketplace is ripe for non-rebate solutions such as bundles, product installation, classes and other add-ons and giveaways or even simple rebate-free pricing. Recently I have seen more buy-two-get-one-free offers, but these too cause consumer confusion. I have frequently misconstrued these offers to mean that if you buy two, one of them is free. (My wife is thankfully there every time to set me straight.)

The ultimate antidote to widespread rebating is a product offering that is in great demand and short supply, such as digital cameras, where the hottest models are never offered with rebates. Alas, with no new operating system from Microsoft or paradigm shift processor upgrade from Intel, the industry has been left to scratch out meager sales gains with more and more rebate offers.

Keep the rebate terms and conditions simple and easy to understand and let’s hope 2004 holds something in the way of exciting new technology to stimulate sales and de-emphasize rebates. But, like death and taxes, rebates will endure.

Roger C. Lanctot is Director of Advertising Analysis for Beyen, a worldwide retail ad tracking and analysis company.

COMMUNITY

Changing Channels: Customer Service –
How to Build a Fan Base

By ChannelMedia Columnist Steve Cross

Sponsored by:

I just became a big fan of the Mandalay Bay Hotel in Las Vegas. This organization turned a so-so customer into a total lunatic in singing its praises. Heck, I’m writing this article about them for national publication! And all they had to do was upgrade their phone system and manage a small database.

Many regular readers of this column know that I live in Las Vegas. Some of you also know that my wife and I are big music fans. An average week sees us at two live music performances in all sorts of genres (jazz, pop, rock, etc). A big week includes three or four concerts, live music parties, outdoor fests, jazz brunches, etc. Last weekend we had tickets with some friends for the Mandalay Bay Beach to see Hall & Oates, who we’ve all seen a zillion times, but they really put on a fun show. Here’s the customer service opportunity, we were rained out. A monsoon rain sweeping up from Arizona dropped over half an inch of rain on the Strip in less than half an hour, along with lightning and thunder. The concert had to be cancelled. When we went inside, the line for refunds was fairly extreme, so we decided to just pop back later in the week for a refund. Unsure of which ticket kiosk would process the refund, I called Mandalay Bay’s event center and box office for the information. Both venues were very busy, with a ten-minute wait to talk to an agent.

The ARU (automated response unit) asked me if I’d care to leave a call-back number and the recording promised to autodial me as soon as an agent was free to talk. I went back to work (I have clients that need deliverables most of the time), and forgot about the call-back. When the phone rang, it was a lovely young woman who listened to my brief tale, and then told me I was already credited; a full refund the morning after the event, directly to my credit card. Just to be on the safe side, however, she suggested verifying the refund (of course, this created an additional task for her). Upon verification against my credit card number, she confirmed the refund. That is Customer Service, with a big C and a big S. Mandalay Bay used easily obtainable technology to make a huge difference to a customer. That customer (me) already called some friends about it, and you have just read about it too. By caring about the customer experience they stand out from other venues. Will I go see another concert at Mandalay Bay? I’m already checking the web site for coming attractions!

Contact Steve Cross at steve@crosschannel.com, 702-492-7472.

Editor's Note: Steve is a top channel consultant who offers services from one-day brainstorming sessions to complete channel strategy plans. He has helped numerous companies to increase revenue and enhance their channel success.




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