Last week, on the eve of Toshiba's launch into desktop PCs, PCDN met up with Howard Seabrook, desktop business manager for the Japanese firm's PC division. Foir the last 18 months, Seabrook has been formulating his plan and in that time has developed some interesting ideas about the consumer sector and what it takes to win in business PCs.
The original plan was to launch a consumer PC first. Why did you U-turn on that and go for a business range instead, especially given the consensus that the market is saturated with brands?
Desktops is a highly competitive market. You only have to look at how most PC brands are doing, and you'll see they aren't doing well, especially those that that don't have an international presence or haven't achieved critical mass.
Business is definitely a more attractive market. In the US we had built up a very strong retail channel so we went with consumer first. In the UK, we have some pretty good links with the retail channel - it's about eight to 10 per cent of our volumes so there were very good signals there, but when we actually started to look at it...
Fundamentally, we came to the decision that it's almost impossible to make money retailing consumer PCs which is a pity as [Toshiba's consumer PC brand in the US] Infinia is in its second generation with MMX chips, DVD drives and so on. And Tosh is a great brand in audio, microwave and other electric goods; almost a quarter of UK households have a Toshiba product.
We feel very much more comfortable in business-to-business. Retail is typically small business. The market is very crowded but there is room, although not for everyone. You have to be bringing something more than a box.
But there are plenty of firms out there offering more than a box, as you put it...
The sensible third alternative is weak: firms like AST and Olivetti that have had well publicised problems. Dealers don't want to leave the door open to Dell but people don't want to rely on one brand. We want it to be about two per cent of desktops in 12 months. That's 3,000-3,500 desktops per month. We're confident there's space in the market for us to achieve that.
What will the channel look like?
The channel is exactly the same as the existing one - no hint of direct. Our T's and C's are very stable. If there's a perception that we're expensive it's because we're not in the cheap and cheerful part of the market, but we're in lots of different margin businesses from mail-order firms to big resellers. We're competing with the people who are top in our channel: HP, Compaq, IBM.