Norman Krieke

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Norman Krieke Sales Director Samsung
Australia
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How the IT Market is moving into the CE Space
Norm KriekeSales Director CE IT
Divisions Samsung Electronics Australia
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Background

• Everyone is talking about Digital Convergence.
• What is this all about?
• Is this a threat or an opportunity
• for the IT Whitebox reseller?

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The Digital Home Environment

• Consumer Desire
• Share music, pictures, and video between PC, home
  electronics, and mobile products

Industry Opportunity Provide a compelling,
user-friendly solution that fuels new businesses
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Digital Home Scenario Video
Server
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Digital Home Scenario Audio
Server
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Digital Home Scenario Picture
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What is Digital Convergence?
Industry Convergence
Market
Change Drivers
Computing
Global Competition
Interconnectivity
DIGITAL CONVERGENCE
Communi -cations
Content
Smarter Customers
De-regulation
Consumer Electronics
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What is Digital Convergence?
Product Convergence
46 LCD TV
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A Question

• A Threat for the Whitebox Market?

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Case 1

• Gateway Fallen PC player
• A bet-the-farm shift to TVs and gizmos from PC
  business
• Launched 1st plasma TV (Nov. '02)
• Running 190 stores as of Nov. '03
• The largest seller of such TVs in the USA
• Christmas 2003 Strategy
• - More flat screens, at lower prices, in
  bigger and better sizes
• Key Products
• - 42-inch Plasma TV (entry level pricing)
• - Pocket Multi-Cam camcorder (US199)
• Files its TVs under the category of
  "electronics"
• instead of "software peripherals"

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Case 2

• Hewlett-Packard Printer Pro
• Success in printers
• Introduction of 158 products aimed at the
• home (Summer, '03)
• Christmas 2003 Strategy
• - Blitz the public with colorful ads singing
  
• the praises of connected peripherals
• Key Products
• - HP DVD Movie Writer,
• - PhotoSmart 245 portable printer

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Case 3

• Dell PC Price Killer
• Launched a complete line of consumer products and
  services, including a 17-inch liquid-crystal-displ
  ay television/monitor.
• All priced at the kind of profit-margin-killing
  levels
• that made Dell the most feared competitor in the
  PC world
• ex. 17-inch LCD TV US699 vs Samsung
  US899
• 20-gigabyte MP3 player 299 cf.
  iPod 399 (Apple.com)

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Case 3

• Dell PC Price Killer (Contd)
• Three rules
• 1. Sell well-accepted products over the web
• 2. Don't hold inventory
• 3. Offer the lowest prices
• Christmas 2003 Strategy -
• Inch into consumer electronics with
  "peripherals" that connect with PCs.
• Key Products
• Dell DJ MP3 Player (299),
• 17-inch LCD television/monitor (699)

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Case 4 5

• Microsoft
• Released a second, more advanced version
• of Windows Media Center PC
• - Media Center PC Software that transforms
  a PC into a
• multimedia center that is part TiVo-like
  digital video recorder, part stereo system and
  part movie and photo viewer
• Cisco Systems
• Bought home-networking-equipment maker Linksys
  (June, '03)

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Outcomes

• Falling prices
• Cool new devices
• An explosion in competition
• ? Consumers will win big.
• A number of companies crowding into the already
  packed ring
• ? Profits will prove elusive.
• ? Some of today's leaders will get
  clobbered.
• Flat-screen TV is the key Consumer Electronics
  appliance
• ? The key product for computer makers to be
  
• consumer-electronics giants

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A Question

• The Threat is
• The Big Players Keep Getting Bigger
• if they dont dominate in one market,
• they may dominate in the other !

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A Question

• An Opportunity ?

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The
Digital Convergence Roadmap
TV
STB
Home Server
Large Display
Digital TV
SOC
DISPLAY
Home Network System
Monitor
Web Monitor
PIC
Web PAD
Desktop PC
PC
Personal Internet Computing
Portable PC
Notebook PC
Media Player
MP3 Player
Convergence Terminal Modular Platform
Expandable Modular Mobile Terminal
IMT-2000
Internet Terminal
Cellular PCS
Mobile
MIC
Wearable Computer
Mobile Internet Computing
DSC
Media Recorder
1999 2000 2001 2002
2003 2004 2005
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The Digital Home Environment
MOBILE MULTIMEDIA Entertainment, Personal
Pictures and Video, Services
BROADBAND Entertainment, E-Business, Services
MEDIA Pre-Recorded Content Personal Media
Consumers want their devices to work together and
share content
BROADCAST Services, Entertainment
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The Digital Home Environment
Who puts it all together? - Simplicity is
the key - Promote brands that the end user
knows and trusts - Position yourself as a best
of breed solution provider Who supports the
end user? - A new services opportunity
Keep the customer for life - Growing numbers of
applications new hardware support
opportunities - Multi room environments -
Updates and upgrades
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Shifting Market Trend
IT Products
CE Products

• IT Companies will have to understand the
  emotional side of selling nice-to-have, not
  need-to-have, gadgets.
• The new players are trying to learn how to get
  
• consumers to touch, feel, and see their wares

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Your Partner in the Emerging Digital
Convergence Market

And now for the AD Break
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Thank You