Dealer Relationships

Dealer Relationships. BPS projectors relies heavily on dealers to sell its complex product to the market. Nearly 80 percent are "systems" dealers who sell BARCO as a component. Dealers sell Barco on the dimensions highest quality final image, and excellent post-installation reliability. However, dealers complain that the machines are unnecessary complex, are designed to win awards, and not be user friendly. Sony, in contrast, sells relatively easy to use but lower projection-quality products direct from the box.

Sony tubes. Sony tubes has dealt cooperatively with Barco for several years. Although the move by Sony projectors may have been predatory, it's possible that the company was simply caught off guard. Rather than continue to upgrade on technical dimensions, BARCO chose to backfill its product line. Left without a primary customer for its 8 inch tube, Sony may have been forced to develop a projector that could maintain productive economies of scale for the tubes division.

Option 2. BG700 upgrade. Although this product does not offer a sufficient technical upgrade, it may be possible to present this option at the trade show, with the promise of the BG800 in the future. Customers who have made orders will be satisfied with this option, but at the cost of BARCO having to redevelop major components of its supply chain. To miss the trade show deadline would severely damage BARCO's brand reputation and give Sony significant time to further respond to the market and secure its own supply chain.

One way to mitigate risk with this option would be to provide dealer incentives to sell the BARCO as a systems package. It is possible that consumers may not notice the quality difference once the projector is installed as a systems package, but with dealer margins added, it is equally possible that they will begin to feel top-line pressures on the systems price. This is at best, a short term solution that does not address product quality and supply chain uncertainties.