Publications

Thomson: Laptop Hardware Making a Comeback

Thomson computers and smartphones may not be very common in Switzerland yet. But the brand is in the process of catching up in the French as well as US markets and plans to expand worldwide. An interview with representatives of the Thomson brand.

During the current pandemic there are winners and losers. The SFIT Group, with its worldwide and exclusive license for the Thomson brand in laptops and smartphones, is not one of the latter. Why?

Thomson is definitely one of the winners of the current period. As a result of governments' decisions to confine people to their homes, home office has developed strongly and the need to have one or more laptops has become essential for all members of a family. The laptop has all the characteristics of the ideal product as it allows consultation and production, communication through its integrated webcam and microphone. This is not the case with the smartphone or tablet, which allow to consult but hardly to produce. Thomson is therefore extremely well positioned to address this market.

Thomson addresses various exciting topics. The business model of variable costs: would you tell us more about it and are there any disadvantages?

Thomson's "asset light" and "fabless" (fabrication-less) model is even more advantageous in times of global crisis. Indeed, our company's model is based on a concept of prudence, we do not invest in heavy structures with subsidiaries per country, very expensive factories or very expensive media campaigns. The model is based on the outsourcing of all activities except for innovation and the sales network.

Normally, the IT market is already very seasonal, with the first half of the year accounting for 30% of turnover and the second for 70% of turnover. Our competitors therefore have to account for very heavy fixed costs in the first half of the year despite limited turnover. All things considered, our outsourced costs at Thomson are proportional to actual activity, so costs are low when there is less activity, such as in the first half of the year or during a period of crisis...

You have been pursuing the strategy of having several production sites for some time now. Now this flexibility is to your advantage. But surely there were other reasons why you decided to implement this strategy?

In correlation with our strategy of limited spending, in total opposition to our competitors, we also have a completely different manufacturing strategy:

Our idea is to design the best machines at the best prices and then to work with assembly partners able to offer us a service at the best conditions, without ever having an exclusive contract with anyone.

This has several advantages:

• We are never dependent on a single assembler;

• We keep the conceptual and technological mastery of the notebooks we offer;

• In a case of mass production we can work with 2 or 3 assemblers at the same time and thus support a larger order flow.

The model is therefore scalable and we have no dependence on a single assembly partner.

Thomson products can be found not only in specialist shops, but everywhere, even in supermarkets. Almost a "to-go" product. And you work particularly intensively with partners. How much does your success depend on this distribution strategy?

In France, the brand is distributed today almost everywhere. In 4 years of sales of notebooks, we have a national market share of around 7% and we are the leader in notebooks under 300 euros with a 25% market share. We are not dependent on any large customer, every year we increase our sales in supermarkets, specialised stores (FNAC, Mediamarkt, Best Buy) and of course online shopping (Amazon, C-Discount) which is a very strong segment.

The Qualcomm range, which we started selling at the beginning of 2020, will enable us to penetrate even more strongly into specialised stores with a higher average price.

In the rest of the world, in EMEA and the US, our development is currently focused on specialised stores, which allows us to show that the Thomson brand is very well recognized and sells everywhere. Our products, whether they are low-price or mid- to high-end, represent an attractive solution for consumers. This is in the context of an oligopoly market with 6 players installed in the same scheme, with the same obligations: amortizing extremely expensive global marketing campaigns by selling the same products that have become obsolete for 3 to 6 years at a very high price.

Basically, the Thomson devices are in the low priced range with a very good price-performance ratio. The development and marketing costs are also lower and therefore you can amortize faster, but also bring new models to the market. An advantage over, say, Apple?

Yes, we wish to keep and offer our first price range all over the world, always integrating the latest and most performing components, as the success of this range has been demonstrated on the 4 continents. We have started from 0 and will achieve a turnover of almost 50 million euros in 2019. The arrival of the new Thomson computers with Qualcomm processors, which feature an unrivalled battery life of 24 hours and a 4G/5G module, shows that we are following through on our differentiation strategy by being the first to bring new technologies to market.

We can say that on average we are two years ahead of our competitors, including Apple, not because we are better, but just because we are more responsive: our flexible "asset light" strategy allows us to place orders without waiting to sell existing inventory or components from previous product lines.

At the moment you are particularly active in France and in the United States. But you want to expand. Where?

In the US, we've just entered several major retailers, such as:

• QVC

• Target

• Brandmart

• Best Buy

• And soon Walmart

For Thomson 2020 is a year of strong opening of the US market and the rest of the world. Timing is optimal because we have very innovative Qualcomm processor products with integrated 4G or 5G internal modules. That's why we're also in discussions with strategic investors that will allow us to accelerate very strongly this year and the following years.

May 28, 2020

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