Projecting profits

Growing business demand, government investments in education and a consumer sales are fuelling demand for projectors

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Projecting profits
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By  Piers Ford Published  July 17, 2011

Growing business demand, government investments in education and a consumer audience hungry for home cinema are all helping to fuel demand in the lucrative Middle East market for projectors, writes Piers Ford.

The projector market across the Middle East is booming, driven by business demand, an education sector hungry for the latest interactive technology and the consumer’s enthusiastic adoption of state-of-the-art home entertainment systems.

The general view is that these factors will help the market to grow by at least 15% this year. With attractive margins holding off product commoditisation at every level except the low end, and plenty of scope for adding value to basic sales, the channel is primed to take advantage of an upward trend that shows no signs of abating.

“Projectors have become more affordable, and businesses and schools that were restricted to a few projectors for their daily use are now acquiring additional quantities,” said Salim Bukhari, head of products at vendor LG Electronics Gulf.

“Another reason [for the growing market] is that education ministries are pushing schools to use higher technology for imparting education. The third reason is the increase in the home projectors segment. Due to affordable housing, especially in the UAE, many ex-pats are moving to bigger apartments and looking for bigger displays.”

Bukhari added that demand is rising for ultra-portable LED projectors that can be used for home cinema and gaming, and for home theatre projectors, data projectors (in the corporate arena) and short-throw projectors that can be used with greater flexibility in the class room.

Manish Bakshi, general manager at BenQ – one of the top three projector vendors in the region during the first quarter of 2011 along with Acer and Epson, according to market analyst Futuresource Consulting – said that users in every sector are simply becoming more sophisticated and mature.

“A few years back, they didn’t understand the specifications they should use,” he said. “Now, the projector can play a greater role in the business. It can be integrated with the LAN, it offers better resolution, there are portable projectors that deliver up to 6,000 lumens, short-throw models that reduce the distance between the projector and the wall to as little as 300-900cm without diminishing the viewing area  - the range is quite astonishing.”

According to Bakshi, the rapid advance of projector technology has dampened the anticipated impact of LED and plasma televisions on the consumer market. In the business and education arenas, the rise of point/draw technology means you can write with a special pen anywhere on the projected area – a good way for professors and teachers to use the integrated projector technology from a distance in the class room - and the computer will receive the marks you are making, removing the need for additional investment in interactive whiteboards.

“Every government in each country across the region is putting lots of funds into education,” said Bakshi. “In Saudia Arabia, budgets have doubled, and it’s a similar story in Egypt, India and the UAE. They are enlarging tenders every year and this is having an impact on the possibilities available to end-users who were previously using a lot of very different gadgets and technologies. Traditionally, they would have used interactive boards plus a projector and a desktop computer. Integrated projectors give us much greater market penetration.”

Epson’s channel sales manager Ahmad Qasem agreed that schools in those Middle Eastern countries with good budgets – generally, the GCC states - are driving demand for interactive projectors. Universities also offer a healthy market for 5,000+ lumen products. But he said that many private schools are still focusing on entry-level products, which means dealers and resellers have a range of options to target.

Projector manufacturers have seized on this opportunity to drive deeper into the education sector, but interactive models are also finding a ready market in the business environment, particularly among consultants and engineers who can use the technology in their presentations, highlighting important messages and emailing appropriate elements to their audience in real time.

Short-throw products are attracting a great deal of attention, not only in the corporate and education sectors, but also in the high-end consumer market where the latest technology is driven by lifestyle trends.

BenQ, whose projector sales grew by 60% in the first quarter of 2011, will launch a major effort across the audio-visual sector during the second half of the year on the back of a new range of models that capitalise on its aspherical lenses, designed to deliver large-screen projection quality across distances as short as just one metre.

Its products also reflect the growing demand for green technology and products that consume less energy. Its Eco Blank Mode, for example, automatically dims the lamp power and reduces consumption by up to 70%. And its Smart Eco Mode gauges the precise amount of lamp power needed by the projector to provide the best contrast performance, saving up to 65% in the process.

On the home cinema front, it is about to launch the first 720P short-throw home entertainment projector, following hot on the heels of the W1200, which includes technology to enhance fast-moving actions scenes in film and sport, and built-in surround sound speakers.

At the gadget end of the market, pocket projectors have been touted as must-have accessories in the retail sector. But Epson’s Qasem said that on the whole, these products don’t fulfil the needs of most serious users, who will usually need the higher levels of brightness offered by mobile business projectors upwards.

Epson has just launched its new EB range of installation and desktop projector models in the region, designed to provide sharp picture quality even in daylight, so a presentation audience doesn’t need to take notes in darkness.

“I don’t think the projector has become a commodity yet, apart from entry level products,” said Qasem. “Most models need some degree of installation, especially when we’re talking about our Pro AV products where the reseller has to have their fingertips on the technology to help customers build their home cinemas. In many cases, I’d say the basic projector doesn’t make up more than 10% of the deal.”

At BenQ, Manish Bakshi said that pricing is more aggressive in retail, where end-users themselves will usually buy most of the products. But in the business market, value-added resellers and systems integrators have become important partners during the last two years. And the growth in demand for home cinema AV products in the region – particularly Saudi Arabia, Kuwait and the UAE – as more residents build professional standard home theatres in their villas has opened up a lucrative market for resellers specialising in complete solution packages.

“To be honest, I don’t think normal dealers are making less than double-digit margins on projectors at the moment,” said Bakshi. “For education and corporate packages, the prospects are more than 20%, and this is an important reason for keeping the whole projector industry booming.
“These are very technically advanced products that can’t be sold by any Tom, Dick or Harry! A lot of research and development has been invested in them. Our higher-end projectors have a lot of added features, from HDMI connectivity to 3-D readiness, LAN capability, and USB ports so users can attach a dongle and make them wireless – very flexible in the conference room.”

BenQ has been a committed market maker, sponsoring events including this year’s Global Edtech Forum and raising the battle cry for interactive technology across the spectrum by holding dealer seminars and running comprehensive training programmes for its channel partners. It has also just held its annual regional distributors’ meeting in Thailand, where it declared its ambition to become the number one projector brand in the world.

“The projector market is very much a two-way game for us,” said Bakshi. “As a vendor last year, we didn’t conduct a single seminar on monitors – but we held 24 on projectors! We’re 100% behind our exhibitions strategy. It’s all about sharing information and making more product education available to the resellers. Everything is geared to help them make more margins.”

Like BenQ, Epson breaks its projector channel into three segments: corporate, retail and AV solution providers, which was established as a separate category last year. Ahmed Qasem echoes the idea that projectors should be a profitable line of business for everybody in the supply chain.

“Most of our corporate and education partners are involved in normal installations at schools and universities and businesses, and they are not very interested in home consumers or theatres,” said Ahmed Qasem.

“Their focus is on the installation itself, and in some segments where they are installing higher-lumen products, they will make up to 25% margin. Even at the lower end, they can generate 15-18%. On the Pro AV side, we are working with partners to develop more expertise in building around the product and the installation.”

Meanwhile, projector technology development refuses to stand still. At LG Electronics Gulf, Salim Bukari pointed out that new laser projectors are already being embedded in video cameras, still cameras and notebook computers, delivering a more tightly integrated package into the hands of the end-user.

“As usual with technology, what everybody is planning is a product that’s smaller in size, that’s greener, that offers more facilities to a greater range of customers,” commented Espon’s Qasem. “Take our EB 1775. It’s mobile, slim as a notebook, it has autoscreen functionality [the image is automatically adjusted to fit the screen]. You just put it on the table and turn it on.”

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