In just about every market segment in IT, the landscape progresses much as you'd expect according to macro-economic theory. That is, the number of competitors in a mature market dwindles as leaders emerge and gobble up market share. Eventually, two, three or maybe even four leaders emerge and dominate a market segment. It has happened with microprocessors, networking gear, PCs, printers, operating systems, disk drives, databases and even security software--almost every category of product that you can think of, save for one.
And that would be displays, where rivals big and small continue to slug it out no matter the financial consequences or market-share gains. In this segment, American computing giants (including Hewlett-Packard and Dell) mix it up with the best, from vertically integrated Japan (Sony, NEC/Mitsubishi, etc.), to the strongest Korean industrial giants (Samsung, KDS, etc.), to a slew of upstarts (BenQ, SVA, etc.), to the occasional European stalwart (Philips). To sum it up, this market defies conventional thinking. There is no earthly reason why so many companies go after this market space. In other segments, entrenched leadership buys a certain amount of insulation. But not here.
Take Sony, for example. It believes it can displace its rivals and be the de facto supplier of products used in every setting. What makes this category remarkable is that even established companies dream of remaking themselves into something different. Take ViewSonic. If nothing else, the company is a reliable supplier of office workhorse displays. But that's not good enough for the Orange County, Calif.-based company, which wants to take leadership positions in everything from plasma TVs to portable gaming devices.
The latest company to pine for more is LG of Korea, which has bold plans to unseat the likes of NEC/Mitsubishi, Samsung, ViewSonic and others in the channel. And it's planning on pouring tens of millions of dollars in the United States to do so. Here's why.
The company, a leader in optical-storage devices, among other things, has tried cracking the U.S. market before. But past efforts led to heartache as profitability failed to meet internal expectations. One reason: an overreliance on retail distribution, which is more price-to-price warring than value-added distribution.
LG, which is also No. 2 worldwide in monitors, has lost ground in the past year to Samsung, which has upped its capacity through the expansion of its facilities. To combat that, LG has launched a variety of promotions designed to get partner attention. It's new "Life's Rewards" campaign promises to put additional dollars into the hands of thousands of reseller sales personnel, plus a Lexus SUV for one lucky program participant.
Morris Lee, senior vice president of LG's North American operations, says his company plans on spending as much as $300 million in marketing and advertising during the next three years to brand and position LG as a leader in the display market. In the United States, the company is not yet a top 10 player. But Lee believes it can be among the top three in a few years.
"It is my personal opinion that when we look back three to five years, there will be some changes. The manufacturers that have fully integrated solutions will emerge," Lee says. "If we commit investment in the U.S. market, we believe we can be the leader."
With deep pockets and money to burn, Lee's company is likely to stand for something in the United States. What, exactly, remains to be seen.