Barco Projection Systems – 1

Barco Projection Systems Case Study, Assignment 1. Describe the increase business concern strategy of the Barco Projection Systems Di lot? bits per second has followed a trade portion based harvesting line. bits per second unalikeiated these separates based on the scan rate of the projectors. Video segment projectors had scan judge of 16 kHz, selective information projectors had scan rates ranging from 16 to 45 kHz and prowess projectors at the higher end had rates from 16 to above 64 kHz. bps was the leader in the artwork projection segment which was a niche commercialise.Historically, Barco entered the projections merchandise with the refuse-end scan rates for video applications and has been adding depth to its product line by improving the scan rates. Thus, subsequently BPS created data projectors and ultimately art projectors. However, BPS had been limiting the projector scan rates in each of these three segments thereby clearly differentiating the products in g round of the segments. 2. On page 12 of the case, Dejonghe comments that all of our projections, however were based on the conjecture that Sony would wonder our vision of the market place. What does this mean?When does one foe accepts an otherwises vision of the market? Traditionally, BPSs emulation had followed its practice of segmenting the projections market by the scan rates. By strong inscription to R&D, BPS had brought about continuous improvements in the projector scan rates and thus established itself as a comprehensive player with carriage in all the segments. Based on this, BPS had a vision that it will continue to drive the applied science improvements in the market (in terms of the scan rates). Also, Sony had always positioned its projectors below that of BPS in terms of performance.This chafe BPS assume that Sony will follow its vision of the market. Generally, a contention might accept another companys vision of the market if the other company a. Is a clear m arket leader and has a good understanding of the market needs b. Is the front-runner in livery new engineering to the market 3. Why did Sony decide to reject BPSs vision of the market in August 1989? Although BPS had been a technology leader, since 1985 BPS had been continuously watching and incorporating the tubes used by Sony on its projectors.This was a clear transition of BPS from being a technology leader to a follower of Sonys technology. Further, there were no suppliers apart from Sony components that produced tubes with the quality necessary for high-end graphics projection. As a result, BPS had to heavily rely on Sony for the tube technology. Sony by chance believed that BPS did not precede at a fast enough rate to capture the suppuration potential in the market. So Sony decided to put itself ahead of BPS in terms of the market vision. 4. How serious a threat is the Sony 1270? What atomic number 18 Sonys objectives?On the performance scale, 1270 is positioned above BPSs BG400, so the image of BPS as a high-end player in the projectors market is under serious threat. Also, the 1270 is targeted at the U. S. and European markets from which BPS had 83% of its graphics revenues. This will significantly affect share of the BG400 in these markets. If the 1270 is priced at the lower end ($15,000), it can also eat into the market share of BD600. Further, at this price level, the 1270 has the potential to serve both the data and graphics segment which will destroy BPSs segmentation practice.The huge result potential (40%) expected in the graphics segment has perhaps prompted Sony to drive the technology change in this segment and develop the 1270. In addition, by pricing it lower Sony aims at merging the data and graphics segment and thereby achieving economy of scale. Sony aims to eventually make the graphics segment a commodity market rather than a niche market. 5. Did Barco make a mistake somewhere along the way or do things like this just happen wh en competing in high technology line of credit on a global scale? Sonys release of the 1270 is not an incidental event.BPSs failure to continuously innovate and update the technology of their projectors made them lose their technology leadership position to Sony. Following Sonys tube technology was a direct conflict with BPSs belief that Sony will accept their vision of the market. As a result, BPS did not foresee that Sony could be ahead of their own projections in terms of the scan rates and prices in the graphics projector segment. BPS also failed to run into that niche markets are always prone to be commoditized eventually. 6. What should Barco do with obeisance to Price?Since there is only market speculation on the Sony 1270s price, Barco should wait for Sony to announce the actual price of the 1270. At two different pricing levels ($20,000 and $15,000) of Sony 1270, various pricing levels of BG400, the associated revenue loss (assumed % for the reduced prices) and the margi ns are calculated below. Scenario 1 Sony 1270 Priced at $20,000 BG400 Pricing Price per unit $ Marigins % salute per unit $ Est. revenue enhancement Loss Estimated Revenues $Millions Total Marigins $Millions No Reduction 24,000 29% 17,040 30% 8. 6 2. 6 Reduced Price 23,000 26% 17,040 25% 9. 60 2. 5 22,000 23% 17,040 20% 10. 24 2. 3 Scenario 2 Sony 1270 Priced at $15,000 BG400 Pricing Price per unit $ Marigins % Cost per unit $ Est. Revenue Loss Estimated Revenues $Millions Total Marigins $Millions No Reduction 24,000 29% 17,040 60% 5. 12 1. 5 Reduced Price 23,000 26% 17,040 55% 5. 76 1. 5 22,000 23% 17,040 50% 6. 1. 4 In the first scenario, with pricing decline of BG400 the total margins are clearly reducing. So, the current pricing should be bear. In the second scenario, a price reduction in the range of $23,000 whitethorn be considered to achieve slightly better revenues with the same total margins. still at the $15,000 pricing level of Sony 1270, chan ging the price of BD600 would not do any difference to its total margins. So the pricing of BD600 should be retained at the current levels in both scenarios. 7.What should Barco do now with respect to its product development plan? Short-term plan Since BD700 is clearly wanting(p) to Sony 1270 in terms of performance, it cannot be positioned higher. Hence, the development of BD700 should be put on hold immediately and BPS should instead focus on develop the BG800. The cost of developing the BG800 in time for the InfoComm should be compared against the cost of a BPS initiated marketing campaign to promote the BG800 and the pace of its development should be decided accordingly.The BG800 should be priced above the 1270 and BG400. Long-term plan BPS should refresh its vision for the future and plan for continuous technology updates to create more(prenominal) depth in the product line. BPS should also develop other suppliers for its projector tubes and reduce its dependence on Sony. A fter the release of BG800, BPS should realign the pricing of BD600 and BG400 to maintain the segment differentiation. Eventually, the data and graphics segments are likely to be commoditized and so BPS has to look at product line extensions in terms of width as well.