Irvine-based Toshiba America Information Systems Inc. is looking to put some life in its laptop computer sales to businesses,a weak spot in its lineup.
The tack: Toshiba will hand out bigger rebates to the vast network of behind-the-scenes resellers. These sellers of computer gear target small and midsize businesses that aren’t big enough to have a chief technology officer or unit that buys computers and other gear.
The Toshiba division,the North American computer arm of Tokyo-based Toshiba Corp.,also is set to increase the amount it reimburses resellers for making repairs and providing other services to laptop buyers.
The cost to bulk up Toshiba’s rebate and reimbursement program is about $20 million.
Toshiba’s U.S. computer unit posts an estimated $2.6 billion in annual sales. Most of its revenue is from laptop computer sales, with consumers accounting for the bulk of that.
Toshiba’s goal is to more than double the company’s U.S. market share in business laptops in the next 12 months, from about 6% to 15%, said Jerry Lumpkin, vice president at Toshiba America Information Systems.
Toshiba needs to take action.
While Toshiba has been strengthening its position in laptop sales at stores during the past few years, the company has recorded shrinking market share for the lucrative market of sales to businesses.
“We’re going to have to go after the B2B space,” Lumpkin said. “We think we can do that.”
Toshiba has lost out to rivals that sell more than just laptops, said Rob Enderle, principal analyst at the Enderle Group in San Jose.
Rivals such as Hewlett-Packard Co. and Dell Inc. also sell desktop computers, servers and other technology gear. Their ability to sell different computer gear makes it more convenient for businesses to do all their buying from them.
Meanwhile, Asian computer makers such as Lenovo Group Ltd. of China and Acer Inc. of Taiwan are moving fast to boost sales to small and midsize companies.
“This space is hard fought,” Enderle said. “(Toshiba) needs every advantage they can find to hold back new entries like Lenovo and Acer while protecting against the big players like Dell and HP.”
The good news for the company, Enderle said: “Toshiba does see the growing competitive threat and they are trying to combat it.”
Toshiba is making a smart move by trying to get to customers through reseller channels, he said. But it’ll be tough without a broad lineup of products, Enderle said.
Toshiba’s Lumpkin said that many companies continue to pick and choose among providers. Toshiba’s laptops have made it a strong player without offering lots of different technology gear, he said.
Toshiba’s new rebate program is set to increase resellers’ profits from about 7% on the cost of the laptop computer to as much as 12%.
Rebates alone are set to range from 1% to 3% of the laptop, versus 0% to 1.5% that Toshiba offered in the past.
The company also has rolled out a plan that calls for large business customers, who contact Toshiba directly to buy laptops, to be steered toward resellers for the sale.
The moves look good to Scott Holcomb, a reseller and technology services provider based in Mission Viejo.
“Anything that puts a little jingle in my pocket,I’m game,” said Holcomb, who has customers in the legal, financial and medical industries.
He said he had shied away from Toshiba in the past, partly because the profits weren’t big enough.
Lumpkin admits as much, saying some resellers “backed away from selling notebooks because they couldn’t make any money doing it.”
Toshiba’s new efforts are bringing Holcomb back to the computer maker.
Business customers have changed their buying habits during the past few years, he said.
In the late 1990s, companies would make large, bulk purchases that made it logical to buy direct from computer makers.
Dell’s growth pace early this decade convinced other computer makers to use the direct sales model. Toshiba was one of them. Its direct sales helped the company become a top seller of consumer laptops.
Now things are changing. Independent units at companies are much more likely to make computer buys on their own and in smaller quantities.
The problem, as other computer makers have discovered, is the direct model doesn’t work as well with small and midsize businesses,or units of bigger companies,as it does with consumers and large buyers.
Smaller companies want more computer support than being directed to a Web site for help.
“They need the expertise that these reseller partners have,” Lumpkin said.
Toshiba isn’t the only computer maker looking to boost business sales.
Part of the struggles at Irvine-based computer maker Gateway Inc. has been its slumping business sales.
Former Gateway chief executive Wayne Inouye stepped down earlier this year amid criticism that the company was focused too heavily on consumer sales at computer and electronics stores.
Gateway’s interim chief executive, Rick Snyder, has vowed to focus more on corporate sales.
