Panasonic Partnership Boosts Federal Sales
Panasonic Partnership Boosts Federal Sales By Nick Wakeman
Panasonic Personal Computer Co. only wants to do one thing well - sell laptops and notebook computers - so there should be little surprise that its marketing approach is tightly focused.
That focus has evolved into an exclusive arrangement with Government Technology Services Inc., Chantilly, Va., which has enabled Panasonic to break into the top five manufacturers in laptop sales to the government.
"We are big on exclusive partnerships," said Robert Carr, Panasonic Personal Computer's vice president of marketing, channel management and services.
Robert Carr, Panasonic vice president
The Secaucus, N.J.-based company only sells laptops to the federal government through GTSI. Although GTSI is free to sell other brands, Panasonic is its top seller, GTSI said.
The personal computer unit formed in 1992 was selling about $4 million worth of notebook and laptop computers a year through GTSI when the exclusive agreement was signed at the end of 1994. Within one year, that sales figure hit $25 million, said Tim Collins, GTSI's director of vendor relations.
Sales continued to rise in 1996, with a 46 percent increase in sales of Panasonic's products by GTSI. And, in the first six months of 1997, GTSI sold more than $30 million worth of Panasonic portable computers, Collins said.
Carr said sales to the federal government will represent about 40 percent of the company's $200 million in revenue.
Sales in 1996 were good enough to rank Panasonic as the fifth largest seller of portable computers to the federal government with 8,000 units shipped, said Payton Smith, an analyst with International Data Corp., Falls Church, Va.
Toshiba Corp. was the top seller with 32,000 units, he said. Toshiba sells through a variety of channels. No. 2 laptop seller, International Data Products Corp., Gaithersburg, Md., sells directly and not through resellers. IDP sold about 21,000 units in 1996, spokeswoman Suzanne Martinez said.
Carr credits Panasonic's partnership with GTSI as the cornerstone of the company's rise in the government market for portable computers.
"We've always taken a very focused view of the market rather then trying to be all things to all people," he said.
Carr said he has seen other companies moving away from exclusive partnerships by turning to a broad distribution model with several partners selling a company's products. "But too many times bad things can happen," he said.
Profit margins face greater pressure as different partners compete with each other to sell the same products, he said. "Loyalties deteriorate," Carr said.
Also, marketing efforts suffer because they aren't focused, he said.
Through their exclusive relationship, GTSI and Panasonic have undertaken joint advertising, marketing and sales activities, Collins and Carr said.
Exclusive partnerships are probably the best way for companies with little federal exposure to crack the market, IDC's Smith said.
"They can leverage [the other partner's] sales force without having to make a large investment themselves," he said.
"The federal market can be a difficult one to get into," Collins said. Choosing to go with an exclusive partnership showed that Panasonic researched the market well, he said.
The move also means Panasonic can concentrate on what it does best, which is manufacturing, Collins said.
Because GTSI already had strong ties into the federal market, it was a natural choice for Panasonic, Carr said.
The relationship has a three-pronged approach, Collins said. First, GTSI is the exclusive holder of Panasonic's General Services Administration schedule. GTSI is using Panasonic portables to help it win indefinite-delivery, indefinite-quantity contracts. The relationship also has an "integrator pass-through program," in which systems integrators that want Panasonic portables on their contracts must go through GTSI.
GTSI had the internal and external resources in place to get Panasonic into the federal market, Carr said. "And we thought we had the technology that would appeal to them."
Since forming the relationship with Panasonic, GTSI has won several IDIQ contracts including the Army Portable II. GTSI sold 1,000 units in August, the first month of that contract, Collins said.
One of the prime reasons Panasonic laptops are gaining in popularity is that the company builds them according to Defense Department specifications, Carr said.
"We've focused on the rugged environment," he said. "They get more mistreatment, more exposure to hot and cold temperatures and they can get knocked over and banged around."
With marketing and support personnel from both companies working together, Panasonic has gained more insight into the needs of end users and how the portables are used in the field, Carr and Collins said.
"We have factory engineers visit accounts," Carr said. From those visits, Panasonic has added features such as touch screens, which won GTSI sales to the military for applications in Bosnia, Collins said.
In August, Panasonic made nonglare screens standard equipment because customers complained about not being able to use the laptops in bright sunlight, Carr said.
The relationship also is helping GTSI make greater inroads into the state and local market, especially with sales of portables to state and local police departments, he said.
"That is probably the single hottest market right now for notebooks and laptops," Carr said. The ruggedness of the portables is a quality police departments value, he said.
GTSI does not have an exclusive relationship with Panasonic for the state and local market but they work together, Carr and Collins said.
The popularity of portable computers is increasing, IDC's Smith said. In 1996, 140,000 portables were sold in the federal market, an increase of 36 percent since 1995.
"The market is growing much faster than desktops," he said. Shipments of desktop computers are remaining relatively flat, Smith noted.
| GTSI/Panasonic Contracts|
| Panasonic is on the following GTSI contracts National Institutes of Health Electronic Computer Store I|
Army Portable II
NASA Scientific & Engineering Workstation Procurement II
Treasury Department Acquisition I
Air Force Integrated Command, Control, Communication, Intelligence
Navy Tactical Computers
National Guard Blanket Purchase Agreement
Randolph Air Force Base Blanket Purchase Agreement
Department of Energy Blanket Purchase Agreement
Veterans Affairs Blanket Purchase Agreement
GSA Great Lakes Blanket Purchase Agreement
"Everyone that wants a portable doesn't have one yet," he said. "And a lot of agencies are opting for portables as replacements for desktops."
Sales in 1996 rose at such a high rate because of the growth of the GSA schedule and several blanket purchase agreements were awarded, he said.
IDC estimates that shipments in 1997 will grow at 11 percent, although Smith said he would not be surprised if the actual growth rate is higher.
Prices for portables have dropped while capabilities and battery life have gone up, Smith said. "You can do just as much on a portable as you can on a desktop," he said.