Pacom and Panasonic form Grand Alliance

11 Jun 2009

by: Editor

This issue in The Interview John Adams talks with Pacific Communications’ Rob Meachem about the significance of the Pacom’s new exclusive distribution agreement with video surveillance powerhouse, Panasonic.

Q: Would you agree that Pacific Communications’ recently announced acquiring of exclusive distribution rights on the flagship Panasonic line up of video surveillance products is one of the most important developments in the Australian electronic security industry for a long time?

A: It certainly appears to be big news and is attracting a lot of interest in the industry. I guess no one could have predicted Rexel Video’s withdrawal let alone Pacific Communications being appointed as Panasonic’s exclusive distributor. Customer feedback has been very positive, which is great news.

Q: How long have negotiations been going on, who approached who and how did the deal play out?

A: Cheeky question, John. It is probably not appropriate nor of any value to share this information. Needless to say I have publicly praised Rexel and Panasonic for their professional approach to the transition and the speed at which we have achieved it together. It is all good...

Q: This is coup not just for Hills at a corporate level – there are significant benefits for your sales teams as well. How are the troops responding to the knowledge they will be distributing one of the industry’s benchmark product ranges?

A: It was a great piece of news to deliver just prior to Christmas. I knew the team would be happy but I have to say I was a bit overwhelmed by the reaction and excitement it created. The troops (as you put it) deserved a win.

Q: What elements of the Panasonic product range are likely to be most valuable to Pacific Communications?

A: It is hard to isolate just one thing and we are committed to supporting all the Panasonic products but it will be camera technology that will be the most value in the short term. Panasonic ‘leads’ camera technology and we know competitors outside the Pacom camp have been getting somewhat of an easy ride. Importantly the I-Pro range of products especially cameras has great potential moving forward. As always we are in it for the long term and we think the future is very good.

Q: There’s obviously going to be some training involved in order to get Pacom staff up to speed with the Panasonic products. How is that progressing and when do you think it will be completed?

A: All technical and sales staff have been comprehensively trained by the Panasonic factory. Training is one of my favorite topics and as such is a key to success for us. More follow-up training will be conducted in late March on the I-Pro range. Very importantly we have employed two ex-Rexel staff to assist in the transition and ongoing support of the Panasonic product to the Pacom and DAS branches as well to the Panasonic customer base.

Q: Will there be an immediate boost to the Pacom bottom line with Panasonic users coming across to Pacom? Would you speculate on a percentage of business increases to the Pacom business as a result of the distribution agreement?

A: Yes, but our commitment to the transition is our focus and we know if we get that right (looking after customers) then the numbers will come. As I indicated earlier we are in this for the long term and as such short term profit gains are not on our radar.

Q: How have your other suppliers reacted to the news? How will you manage to keep them all happy?

A: I personally called all our key suppliers. The response was very positive. Good suppliers understand their strengths and that Panasonic is no more of a threat inside Pacom’s camp than it was outside. As a distributor it makes no sense for us to swap one product to another. Panasonic are clear on this as well. Our supplier relationships run deep at many levels and we have no intention of changing this. The electronic security market is huge, with many competitors. Our aim through people, products and service, is to increase market share by broadening our market opportunities and exceeding customer’s needs.

Q: Pacom’s probably one of only a handful of distributors in Australia capable of supporting Panasonic’s range in the way it deserves to be supported, wouldn’t you agree?

A: As mentioned, we are very humbled to be given the opportunity. We think a brand and product range such as Panasonic deserves a national foot print that has the best chance to tap the relevant market segments. Our 7 Pacom branches and 9 DAS branches do this. Our decentralized approach (knowledge, people, products) at the branches is the hallmark of our success.

When you back this up with support from our teams of product managers, trainers, marketing people, service, logistic and national sales management teams and we have a pretty solid foundation to maximize any products success in the market let alone a line-up like Panasonic. We rarely take on significant product ranges – in fact DVTel would be one of the last major products we took on and that was over 5 years ago. The DVTel product and the relationship between our companies have blossomed into something special and very rewarding. So these situations are always very carefully thought out and we think and invest for the long term.

Q: It’s also apparent this distribution agreement changes Pacom’s position in the market too, doesn’t it? Pacom is known for strength in the broader part of the market but this gets you right into the top end.

A: We would hope the market does not see us as you have suggested. Pacom as a company is built on its sales of technology and solutions to the top end project market (this goes back to the invention of the Pacom Matrix switch and Keyboard). Pacom as a brand (Pacom branded cameras, DVR, Monitors etc) is focused on the broader market. Having Panasonic adds to our significant line up of products both broad and top end and will definitely allow us to access a number of vertical markets not held by Pacom in the past.

Q: Obviously Panasonic is working on the next generation of Super Dynamic cameras SD5 – can you tell us anything about that – when it’s due – or hint at any potential specifications?

A: Nice question John. It is a bit early to say as there is a launch plan that we will follow, but you can probably imagine it will be absolute top of the range. Early indications are mid 2009 for the release.

Q: A great strength of the Panasonic line-up is the I-Pro range with its IP cameras and NVRs. How important will that I-Pro IP camera range be for Pacom moving forward?

A: Yes, there is a lot of interest in the I-Pro product and especially cameras as you have suggested. The core of Pacom’s growth is in IP Video and as such will only add to our large choice of IP based product. As Panasonic’s core competency is in video imaging you can bet the I-Pro cameras are top quality. Importantly, Panasonic is a full member of the Open Network Video Interface Forum, set up by the founding members of Axis, Bosch and Sony. This is great news as the industry is keen to see co-operation on the standard protocol front. 

Q: The market is entering a more challenging time – does securing exclusive Panasonic distribution rights strengthen Pacific Communications’ position at a pivotal moment for the electronic security industry in this country?

A: 2009 will be a tough year due to the slow down caused by the GFC, but Panasonic and Rexel have created a very loyal customer base that will stand us in good stead. I believe the security distribution business is in for a shake up during the next 18 months, like most industries are.  

Q: Is electronic security wholesaling likely to change over the next few years? We’ve seen changes already with Rexel withdrawing from the market. There’s certainly mounting pressure, isn’t there?

A: Unfortunately as I mentioned earlier, the pressure is mounting and consolidation in the industry will occur. We are always looking long term and as such we have several key initiatives in play at the moment that will help deliver on our 5-year strategic plan. Additionally we are selling significantly more IT based equipment now. Switchers, servers, storage and wireless networks are all massive growth areas for us, as well as the obvious growth of IP Video. There are tough times no doubt, but plenty of exciting opportunities as well.

Q: Now, some would argue the shape of the video surveillance system of the future is changing completely with IP cameras meshing with networks via video management systems. Do you agree with this? How quickly will change come and could this economic slow-down delay the switch longer than many suppose?

A: Absolutely agree with your first statement. Most large projects are IP-based now (at least encoder to monitor). Cameras are still largely analogue but as technology and price improves so will the acceleration to IP cameras. I believe that within 3 to 5 years 90 per cent of large systems will be IP end-to-end. I don’t expect the GFC will have any material effect on the switch to IP. In the volume market (middle market for Pacom/DAS as we don’t play in the cheap market) DVR’s are still strong and I see nothing that will threaten this market/product in the short to medium term.

Q: Stepping back - how is the relationship with Panasonic going? You’ve been competitors for many years so it must be unusual and rather thrilling to be working very closely with one of the world’s leading CCTV manufacturers.

A; It has been a great start and yes, it is exciting. The local Panasonic team has been sensational from day one and the support from the Panasonic Head Quarters in Japan has been overwhelming. If one word could express how we feel about Panasonic I would say: “Impressive”.

Q: What has the reaction of Panasonic customers been to the change in distributor?

A: I have been really happy with the reaction. We have received many phone calls and genuinely helpful advice. Employing two ex-Rexel staff has been well received by customers and our own staff as well. There are many loyal customers and I know business is based upon long term relationships. Our focus is to prove we deserve their business. Delivering on this is key.

Q: If you could sit down with Rexel’s Panasonic customers, end users and integrators, what would you tell them about Pacom’s commitment to this important brand?

A: One of our first approaches has been to “ask” the customers what they want from Pacom and Panasonic. The answers we have received have generally been consistent along the following lines:

* Maintain Panasonic’s world class inventive technology

* Sustain the unequaled quality and reliability of Panasonic products

* Provide strong technical support

* Hold lots of Panasonic stock on the shelves at the local Pacom/DAS branches.

Panasonic is committed to the first two and our absolute focus is on second two. We will provide a whole lot more additional value to the above but our aim is to meet these needs first.   

Q: How is your sister company DAS going with CCTV?

A: DAS is a gem of a business. Built on the foundation of alarms and access control products, it addresses customers’ needs as a one stop shop for electronic security. CCTV is a natural extension of this and DAS shifts huge volumes of products. This gives many of our suppliers reach into markets and access to customers unequalled by the competition. DAS is going very well...

Q: If there was one thing relating to the security wholesaling business that’s currently outside your control but that you would like to have influence over, what would it be?

A: I tend not to worry about things outside my control, but if there is one thing that has caused disruption in recent times it would be exchange rates. The $A has been smashed by the $US and Yen. It is not so much the size of the change but the speed at which it has happened. When input costs are mostly in foreign currency this presents major impacts to margins, working capital and obviously, price to the market.

No one likes to raise prices but when the change and speed is so fast then you have no choice. I guess the speed of change is accelerating in all part of our lives and business and our ability to keep up as an industry and business is crucial. Thankfully our Website, E-book and E-marketing approach has allowed us to keep pace with the speed of change and generally at a pace the customers demand.

“The local Panasonic team has been sensational from day one and the support from the Panasonic Head Quarters in Japan has been overwhelming. If one word could express how we feel about Panasonic I would say: ‘Impressive’”