Barco Background and Strategy
Barco Projections Systems (BPS) was the second biggest division of Barco N.V.. The division employed 350 employees and accounted for 23% of Barco N.V.’s total revenue in 1988, which grossed $35 million. The BPS division was formed due to the large growth momentum during the 1980’s in order to pursue the highly opportunistic technology of video projection.
Originally, Barco N.V. began as a producer of radio broadcast receivers and over the years the company expanded its product line into broadcast monitors and professional video equipment. It was not until the global recession after the 1977 oil supply crisis, demand and sales for Barco’s ...view middle of the document...
Manufacturer & Model |Scan Rate/Light Output/Resolution |Retail Price | |BARCO: BD600
BD400 |16-45 600 1,600
16-72 400 2,000 |$12,000
$24,000 | |SONY: VPH1031 |16-35 300 1,100 |$10, 500 | |
The BPS division focused on three types of projectors: video, data and graphics. The evolution of its product line was centrally focused around digital projectors in 1989. BPS was the accepted technological leader in the high end projector market until Sony strategically unveiled its 1270 super-data projector and threatened to steal BPS market share.
The Sony Corporation had a very strong and reputable name to back its projectors in the market and thus resulted in Sony holding approximately 49% of total projector units sold. Nevertheless, Sony projectors were far inferior of quality when compared to those projectors manufactured by Barco. The selling price was normally about 15% less than Barco’s and in 1989 Sony projectors could be found in an estimated 80-90% of audiovisual dealer stores worldwide. It was not a secret that Sony had a reputation of reliability and low prices among dealers and few dealers could not stay open for business without the Sony projector sales.
Sony entered the projection market with its flagship 1020 video projector. Again true to its reputation, the 1020 was slower than Barco’s video projectors but interestingly enough this time the projector had a sharper focus which indicated in a better quality projector tube. Upon further research and closer examination by BPS executives, it was decided to maintain its projector quality and market share BPS forged a threatening relationship with Sony. BPS entered into a contract with Sony Components to become the sole supplier of tubes, which is ultimately why Sony didn’t respect Barco’s vision in the market any longer.
By creating the supply contract with BPS, Sony was able to maintain its strategic vision and strategy by always knowing the capability and quality of the tubes in BPS projectors. BPS made a terrible mistake as only keeping a 3-month supply of tubes on hand and 2-months of orders in transit. The mistake was as clear as day, that was made by BPS General manager Frans Claerbout. He assumed that because BPS lowered Sony’s manufacturing costs down and Sony made an attempt to always keep BPS in-touch with its latest developments, that the relationship would be profitable for both companies. Nothing could have been further from the truth.
The old saying, “keep your friends close, and your enemies closer...” was real life for Sony. By supplying BPS tubes for its projectors it had vital technological and development knowledge of BPS products and thus would be able to use that information to the...