Like the phoenix, Sharp rose from the ashes of previous year’s financial troubles and uncertainty about its future to provide its dealers with a strong line of new products and a positive vision of what’s to come at its Phoenix dealer meeting.
A year ago, people were questioning whether Sharp had a pulse at all. The financial condition was dire and the imaging division was under enormous pressure. Then came the acquisition by Foxconn, announced in March 2016 and which closed in August of 2016.
Shortly after the acquisition was announced, Sharp Electronics reported that Foxconn was planning to invest $400 million to help get the ship righted. Scott, CJ, and I visited Sharp in June of 2016 to meet with Doug Albregts, Mike Marusic, and Laura Blackmer to learn more about the company’s status and the relationship with Foxconn.
In that initial interview, Doug asked us not to focus on that $400 million figure. “As Foxconn learns more about Sharp’s market, the investment opportunities from Foxconn will likely be much greater than that original figure,” he told us.
Our editorial team has weekly editorial calls and on one such call, as we entered the New Year, we pondered what had happened with the money the Foxconn was going to provide Sharp Electronics. We decided a second visit and conversation with Doug, Mike, and Laura was more than appropriate and scheduled one for Feb. 13, 2017. The results were published in our March 2017 issue.
In that follow up, we learned that the money was being invested in new products, including products from other Foxconn companies such as the Skywell water generation system that takes the humidity out of the air similar to a dehumidifier to produce drinking water that meets the most stringent standards for purity. In addition, we saw Intellos, a Sharp-developed security robot, which was still in beta testing stage. It was an intriguing product, particularly when you consider the number of hours of labor it saves.
We left that meeting with an understanding there would be road shows and a dealer meeting later that year. Scott covered the road show.
The reason behind scheduling the dealer meeting towards the end of the year was to give Sharp time to have as many new products as possible to show at that meeting. Mike was firm in that he didn’t want to schedule a dealer meeting if the products weren’t ready. After attending Pulse 17—a name that has more than one meaning in this context—in Phoenix, Nov. 28-Dec. 1, things appear to be on schedule for Sharp. Sharp chose to interpret “Pulse” to mean that the company was positioned to address the demands of today’s office environment as well as develop systems for the office of the future by having its finger on the pulse of technology.
We have already published an article by Scott that covers the meeting. My assignment was to cover the pre-event press walkthrough that Sharp usually conducts before the opening event of the meeting.
Besides the many new products on display, Sharp invited more than 50-third party exhibitors and sponsors, including Clover Imaging Group, Docukit, Nuance, Square 9, GreatAmerica Financial Services Company, and DLL to participate in the event.
The entire Sharp management team was available and there was much to see. After the walkthrough, Doug entertained questions from the industry press and analysts.
As analysts we judge senior executives not on single performances, but rather on a collective view. We do this for two reasons, first and foremost is consistency of the message and the credibility of the individual.
There are manufacturer’s executives who make the mistake in believing we are not paying attention when we attend press conferences. We take notes and tabulate numbers related to acquisitions, investments in R&D, future commitments, and financial performance.
Doug is attuned to that and the first thing he did was provide a handout on the financial condition of Sharp Electronics. Bottom line, the owner of Foxconn holds 66% of the outstanding shares of Sharp. Foxconn and Sharp are managed as separate companies and Sharp reports on its financial performances as if it were still an independently owned company.
From my personal experience, Doug is a highly capable and credible executive who has no problem telling the truth. We understand that there are things executives are unable to address and by necessity must avoid. The question I posed was, “Where is the production print product?” In response, Doug pointed to a corner of the exhibit area where Sharp was showcasing its high-volume light production products, and said, “Over there.”
We did not make clear that we were not referring to light product but high-volume printing. Sharp has addressed the education market with some high-speed printers, however, these are products that fit the definition of light production and are more suitable for handling high volumes of simple print jobs.
We did see 20 new document systems products, 10 office display products along with network storage. The new hardware has a common UI, supplies and accessories. In speaking to the dealers throughout the meeting this was widely hailed as the best thing they have seen in a long time from Sharp.
For the short term, this is what Sharp dealers are looking for. However, there are dedicated Sharp dealers who are responsible (in our opinion) for 40% of all channel sales. In our most recent survey 20 out of 27 Sharp dealers responding were dedicated to Sharp for their A3 MFP business. For that they enjoy an economic benefit that has more than outweighed the limitations of the Sharp line in high volume. We sense that is going to change.
We also saw many dealers at the meeting who represent Canon, Konica Minolta, and Ricoh with Sharp as their second line. For those dealers who have an alternative to sell true production print products, the lack of a true production print device from Sharp is not a problem.
We went out of our way to talk to those dealers. Without question they are very happy with Sharp. In my opinion Sharp is a strong candidate for strongest second line for A3 MFPs even if Sharp continues to have the least distributed A3 MFP line in North America. The improved product offering of A3 MFPs introduced in Phoenix may well strengthen Sharp’s position as a secondary source.
In our 2014 trip to Japan we discussed production print with everyone, including Sharp and our impression was they believe they do not have the distribution for it. Let me make this clear, they did not say that, that is my opinion. I look forward to our trip to Japan in 2018 and another visit to Sharp. Perhaps at that time we will get a more definitive answer as to their plans for production print.
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