Interacting with the UK

SMART Technologies' CEO Neil Gaydon talks to CRN about the importance of gathering feedback from local resellers and policy makers as the interactive display vendor looks to regain lost ground in the UK

"When I sat down with UK resellers for the first time in April and asked them who had seen a road map, they said 'we didn't even know one existed'."

That statement encapsulates all that was wrong with interactive display vendor SMART Technologies' UK strategy before it overhauled its approach three months ago, according to its CEO Neil Gaydon (pictured).

A decade ago, SMART was riding high in the UK as the undisputed kingpin of a booming interactive whiteboard market.

But the Canadian vendor's share of the market here dropped to as low as 20 per cent as it failed to capitalise as quickly as its peers on the market shift from whiteboards to interactive flat panels (IFPs), Gaydon admitted.

To make matters worse, its partnership with sole distributor Steljes - once synonymous with the SMART brand in the UK - broke down towards the end of last year and since then SMART has taken UK support direct, moving to a fulfilment-only distribution model with new allies Midwich and Westcon and ramping up local headcount from two to 40. Steljes, meanwhile, went into administration in May.

Partner feedback

Gaydon is in the UK this week to gather feedback from the UK government and local channel partners on the NASDAQ-listed vendor's strategy and product road map, something he claims would never have happened under the old set-up, where SMART relied on Steljes as its UK eyes and ears.

"We have 500 people who do nothing but education in the company every day, and that's more than Apple, Microsoft or Google."

"We lost ground here in the UK but now with the range we have, and the change of distribution, we're confident of regaining that ground," he said.

"We want resellers to look at our road map and say 'we don't want one of those but we do want one of those' and tell us how to improve things. We are looking forward to getting feedback and making our products more closely aligned with what the UK market wants. Sometimes a little thing can make a huge difference. It's a bit like when BMW and Mercedes were struggling to sell the volumes they thought they should be in the US; when they added cup holders, sales went up by 30 per cent - it could be a stupid thing like that."

SMART may have lost ground in the UK to the likes of Clevertouch but Gaydon said the firm's new hands-on approach will help build momentum for its flagship 6000 series. He claimed this is the only panel in the world that can automatically recognise that the teacher is using a pen.

"These are the things that differentiate the company," he said. "We are obsessed. We have 500 people who do nothing but education in the company every day, and that's more than Apple, Microsoft or Google."

SMART's engineers also have to visit schools every month to help design tools, Gaydon added.

Corridors of power

Gaydon will spend the coming days meeting not only channel partners but also government figures, including government adviser Rachel Wolf at 10 Downing Street tomorrow.

"We weren't getting the level of attention we thought we were getting so we have to recover our position."

He said he has two key messages for the government around education technology, namely that there needs to be more standardisation around software, and that the funding model schools use for technology is stuck in the past.

On the former point, Gaydon said the schools market needs to take a leaf from industries such as finance and engineering, which are standardised around one or two key software tools such as Excel and Autodesk, respectively. No such standardisation has occurred in education, he said, arguing that this is confusing for students.

"You should see the chart I have of where education is," he said. "It is in the thousands and very few of them are interoperable."

"The financing model for education doesn't work because it belongs to the era of the textbook," he added, claiming that wider adoption of a subscription model would be a better use of capital and would allow schools to keep their devices and software up to date.

"We are raising these issues in order to learn what to make, because when we're thinking of products we are two years away from what comes out," Gaydon explained. "I've got 300 engineers in Calgary and Seattle and we've got to have them working on the right stuff to hit the bullseye."

Gaydon said SMART has already accumulated a 50 per cent share of the US IFP market and is shipping twice as many units as its nearest rival. Although reluctant to dwell on the breakdown in SMART's relationship with Steljes, Gaydon intimated that SMART could have been further ahead in the UK had it not been reliant on a third-party supplier last year.

"We weren't getting the level of attention we thought we were getting so we have to recover our position and we'll only do that through fantastic products, fantastic software and a fantastic channel," he said.

Economies of scale

SMART is in the process of being acquired by Taiwanese contract manufacturer Foxconn, whose 1.2 million-employee headcount Gaydon pointed out is greater than the population of SMART's home city of Calgary.

"What we do in revenues in a year, [Foxconn] do in a morning."

"They make 11 million panels a year and the global market for interactive flat panels for education is about 450,000 to 500,000," he said. "It's like I said to our staff when we announced the deal: what we do in revenues in a year, they do in a morning."

The deal will immediately add buying power around some components SMART uses but SMART's own manufacturing set-up will only be reviewed over time, Gaydon said.

He also asserted that the acquisition - which was announced in May but is yet to close - stands to bolster SMART's education offering in the long term.

"SMART are an innovation company and they are an optimisation company," he said. "They bought us for our brand, our software and hardware. But they also bought us for our channel; they were quite specific about that as they know the channel has the deep understanding of the education market, when budgets are coming up, and how to do those deals.

"Foxconn has no channel and no marketing and they bought Sharp for that reason as well. There's a bunch of IP and talent around things such as WiFi and devices so SMART might start to think - and I'm giving you our longer-term vision - as to more capability to help deliver classrooms' entire solution from Wi-Fi to the end-point."

All these changes collectively mean UK resellers will be dealing with a "new SMART", Gaydon said.

"We are now working directly with channel partners and have closer involvement with decision makers in UK education," Gaydon said. "We are getting closer to the UK market for the first time and with new owners on the horizon offer the best supply chain in the world."

Lighter touch

SMART acts as its own distributor in the US but Gaydon said the new ‘hybrid' model it employs in the UK with Midwich and Westcon will remain in place for the foreseeable future.

Westcon always knew that Midwich would come on board as a second distributor, Gaydon said, arguing that resellers "like choice".

"We felt [taking billing and warehousing] was too big a jump so we are not looking to change that. We have a lighter-touch distribution model than we had with Steljes and we are now the direct interface with the channel so they know what the roadmap is and how to sell our product," he said.

Daley Robinson, marketing director at SMART Technologies partner Stone, said SMART was late to market on the new generation of products but said its strong brand means it should make up lost ground.

"There are some people that just won't buy anything else," he said. "When interactive whiteboards came along, they were just known as smartboards and that's almost ingrained. When people come to replace their smartboards - of which there hundreds of thousands in UK education establishments - they want to carry on that brand. Now SMART has focused its energy on large-format touch, I don't see any reason why it can't carry on the momentum. It's still such a massively growing market and there's still so many interactive whiteboards out there for replacement, there's still all to play for in that market."