Re-engineering lamp supply For years the projector lamp went largely unnoticed. Only the replacement price merited comment (usually of the open-mouthed horror variety) by end-users. For resellers, the hassle factor of getting a replacement at short notice often wiped out the slim margin to be made on the sale. Now, the debate triggered by compatible lamps, copy lamps and even counterfeit lamps has focused attention on this previously unsung but crucial component. AV News International visited Philips Lighting to find out about the lamp business from the inside.
eplacement lamp pricing and availability has always been something of a mystery – even to those in the trade. For many endusers, who might have bought a sub-EUR700 projector, the prospect of paying EUR300 for the replacement lamp is simply beyond comprehension. There is no doubt that the rapid drop in projector prices has been a catalyst for change, but so has the migration of projectors into the consumer sector. Whereas the fast availability of replacement lamps is perhaps the priority for the corporate or institutional buyer, the consumer or the SOHO buyer also factors in the cost. Whereas once the replacement lamp was 15% of the projector price, it can now be as much as 80%.
Henk Coppens of Philips Lighting: re-engineering the traditional model for the supply of replacement projector lamps.
Laissez faire Like nature, commerce abhors a vacuum. A demand has opened up for cheaper replacement lamps, with prices that endusers feel are more in proportion to their initial investment in the projector. This has posed a number of problems for the established lamp suppliers. First, their adherence to high
ISE 2008 preview
standards in manufacturing made it difficult to compete with those not so committed. Second, the traditional model for the distribution of replacement lamps involves up to seven different transactions as the lamp makes its way from manufacture, to various levels within the projector brand’s organisation, to distributor, to reseller and finally to the end user. When faced with a challenge from makers of cheaper replacement lamps, something had to change within the established manufacturing partnerships, and in the subsequent route to market.
Premium response Henk Coppens, CEO of Philips Digital Projection Lighting, is uncompromising in his view of both issues. He believes that companies like Philips, which made the initial investment in R&D, have an entitlement to reap the benefits of their work. Coppens accepts that the alternative lamp market represents a broad spectrum. This spans the flagrant passing off of premium brands by lamp counterfeiters right through to authorised products manufactured on the same production lines as lamps branded by projector vendors. While Coppens acknowledges that some manufacturers of compatible lamps have found a place in the market and satisfy their customer demands, he is utterly condemnatory of the counterfeiters and chop-shop re-lampers. He warns of what could happen if lamp supply from the leading manufacturers can’t be brought in line with channel and end-user expectation. Philips maintains its own collection of counterfeit and remanufactured lamps which range from the noticeably poor to the potentially dangerous. Faced with the prospect of some end-users being, at best, disappointed with the performance of their replacement lamp or, at
worst, physically injured, Coppens has led an initiative to make life difficult for the more questionable suppliers of copy lamps.
Partner relations The first challenge for Coppens and his team was to persuade the projector brands that change was both necessary and desirable. For some of Philips’ manufacturing clients, replacement lamps represent a healthy net contribution to their bottom line. While there is obviously a cost associated with ensuring that a replacement lamp is always available, even for a projector that might have ceased manufacture years ago, Coppens persuaded the projector brands that the traditional margins enjoyed on lamps are unsustainable. Furthermore, Coppens made the point that when the projector performance is impaired by a poor quality lamp, the name on the case (and in the case of counterfeit products, possible even the lamp) is that of the projector manufacturer. With the support of the projector brands, Coppens’ team has been able to develop legitimate alternatives to the projector brand’s replacement lamps, manufactured to the same standards as the original Philips’ products – and a means of bringing them to market with a lower transaction overhead.
Future model Coppens points to Philips’ relationship with specialist trade distributor Just Lamps as a model for the way that the company is able to provide a lower cost alternative, without compromising on quality. Diamond Lamps are manufactured exclusively for Just Lamps, using original Philips components and the same production lines. The quality control procedures are also the same as those employed
Re-engineering lamp supply – part 2 for manufacturing original lamps for Philips’ projector manufacturing partners. Whatever volume advantage Just Lamps enjoys, the real saving for the end-user is created by rationalising the supply chain. The lamps are passed to Just Lamps, who sell to resellers, who then sell to end-users – three stages instead of seven. The result is high levels of availability, lower end-user prices, a bigger margin for the reseller – and .a higher degree of customer satisfaction with the replacement lamp, and ultimately the projector brand. So convinced is Coppens that this is the right model for the replacement lamp market that Philips is actively seeking suitable partners with which to roll out the Diamond Lamps model. While it might involve a degree of compromise on the part of the projector brand, as Coppens says, “the alternative could be so much worse”.