Barco Small Summary

Qus. Which of three product development options should BARCO pursue and why ? Please keep in mind that the company can pick only one of the three.

Ans. First we should consider the fact that we are looking at this question only because Sony has shown in a trade show a new product 1270 (Superdata) projector, which may be launched in November 1989 – otherwise BARCO had a plan on the launch of its future pipeline of products. The main characteristics of this product which challenges BPS products are: Scan rate of up to 75 kHz and a potential price of USD 15000 – USD 20000 (may be). This product could possess threat to sales of BG400 and possible BD600. The major threat in my understanding is that with this one product – Sony is trying to take over the two segments of Data and Graphics (created by BARCO) by launching a single product which could potentially kill the profitability of BARCO’s most profitable product Graphics product BG400 (contributing 29% margin on only 23% revenue). Still, the exact launch date, pricing of this device, customer’s response is not known for sure and all the figures available with any one from BPS are on rumors and speculations. Given this scenario, we will analyze the available product options one by one:

BG800 :: Pros of pursuing – A product which could exceed the performance of 1270 and considering the worst case scenario that 1270 delivers what it is promising at the speculated price and customers respond to it positively, BARCO gets to still keep its position as technological leader in high end products. This could help in stemming the fall of sales if BARCO can compete on price.

Cons of pursuing – i) Only 40% chance of making the expected deadline. ii) BARCO will have to stop work on other products like BD700 which are near completion and for which BARCO already has orders.

iii) Requires 8” tube for which BARCO has no stock - has to source from sister concern of its competitor Sony and for which also it has to do modifications...