Vtech 2006 Annual Report Download - page 14

02 03 04 05 06
0
100
200
300
700
US$ million
670.0
609.8
687.2
612.5 594.7
400
500
TEL Revenue in Last 5 Years
600
VTech Holdings Ltd Annual Report 2006 11
The new window box packaging design VTech DECT Cordless Phone with Colour
LCD Display and SMS Function
Two Handset Expandable Internet Phone
System with Caller ID
While re-engineering the operations, the
business worked on creating an entirely
new product line-up, which was unveiled
at the Consumer Electronics Show in
Las Vegas in January 2006. The new
product range aims to be much more
closely aligned with the needs of VTech
customers and consumers in North
America with close attention paid to the
phones’ features to enhance their value
proposition. More emphasis has also been
placed on developing more distinct
identities for the VTech and AT&T brands,
to allow the Group to exploit its dual
brand strategy more fully.
To strengthen VTech’s competitiveness,
the business has rationalised component
usage and standardised technology
platforms to achieve cost savings and
ensure more cost effective products.
The revamped product line has been
gradually appearing on shelves since
April 2006 and customers are in
general supportive of the products, in
particular of some of the 5.8GHz
analogue models.
Considerable effort was also devoted
during the financial year 2006 to
strengthening marketing in support of
the launch of the new product line-up.
The marketing team in the United
States created a new window box
packaging design that is completely
recyclable and is much easier for the
consumer to handle than the standard
clamshell. It was first launched to club
stores in May 2006. VTech has applied
to patent this design, which has made
the Group more environmentally
friendly in the eyes of consumers and is
pressuring competitors to follow its lead,
adding to our legacy as a pioneer in the
telecommunication products industry.
In the financial year 2006, the business in
the United States also introduced a
series of well designed print and online
advertising campaigns. These were
highly successful, winning considerable
industry acclaim, including nationwide
recognition “ Campaign of the Week”
from www.adbumb.com and third place
in the A.M.A. Max Award for Marketing
Excellence for 2005.
Outside the US market, VTech
continued to achieve growth in Europe,
offsetting a large part of the sales
decline in North America. Revenue in
Europe rose by 49.4% to US$168.5
million, representing 28.3% of the total
TEL revenue.
Growth was recorded mainly in Western
Europe, notably France and Germany. The
Group also made good progress in
penetrating new markets such as
Scandinavia and Eastern Europe.
As national fixed line telephone operators
and other incumbent players are still
dominant in several major European
markets, our business strategy will remain
to supply cordless phones to these
companies on an ODM basis. Our
relationships with these customers have
strengthened as they see the advantage
to their businesses of having a reliable,
cost effective and high quality ODM
partner that has complied with the
European environmental directive RoHS.
This strategy is ensuring a quicker
expansion in the near term than pursuing
one based on our own brand.
In the longer term, we remain
convinced that the VoIP market will
offer considerable opportunities as
fixed line traffic moves to this new
technology platform. However, we will
phase our investment to ensure it
matches the growth with actual
consumer demand. Currently, the
Group offers three VoIP phone models
in North America in partnership with
Vonage, North America’s leading
broadband telephone service provider,
Skype, an eBay company which is the
world’s fast growing Internet
communication software and Yahoo! ,
the world’s leading Internet portal. The
Skype and Yahoo! models are dual
mode, allowing users to make and
receive both fixed line and peer-to-peer
VoIP calls.