CII Data Shows Merger of NEC and Packard Bell Creates a Channel Powerhouse; Consumers Will Benefit from Competition Seen for 1996 Holiday Buying Season

Business Wire, June 5, 1996

LA JOLLA, Calif.--(BUSINESS WIRE)--June 5, 1996--Combining the Packard Bell, NEC and Zenith Data Systems PC operations outside China and Japan yields an instant powerhouse in retail channels, in addition to significant potential for other distribution channels, according to data from Computer Intelligence InfoCorp (CII). However, CII studies also demonstrate that the combined company faces interesting challenges, such as disparate levels of consumer loyalty and a wide variation in business penetration among its PC brands.

The channel findings emerged from CII's StoreBoard Channel Tracking database, which tracks U.S. sales channel performance and trends for PCs, printers and software. StoreBoard channels include Computer Dealers, Consumer Electronics Stores, PC Superstores and Office Superstores.

Noted Stella Kelly, CII's Program Director for StoreBoard, "The merger comes at a fortunate time. Packard Bell has been faced with some downturn in share in consumer channels, as well as a limit on how much more shelf space they can get from certain retailers. The combination with NEC, which has grown significantly over the last 12 months, allows the new company to develop two very strong brands."

According to CII's StoreBoard data, the combined companies claimed 40 percent of all sales in the critical Consumer Electronics Store channel in April, a significant advantage over Acer, which took second place with 27 percent of April shipments. CII believes there is also great potential for Packard Bell to leverage both NEC and Zenith Data Systems through other channels of distribution.

"In the PC Superstores channel, the combined Packard Bell and NEC go from individual positions in the pack, back in the second five, to being the number one supplier in April, with 22 percent of shipments," observed Kelly. "The dealer channel, however, will need to be a key focus for the new company -- at present, Packard Bell-NEC has only three percent of this channel, which is the largest of all."

In addition to its channel presence, key elements for the new company's eventual success will be the dynamics among market segments of PC end-users, notably, customer loyalty.

"While there may be expectations that there exists some loyalty to NEC or Zenith that Packard Bell-NEC can leverage, the facts are otherwise," asserted Dave Tremblay, Senior Industry Analyst at CII. "The data from our CTI survey shows that Packard Bell has in fact raised their loyalty among consumers to third place behind Gateway and Apple, but NEC and Zenith haven't done so well. In the fight to hold on to existing customers and win new ones, we will almost certainly see a new round of fierce competition that should please the pockets of holiday shoppers in 1996."

The brand loyalty information (see table following) comes from the 1996 version of CII's Consumer Technology Index (CTI), the largest, most comprehensive survey of personal computer usage in the U.S. CTI surveys three different segments of the U.S. PC market - home, workplace and self-employed. Brand loyalty is based on the percentage of current customers who repurchased the same brand of PC.

Loyalty Rankings for PCs Acquired in 1995

NEC, Packard Bell and Zenith Rankings, Out of Top 11 Brands

               Overall Rank   Home       Self-Employed    Workplace