March 1, 2008

Neonode's New World adventure

Just as North American companies wanting to expand overseas often seek out third-party logistics providers and trusted experts to help them succeed, so do European companies that are venturing over here for the first time.

By DC Velocity Staff

Just as North American companies wanting to expand overseas often seek out third-party logistics providers and trusted experts to help them succeed, so do European companies that are venturing over here for the first time.

Neonode, a Swedish manufacturer of mobile communications equipment, is one such company. Not only has Neonode discovered the New World, but it has also figured out that its success will depend on how well it combines saleschannel development, product marketing, and supply chain management.

The newcomer is hoping to give Apple some competition in Silicon Valley and beyond: It has just launched the N2, a touch-screen cell phone in the mold of the revolutionary Apple iPhone. The N2 has many of the features of the better-known iPhone, such as fingertip navigation, a 2-megapixel camera, an MP3 player, a calendar, an address book, Internet access, and Bluetooth. But what sets it apart from its big rival is a proprietary touch-screen technology that is extremely responsive—and less expensive to manufacture. Its intuitive interface also provides fast access to information, all wrapped in a device with a mere 3-inch profile.

Designing the N2 was one thing; getting it to market will be an entirely different matter, since the company has no direct experience selling within the United States. Neonode wanted a partner that could help it develop both product demand and a U.S. marketing strategy. And once a plan was in place, Neonode also hoped the partner would manage sales and distribution.

To fill all those varied requirements, Neonode turned to Distribution Management Consolidators Worldwide (DMC), a New York company with expertise in both sales-channel development and supply chain management. Together, the two companies have established Neonode USA, a partnership that will market and distribute Neonode's products in North America, Latin America, and China.

"DMC was selected for their strength in the United States," says Daniel Stalbo, marketing director of Neonode in Sweden. "DMC brings experience, knowledge about the American market, and knowledge of product development. It also has knowledge in Asia, which we will use when we expand into that market."

In addition, DMC provides the financing needed to assure rapid penetration of the new market. This arrangement reduces Neonode's capital investment as well as its risk. DMC also makes certain that any new products introduced in a country are a good cultural fit.

"The lifespan for new technology is so short, and companies have to move fast if they are to get their products to market on time," explains Andrew Lowinger, president and CEO of DMC. "Neonode is a small company with great technology. Partnering with us allows Neonode to work on their core competency, which is developing the next generation of products, while we bring the current products to market in a timely, competitive, and cost-effective manner."

The target market in North America for the N2, which has been selling in Europe for several months, includes cell-phone network providers and telecom retailers. The product launch in the United States is set to begin this spring.

DMC is still defining the N2's North American distribution plan, but it expects that it will bring the phones in from Malaysia through a West Coast port, where DMC's own in-house team will handle customs clearance. Domestic distribution will likely be handled from two third-party logistics facilities in Los Angeles and Georgia, where DMC currently has contracted space.

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