Microvitec Plc has spun out its multimedia division into a wholly owned subsidary and formed a communications company, Vitec Communications Ltd. Vitec is headed by the former Gandalf staff brought in by James Bailey earlier this year. Despite the downturn in sales of monitors, reported in March, Microvitec will continue to deal in terminals and monitors as a substantial part of its business. But according to Robert Adams, sales and marketing director, the company hopes to achieve higher profit margins through wise management. The investment in different, although complementary market areas, is, however, an attempt to spread Microvitec’s eggs over several baskets. The lesson of depending too heavily on one area appears to have been learnt Microvitec’s recent troubles largely stem from a dependence on original equipment manufacturer deals with Reuters and British Telecom. The company is also keen to stress that markets will be geographically spread for all sectors of the company relieving it of over-dependence on the UK market. Local area networking has been picked on as an area for expansion says Adams, because of its increasingly profitable margins – perhaps another lesson that Microvitec has learnt from its monitors disaster. Heading Vitec Communications Ltd is Kevin Howarth, ex-Gandalf UK sales director. Its products have come out of Microvitec’s recent acquisition of an unamed Canadian Ethernet networking company and its OEM agreement with Canadian local area network specialist, Develcon Electronics Ltd. Vitec will initally sell Develcon’s bridges, routers and gateways for local area nets and will eventually move into ISDN applications, currently being developed by Vitec in-house. Develcon is, according to Howarth, one of Gandalf’s main Canadian competitors. Vitec will adapt and sell Develcon’s products exclusively outside North America, while Develcon will distribute Vitec products in that area. Back in August, when Microvitec announced half year losses of over UKP2m, there were criticisms of its indirect sales and distribution network. Vitec has implemented a direct sales force which it reckons will make up 40% of sales, eventually rising to 60%. The new multimedia subsidiary, MV Multimedia Ltd, will continue to sell Microvitec’s Insight MM Workstation for interactive training applications. Although this division contributed just 12% of turnover last year, Adams of Microvitec is confident that the investment in will pay off, quoting IBM’s dictum that multimedia in the 1990s will be akin to personal computers in the 1970s. MV’s products will be sold through a mix of dealers, a sales force and value added resellers.
