Taking on the big boys

29 Jan 2004

The PC business may be a multi-billion dollar global industry dominated by a handful of big names but there still is room for smaller niche players to make their mark. One such firm is Dundalk-based iQon Technologies run by founder and joint managing director, Dermot McElroy (pictured).

The only volume PC maker in Ireland apart from Dell, iQon churned out 35,000 machines under the Multimedia by Philips brand name last year, translating into revenues of almost €30m.

IQon is the culmination of an interesting decade in the PC business for McElroy. Ten years ago next month, he and his then business partner, Pat Rooney, formed a PC assembly and systems integration company, Romak Computers, that sold PCs to the Irish market through retailers such as Compustore and ESB. In 1999, Romak was bought out by Miami-based, Venezuelan-owned CHS Electronics, then the world’s third biggest PC distributor and contract PC assembler.

A year later CHS went bust after it was found to be cooking the books. Six months after that, at the end of 2000, McElroy agreed to a buyback of assets from the US liquidation lawyer charged with selling the company’s property. Romak, which had continued trading throughout its parent company’s difficulties, was renamed iQon Technologies. The principal shareholders are McElroy and Ciaran O’Donoghue, former sales director of distribution heavyweight Sharptext, who are now joint managing directors of the company.

2004 is likely to be a landmark year for iQon, which plans to build on its sole ownership of the European rights to the Multimedia by Philips brand, which McElroy clearly considers a huge asset to the company. “Philips is a name nearly better known to ordinary consumers than Compaq, HP, Packard Bell or whatever,” he points out.

As well as consolidating its position in the Irish market, the PC maker plans to achieve substantial growth in the UK and also establish beachheads in a number of mainland European markets. It is doing this by signing contract manufacturing deals with local system integrators and assemblers in a number of countries, which will build Philips computers under licence from iQon. Agreements have already been signed in Scandinavia where local partners in Sweden and Norway are already in production and a Danish partner is due to begin production in the coming weeks.

McElroy expects to set up similar licensing arrangements with firms in Germany, France and the Netherlands in the near future and to start distributing its PCs in those markets in the second quarter of 2004. In the UK, where its machines are sold mainly through catalogue-based chains such as Argos and Littlewoods, iQon plans to establish new sales channels through a number of high-street retail outlets. McElroy expects to be shipping into these new channels by the second quarter of 2004.

When it comes to management philosophy, McElroy believes the key to running a successful PC business, or any other business for that matter, is mainly about not reinventing the wheel. “I’m a big believer in reading about and listening to other people who’ve done it all before,” he says. “Very few people have to be business mavericks or pioneers in that most major challenges that any businessperson faces have already been faced by someone else in some other company, whether it’s a new product design or method of launching a product to the market.”

McElroy believes that getting good advice from external sources helps prevent him getting sidetracked by day-to-day production issues and instead stay focused on long-term strategic goals. His closest advisors include Aidan Donnelly, who set up the Xerox manufacturing operations in Dundalk and before that was managing director of hard disk-drive maker Quantum Ireland. Donnelly is one of the non-executive directors at iQon.

Likewise in the marketing area, rather than waste time and effort coming up with original ideas or marketing plans, McElroy believes in emulating the best efforts of others. “[Advertising guru] David Ogilvy always said that most brilliant advertising is based on copying the best of the rest rather than the result of a unique single original idea or effort to find a slogan of the century or whatever. Copying the best of what’s out there is as good a way as any to come up with good ideas or good business strategies,” he says.

McElroy’s management philosophies have obviously served him well so far but what does he say to those who doubt whether a small Dundalk-based outfit can compete indefinitely with the might of the industry big guns?

“We have very few borrowings, have a low overhead structure and own our own premises. This isn’t a huge profit industry at the moment and most companies struggle to make a profit. But we’ve remained profitable every year since we’ve started bar the six-month stint under foreign ownership,” he states.

Backed by the weight of the Philips brand, McElroy is convinced that the machines made by iQon in Dundalk can continue to compete with the Dells, the HPs and the IBMs.

By Brian Skelly