CEOCFO: Ms. Knowlton, what was
your vision when you founded SMART Technologies and where are you today?
Ms. Knowlton:
Our vision today is remarkably close to where it was back at the founding of
the company. My husband had the idea for the interactive whiteboard a year
before we actually started the company. We thought that we could help people
who were either in the same room or at a distance, collaborate, share
information, work together and just reach conclusions or have some sort of
output by taking what was on an individual computer and making it available
to a group.
CEOCFO:
What is SMART offering today and who is using your products and services?
Ms.
Knowlton:
We make a variety of products that we are offering on a global basis to
education, business and government customers. The products really focus on
collaboration and interaction, so we enable a group access to any
information that is stored on a computer or that is on the internet, and the
sharing of that information with people in remote locations. It is both an
in-room tool as well as a remote collaboration system. The K through 12
education market has been the largest adopting group for our product and we
have seen the adoption really accelerate as a number of conditions have
improved. One of the first is a teacher’s ability to use computers in the
classrooms. Most teachers, when they received their teacher training did not
learn how to integrate computers into their teaching strategies, so there is
a little bit of a comfort, development and learning curve that teachers have
to get up. The access to the internet has done nothing but improve in all
countries around the world and as that has become more pervasively available
we have seen a variety of countries really accelerate their adoption of our
whiteboard products. The other factor has been the creation and broad
availability of teaching resources on the internet and teacher comfort in
the development of their own resources. As we look at the business market
there has always been a level of use of our products by business and
government. This is because government has a close relationship to business,
because they do meet and collaborate. As we see business and government
being increasingly challenged to do more with less, as teams have become
more dispersed either across the city, across the country or around the
world, people can not always resort to travel to get together. It is also
not always possible to wait for people to get together. All of those
pre-conditions are really driving an increased interest in products that can
enhance collaboration.
CEOCFO:
What is the competitive landscape?
Ms.
Knowlton:
There are a number of companies that are either providing products that are
directly competitive to our individual products or there are different
categories of products that might be construed to do the same or something
similar. There are a number of companies providing interactive whiteboards
or other products that are competitive to ours like response products in
education. What we try to do is provide a whole system, so certainly the
interactive whiteboards plus projector with our student application or
learning application for education, but then that is complimented by our
response category products, our document cameras, our wireless slates and
things of that nature. Then we take product and supplement that with
paid-for teacher professional development, the availability of resources on
a community site that we have as well as services offering to really flesh
out that total offering that we have for our customers. It is on that basis
that we try to differentiate what we do from the companies that might be
viewed as competitors. On the business front, it is very much the same
thing, but it is taken to one extra level and that certainly is around the
creation of competitive products, customized by software that either we
create or that comes from third parties that address specific needs of those
customers. Then that is amplified by the integration with other leading
collaboration tools; you might think of the video conferencing products that
are offered by POLYCOM, by LIFESIDES and Tamberg/Cisco.
CEOCFO:
Is your typical end user buying through someone else or directly through
from SMART?
Ms.
Knowlton:
Virtually all of our sales are delivered by a reseller channel and certainly
we work hand in hand with the channel to apprise end users with what our
offerings are.
CEOCFO:
Do people look for SMART Technologies products or are they looking for
certain features that SMART has?
Ms.
Knowlton:
As we have become more known, companies are actually looking at SMART
Technologies. We have an installed base of say 1.8 to 1.9 million
interactive whiteboards around the world. It is just not a sell and leave
mentality that we or our resellers have. We sell and stick around to make
sure that they use these products better. If it is a school district, they
don’t typically outfit all of their classrooms right at the start, so they
are going to do that over time as teacher capability allows and their
budgets allow. That means that they are looking to SMART Technologies for
those additional classrooms and that means that they are also looking at our
new products or upgraded product offerings as well.
CEOCFO:
Are there new products and services you are working on or that you would
like to improve?
Ms.
Knowlton:
We are always improving our product offering and we certainly hope that is
aligned with how our customers see the evolution of that product offering.
The offerings really are improved in a number of different ways. There are
product updates to software for example, as soon as we release a version of
software you can be sure that we are working on the next generation of that
software. It means enhancements and upgrades for new versions of hardware
products as well. It also means service offerings. Today many of our service
offerings are included at no charge in the hardware/software purchases that
people make from us, but increasingly we are looking at enhanced offerings
above and beyond those base-level offerings to really meet the elevated
needs of some of our customers. For example, it might mean an extended
warranty, or a faster response time in terms of servicing some of the
product. It could also mean onsite service and support as well. Therefore,
these new enhancements or upgrades cut across hardware, software, and
services.
CEOCFO:
Would you tell us more about the customization?
Ms.
Knowlton:
It is differentiated between education and business. For example, a teacher
who owns a K-5 classroom. She is in that room all the time, so if there is
an interactive whiteboard in the classroom a teacher becomes committed to
using that tool because it is always available. Now contrast that with a
business person. The business person will move in and out of a meeting room
not owning that meeting room and not really the main user of the tools in
that area in that meeting room. Therefore, I would contrast the needs of
those users in a couple of ways. The teacher is going to advance their
skills and probably more rapidly than the casual user, because that device
is there and it is an integrated part of the whole learning scheme. In
business, users are more casual and they are also impatient. They don’t
spend all of their time meeting, so they come into a meeting room and they
want to accomplish their task and get out. Therefore, the application that
is available to those business users needs to be simplified. It needs to be
immediately apparent if they haven’t been in a meeting where the tool is
used for perhaps a week or two weeks, well it had better be simple and
obvious how to use it. That is what I mean at a base level for
customization, and then the second level of customization really gets to how
other third-party applications might be integrated with our products so that
it becomes completely tailored to a user’s needs. For example, financial
organizations may have a preferred application that they use to analyze some
investments. So we will want to make sure that our products have some
features in them and certainly usability built in that would allow for a
great experience for that special group of users to work with our product
with the tools that they already use.
CEOCFO:
Your third quarter certainly produced nice results; what is the financial
picture for SMART Technologies and how do you continue on the path?
Ms.
Knowlton:
Our 3rd Quarter was a good quarter for us despite all of the very
negative high-profile news around the challenges to education. I would say
that we got a good level of engagement with our customers. We are making
sure that we are engaged with them and responsive to what it is that they
need when they need it. That is part of what is reflected in our sales, as
well, we are broadly present around the globe either directly through SMART
staff or through the staff of our various channel members. Here in North
America, we have dealers representing us to end users and internationally we
have a combination of distributors and dealer sales people. We also have
broadened our offering beyond just education, which is the area with some
budget challenge these days, and business users are finding the appeal in
the addition of our product to the tools that they have available.
Therefore, it is that diversification that is also contributing well to our
top line.
CEOCFO:
Is the investment community paying attention?
Ms.
Knowlton:
In some ways, we are at a very early stage in communicating our story to the
broader market. There is a lot of interest in the company that has been
demonstrated to deliver a high rate of growth over a sustained period of
time. I do think that the investment community either needs to or has to
spend the time to understand how our business has long-term secular growth
opportunity and while some of the headlines today may point to some of the
challenge in that funding for a very large portion of our revenues; it
doesn’t really detract from the long-term opportunity. When that long-term
opportunity starts to really play out, is probably of top concern for some
investors. Of course, we to some degree have to play the hand that we are
dealt in terms of the funding for our customers, but again our job is just
communicating the basic story for the company where the opportunity lies. I
think that various players in the investment community will make up their
own minds as to when the opportune time will be to invest in that story.
CEOCFO:
Are there geographic areas you would like to have a greater presence in and
do you plan to move into new areas?
Ms.
Knowlton:
Certainly, the bulk of our revenue today is coming from North America and we
still do have good rates of growth here, but the area where we have been
making some significant investments is in EMEA, so Europe, Middle East, and
Africa. Therefore, we have a dedicated team in place that is now looking
after our interests and making contact with end users directly on our
behalf, and working to support our channel. We have put people in place in
individual countries as well to look after groupings of countries on a
regional basis. The third area of interest although we believe that it is a
little bit further out is the Asia Pacific region.
CEOCFO:
In closing, would you address potential investors and why they should look
at SMART Technologies?
Ms.
Knowlton:
SMART Technologies really represents a bit of a unique company. While we are
new to the public markets, we are not a new company. We have been around for
coming up on twenty-four years in August and we are just in the midst of
celebrating the twentieth year anniversary of the introduction of our
initial interactive whiteboard. While there is some newness to the market,
we present a seasoned executive team and senior management team with a
strong commitment to both education and business. We have had strong success
in the education market, and have real growth opportunities in business and
geographies outside of North America.
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