New kid on the block

James Hopkin never thought distributing memory would lead to a situation in which he needed to investigate the difference between a knife and a tool. But being first to market in Australia with a Swiss army knife that packs a USB memory key alongside the usual blades, toothpicks and bottle openers has opened his eyes to Australia’s laws about knives.

"We thought it would violate laws," says Hopkin, a co-founder of memory distributor IMS Memory. "We thought it could be a thing that would hold us up," as knives cannot be sold to people under a certain age, or through certain types of shop.

This fear led to some unusual due diligence checks. "Before we signed up to distribute the product, we contacted every police department to explain what the product was, gave them the dimensions of the blade and made sure it would be okay to market here."

This part of Hopkin’s tale has a happy ending. "The product does not violate any state or territory laws," he says. "It is considered a tool, not a knife."

But the end of the story of his company’s attempt to move into consumer-oriented products cannot yet to be written. IMS Memory sells memory, typically for desktop computers and servers, and sells business to business through a range of resellers. Buyers are typically corporates upgrading the RAM of their PC fleet or boosting the memory available to their servers.

Some of the products it distributes are made by Swissbit, which also produces the hybrid knife/memory key. Yet despite the lack of experience, the idea of moving into the retail sphere with the knife/memory key appealed because it offered the chance to defend a relationship as well as make a profit.

"We were concerned that if we said no to this product, Swissbit would find another distributor in Australia to handle it," Hopkin says. Little imagination was required to extend that relationship into a full-blown competitor across Swissbit’s product lines, a big influence on the decision to take the product on.

But the chance to make a profit on a hot product was a more motivating factor. "I believe Swissbit launched it at the CeBIT trade show in Germany. It was immediately picked up by the press and got pretty big worldwide exposure," including spontaneous local interest in the product that proved there was demand.

There were still hurdles to overcome, however. "We were worried about the cost of the products to begin with. The Swiss army knife has quite a large price tag and the flash RAM is expensive," factors that added up to a fear that losses could be swift and savage. "Because of our background in memory distribution we know prices fluctuate. And for this product it looked like a price drop was possible as component prices fell."

IMS' Hopkin: Longer term proposition was on offer

With the twin challenges of making a new market and making a profit to face, IMS Memory therefore held off the product for some time.

But their attitude softened when it became clear that the manufacturer, Swissbit, was willing to back the product to the hilt and had even formed a joint venture with Victorinox, maker of Swiss army knives, to create future consumeroriented products.

With a longer-term proposition on offer instead of a quick hit on a novelty product, Hopkin "... talked to a couple of freight forwarders about how we can get the memory from Europe to Australia as fast as possible", and was pleased to find it would be possible to quickly and cost-effectively import small quantities of the devices.

The company has since launched a multipronged offensive to enter the consumer market, one tactic of which has seen it enter discussions with potential sub-distributors that can use pre-existing relationships with large retailers to get the product onto their shelves more rapidly than would be possible if IMS Memory tried to approach them itself.

A retail website -- upgradeable.com.au -- was another initiative, as Hopkin felt early adopters would search for and buy the product online. "Initially people get excited about it and price is not a big issue," he says. "And we wanted to get some sales through!"

A public relations campaign is another of the company’s tactics and has seen IMS Memory hire a PR company. The objectives of the PR campaign are twofold: create general end user demand that will stimulate resellers to adopt the product, and second, to focus on media opportunities to get the devices onto Father’s Day shopping lists.

With that occasion a few weeks away, Hopkin knows there is no guarantee of success. But he is optimistic his company has done all the right things to make a success of the product and launch a new consumer business.

"Consumer is a good area to grow into. We are not competing with anyone and Swissbit are taking it as seriously as we are.

"This could be a potentially big market for us," he says.