What Happened to Proxima Is a Business School Case of How NOT to Merge Two Companies

On the day that InFocus shocked the AV industry and announced they’d bought its largest competitor, I was actually there. It was Monday, March 6, 2000 — I remember the details of the day very well but my old Franklin Planner helped me keep track of the date for the purpose of this article.

Let me back up. My company has always done marketing consulting. I started it at the very end of 1998 and my very first client was Sony. My second big client was Proxima. Back when I started working with Proxima in 1998, they had just gone through a merger with ASK (remember them?), a Norwegian projector company. Over time, the two companies become the number-two projector brand, bested only by InFocus. I was asked to help create what the company called its “installation” product line. They wanted to be in the permanent-install projection market — meaning, they wanted to sell more than portable projectors for traveling presenters or those projectors also used on carts you’d wheel from room to room. InFocus and Proxima, both, were easily 90 percent portable. Companies like Barco, Electrohome (now called Christie Digital), Sony, Sanyo and NEC dominated the installation market with projectors that had much higher margins that the portable ones.

I was teamed with a guy by the name of Gary Fuller, whose name you may recognize his name as he just helped build ABSEN into the number-one LED brand in the U.S. and was previously at Christie and Barco after leaving Proxima. Anyway, Gary had already set up a genius plan by secretly partnered with Sanyo Japan (much to the chagrin of Sanyo USA) to supply all the “installable” projectors. So, Proxima would rebrand the Sanyo products as Proxima and sell them through its giant box-house dealer channel. There was only one problem — box houses, although they all wanted to be in the install market, didn’t know how to do installs.

So, I devised a marketing plan and my partner at the time, Jody Thomas, worked on the training part of the plan. We needed to spend two years convincing 200-300 dealers around the world to convert their business models from box-sales to systems-sales.

It worked — by the end of 1999, Proxima was either number-two or number-three in the world, depending on whose numbers you believed, in systems sales. And, we helped convert some biggies, too. CCSSpinitarAVI (then called Audio Visual Innovations) were all box-sales companies. We would go spend weeks at giant dealers like those and help educate them on how to market and sell sysems products. Before our work, all these companies sold was boxes. Afterwards, they were systems companies.

Then, on March 6, 2,000, InFocus destroyed everything. It didn’t happen in one day, but it was fast. I remember that day, clearly, as I was in San Diego when the announcement hit the news wires. We actually had about 20 dealers at Proxima staying in a hotel right down the road getting ready to start our week-long, fast-track systems sales class on behalf of Proxima to help convert another to dozen dealers from box-guys to system integrators.

Everyone was in shock. But, the day moved quickly and soon the CEO of Wilsonville, Oregon-based InFocus John Harker was standing in the Proxima offices along with Proxima CEO Werner Heid claiming that nothing major would change and that both companies would operate, for the most part, independently, and take advantage of the consolidation to drive down pricing and profitability. They even said that they didn’t see any “significant layoffs” of InFocus’ 600 or so or Proxima’s 400 or so employees.

Ok, that’s when I turned to Gary Fuller and said, “This seems unrealistic.”

What happened next is history and, of course, hindsight is 20/20 but, instead of keeping Proxima as a separate company, it became a product line of InFocus’ and eventually disappeared. Literally. They went from being the number-two projector brand overall and one of the top-two or -three systems brands and in less than a year, both were nearly gone.

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Now, I am sure a hoard of former InFocus execs may comment on this article publicly that it was more complicated than this, but it wasn’t. InFocus made an arrogant decision at that time — its brand was better than Proxima’s and it should, instead of owning its own competition, consolidate them. And, they did ask me. In fact, I flew back to Oregon with John Harker that week and was asked to meet with their marketing team and was even brought into the InFocus board meeting. I was actually asked my opinion on what to do and I repeated something that my old boss, founder of Extron, Andrew Edwards, once told me, “It’s better to own your own competition than not.”

I suggested they keep the two companies as separate brands and products and that InFocus, too, enter the systems projector market and emulate Proxima’s success. And, they, of course, now owned the intellectual property that I had sold to Proxima for how to convert a box house to a systems integrator. But, they didn’t do it.

Sound familiar, Barco? Um, WePresent? I digress — that’s for another column.

Anyway, the rise and fall of Proxima was amazing and sad at the same time. Both companies had some amazing talent and I think a few of the best of the best in our industry came from the ashes of that experience. Gary Fuller and I became lifelong friends, and I also made incredible friendships with talented InFocus leaders like Scott Hix, JB Daines, Pippa Edelen, Annie Sunseri (all four, of which, are over at AVOCOR kicking some a** right now in the collaboration board market). David Wolff just became a VP over at Biamp, Brian Carskadon co-founded TargetPath and many more. And, on the dealer side, this kicked-off my relationship with AVI founder Marty Schaffel — who’s a genius and built the AV industry’s largest AV integrator that, as you know, merged with SPL. In addition, I ended up meeting one of the nicest people I’ve ever met in Spinitar founder Jeff Irvin and even introduced him to his future president, Jay Rogina — who also ended up becoming the elected chairman of InfoComm and served on its board for at least six years.

I could go on and on and on, but suffice it to say that this was the experience of a lifetime. Although I think InFocus management, at the time, made a huge mistake, I wouldn’t trade that experience for anything. It was hugely stressful and frustrating to see all that we built crumble so quickly, but I learned a lot. And, by the way, the current version of InFocus is not at all related to the old InFocus decision-making team. In fact, none of them even worked there or owned InFocus at the time — remember, InFocus was a public company. I would be lying if I told you I had any clue who was the ultimate decision marker to not keep Proxima as a separate company but to actually assimilate them into InFocus — I doubt it was anyone named here – even CEO John Harker — although he was running the show, he didn’t seem to be a micromanager at that level. I think it was a decision likely lost in product management — even possibly not made by marketing. I know that sounds crazy, but you have to think back to 2000s and think about the market back then. With a few exceptions, we were not a marketing-driven industry — we were steered by technological development and products.

But I do think, if they had to do it all over again, everyone would agree to do it differently.

Update: Several days after this story was originally published, InFocus informed employees that it was getting out of the display and projector business, ceasing all production of those product lines and “looking at new strategies,” as well as laying off many employees. See the story here.

Proxima projector images via Projector Central