The meeting was held at NEC headquarters in Melville, NY. Attending for the dealer council were Gordon Maccani, Sheldon Allen, Herb Reading, Allen Wood, Sol Birnbaum, Vito Marrone and Steve Autor. Attending for NEC CPE Division were Kanji Suzuki (Vice-President and General Manager), Roger Byrne (Asst. Gen. Mgr.), Gail Fisher (Key Systems), Frank Viola (Manager Market Sales Support) Bob Talty (Director of Marketing), Cliff Cozzolino, (Director Operations Support) Jim Hogan (Sr. Acct. Manager) and G. Kasek (Key Systems Product Line Manager). Attending from the Advanced Terminals Division from Richardson, TX were: H. Itoh (Vice President/General Manager) D. Koontz, (Director Service Operations), K. Okamoto, (Manager for Planning and Materials), Doug Williams (Manager - Product Marketing), B. Christensen (Manager Product Engineering), and R. Tanihata (Manager - Engineering). NOTE: ATD is the division from Richardson, TX responsible for getting the product engineered, manufactured, serviced, & new product into the NEC warehouse.

Kanji Suzuki opened the meeting at 9:15am welcoming the dealers and thanking them for attending. Mr. Suzuki announced that since the back order problem with the Mark II will continue well into 1993, that the 1400M package discount would be continued until the end of April. Mr. Suzuki requested that all dealers sign up for the new E-Mail program as soon as possible. NEC is providing the software for free to all dealers in an effort to communicate directly to the dealer quickly. All you need is a modem and computer with a hard drive and a dedicated line available at night for NEC to call in and deliver and pick up mail. The system really doesn't become effective until all dealers are involved!!!

Herb Reading started off for the dealers by reviewing the current status and problems that the dealers have faced with the Mark II shortages. He indicated that serious problems existed and that the problems needed to be remedied quickly or NEC and its dealers will continue to lose market share. It is important for NEC to work together with their customers, the dealers. The Council requested that NEC share some of the operational expenses of the Dealer Council as our efforts should benefit NEC as well as the dealers. Mr. Suzuki indicated that he would look into the matter.

Sheldon Allen spent the rest of the morning reviewing the survey results of the dealers regarding the Electra Professional, Level II. A list of sixty features enhancements and improvements were requested for the product. Sheldon reviewed the list in detail. The dealers explained how they wanted the product to work and expressed dismay that the product had been introduced without the features and the versatility of the Mark II.

A short lunch break was held, followed by a presentation by Gail Fisher. Gail announced that NEC was planning to release the expanded Pro II in April, rather than March. This system will use the same CPU (minimum 200 level software required) and all other Pro II circuit boards and phones. The new base cabinet has 64 ports and will probably come out with a list price of $1400. The expansion cabinets will list for $1371, plus a MMC type card for $286 bringing the cost of an expansion cabinet to $1657 dealer list. Enhancements to the product to be released were: Secondary Incoming Virtuals (max. 96 less # of phones), Account Codes, UCD and Attendant Add-on Console (allows line appearances on the DSS). The dealers responded that the number one item that the dealers wanted were full featured virtuals and that a limited number of incoming only virtuals was not going to solve the problem. At this point the dealers indicated that we would like NEC to consider an additional 1400 discount program for the I package with 50 key phones, as the dealers felt that the Pro II or an expanded Pro II was not adequate for the customer with 50 phones. With this limited software, the dealers felt that they would only sell the Pro II or Pro IIE as a square key system until such time as the software has been updated to at least the level of a Mark II in order to meet the needs of the marketplace. The dealers expressed dismay at the fact that NEC had not asked for dealer input in the design and had not paid attention to the results of the Beta tests where many of these same changes were first requested as early as July of 1992.

Next Cliff "You want it when?" Cosselino made a presentation showing the dismal backorder schedule for the Mark II. If no dealers order Mark II systems in 1993, the backorders should be filled by April. However, some parts may be backordered until summer since system orders are still coming in. In short supply are ESI cards (1000 back-ordered still), MMC (320 BO), power supplies (112 BO) etc. Sales for the Mark II had been picking up starting in May (125 systems per month) when NEC predicted that sales of the Mark II would go down. By September (after dealers had seen the Pro II and the Mark II was in short supply), sales had doubled to 250 systems per month. The consensus of the Dealer Council was that the Mark II was becoming very successful because it finally had the features that we needed, and that the dealers had a lot of confidence in the product as it made customers happy. With the limited sales training that had been provided, the extended ramp time until sales people become familiar with the system on their own, 8 port voice mail integration that works well, then the system becomes a big hit! The product is sturdy, reliable and respected. The only major problem remaining with the Mark II was that it was not price competitive with the Panasonic and others. SUGGESTION: Sheldon Allen (American Telephone Technology) reported that he has been upgrading existing Mark II customers to 1400's using the 1400M package to make sales easier and get needed Mark II parts! Cliff also pointed out that you can place orders for "Nearly New" products via PC through the bulletin board now.

Next. Bob Talty, the new marketing Director, was given 20 minutes to do a quick overview of the new marketing Plan. This plan will be presented to the dealers in it's entirety in regional meetings in coming months. Consensus of the dealers was that this should have been done years ago. Our main concern is whether or not NEC can adapt to so much change in a relatively short period of time. It is not possible to review the plan here, but as the plan is adopted and followed, it will represent a major turn around in the NEC/Dealer relationship. Any dealer that uses NEC as a major product line should respond to the survey coming out and attend the regional meeting where this plan will be reviewed. The new distribution plan is designed to reduce channel conflict and encourage joint ventures, but 2400 dealers or dealers that currently market to Fortune 500 type companies in major markets should definitely be actively involved in how this plan is going to develop!!!

Gordon Maccani and Allen Wood discussed the success that had stemmed from the co-operation between the RBOC's and their sales agents. Gordon suggested quarterly "Partnership Planning Meetings" between the Distributor Council and NEC. Allen Wood requested that associates be issued a monthly technical ID number. A technician who does not work for an associate would not be able to get through to NEC Engineering for technical support.

Finally, Roger Byrne passed out a GSA booklet developed by General Analytics. Charlie Eazor, (formerly VP-AIM) is their Project Manager. Call him at 800-628-4442 or his direct number 703-903-1281. This booklet lists GSA 1400 and 2400 pricing. They will work with authorized NEC dealers so you can have them sell the job and you can install, maintain and share profit on the sale. General Analytics is an NEC dealer that specializes in federal contracts. Also, Roger promised to follow up next week on our request to provide the necessary language for Bell Atlantic to use on their purchase order so that Bell Atlantic can implement their guaranteed pay proceeds leasing program for the dealers.

Steve Autor