VTech

VTech Holdings Ltd

Type	Public
Traded as	HKSE: 0303
Industry	Electronics Industry
Founded	1976
Headquarters	Hong Kong
Area served	Worldwide
Products	Residential Phones Educational toys Electronic Manufacturing Services Small to medium sized business phones Hotel phones Cordless headsets Integrated access device Baby monitor
Revenue	US$1,858.0 million (FY2013)
Net income	US$202.3 million (FY2013)
Employees	Around 37,000
Website	www.vtech.com

VTech (Simplified Chinese: 伟易达 Wěi yì dá) (Traditional Chinese: 偉易達 Wěi yì dá) (HKSE: 0303) is the world’s largest manufacturer of cordless telephones^[1] and a supplier of electronic learning products (ELPs).^[1][2] It is also one of the top 50 electronic manufacturing services providers globally.^[3]

Name and listing

The company was originally named “Video Technology Limited” in reference to the company’s first product, a home video game console.^[4] In 1991, it was renamed “VTech Holdings Limited” to reflect a wider portfolio of products.^[5]

The company first listed in Hong Kong in June 1986 under the name “Video Technology International (Holdings) Limited”. It was privatised and delisted from The Stock Exchange of Hong Kong Limited in 1990.

VTech obtained a primary listing on the London Stock Exchange in 1991. In 1992, the company relisted on The Stock Exchange of Hong Kong Limited, establishing a dual primary listing with London. In 1993, the company established its American Depositary Receipt programme.

VTech delisted voluntarily from the London Stock Exchange on 7 October 2008.^[6] It also terminated its American Depositary Receipt programme with effect from 21 January 2011.

History

VTech was founded in Hong Kong in October 1976 by two local entrepreneurs, Allan Wong^[7][8] and Stephen Leung.^[5] When the first single-chip microprocessor "Intel 4004" became available in the early 1970s, the company saw the potential it offered for portable consumer electronics products. Wong & Leung set up a small factory in To Kwa Wan, with a US$40,000 investment and a staff of 40 people. In the first year, turnover was less than US$1 million.^[5]

VTech initially focused on developing video games. In 1977, the company created its first home TV game console, a version of Pong. Since only consumers in North America and Europe could afford such items, the company targeted primarily these markets.

The United Kingdom was chosen as the first market for Pong, as Hong Kong and the UK used the same standard for television systems. In 1978, the founders introduced LED games they had developed to buyers from RadioShack in the US, which were sold under the RadioShack brand.^[5]

VTech then began to build its own brand. VTech unveiled its first electronic learning product (ELP) called “Lesson One” at the New York Toy Fair in February 1980.^[5] It taught children basic spelling and maths. An exclusive version under the name “Computron” was offered to Sears, with the product being prominently advertised by Sears in its catalogue which was a popular shopping guide.^[9][10]

VTech then branched out into personal computers, including a series of IBM compatible PCs beginning in 1983 and Apple II compatible computers beginning in 1985, including a model called Laser 128. VTech exited the personal computer market in 1997 due to keen competition.^[11]

In 1985, the United States Federal Communications Commission (FCC) allocated the frequency band 900MHz to ISM (industrial, scientific and medical) devices. Taking advantage of this, VTech started developing a cordless telephone using the 900 MHz band and in 1991 introduced the world’s first fully digital 900 MHz cordless telephone.^[12][13]

In 2000, to expand its cordless phone business, VTech acquired the consumer telephone business of Lucent Technologies. The acquisition also gave VTech the exclusive right for 10 years to use the AT&T brand in conjunction with the manufacture and sale of wireline telephones and accessories in the United States and Canada.^[14] Although the acquisition increased sales of VTech’s telecommunication products by 50%, it led to operating losses and write-offs. The company issued a profit warning in March 2001 and launched a broad restructuring plan.^[15] By the financial year 2002, the company had turned around the business and returned to profitability.^[16]

Today, VTech’s core businesses remain cordless telephones and electronic learning products. Its contract manufacturing services, which manufactures a range of electronic products on behalf of medium sized companies, has also become a major source of revenue. The company has diversified geographically, selling to North America, Europe, Asia, Latin America, the Middle East and Africa.^[17]

Core businesses

Telecommunication (TEL) products

VTech introduced the world’s first 900 MHz and 5.8 GHz cordless phones in 1991 and 2002 respectively. According to MZA Ltd,^[18] the company is the world’s largest manufacturer of cordless telephones.

In North America, VTech is the largest player in the industry, according to MarketWise Consumer Insights LLC,^[19] selling both AT&T and VTech branded phones and accessories. Outside North America, VTech mainly supplies products to fixed-line telephone operators, brand names and distributors on an original design manufacturing (ODM) basis. VTech is the exclusive supplier to Deutsche Telekom for all its corded and cordless phones in Germany^[20] and the direct supplier to Telstra for all its fixed-line telephones in Australia.^[21]

VTech launched its first commercial phone, targeting small to medium sized businesses in 2009.^[22]

Other telecommunication products VTech manufactures includes hotel phones, cordless headsets, integrated access devices, baby monitors, etc.

Electronic learning products (ELPs)

VTech was among the pioneers of the ELP industry, beginning in 1980 with a unit designed to teach children basic spelling and mathematics.^[23]

Today VTech is one of the world’s largest manufacturers of ELPs,^[1][2] making both individual standalone products and platform products that combine a variety of consoles with different software.^[7]

Its V.Smile TV Learning System, which was launched in 2004, established what the company calls platform products as an important category within its ELPs.^[24] New additions to the platform product range in recent years include InnoTab, MobiGo and V.Reader.^[25]

In 2012, VTech branched out beyond the learning aisle with Switch and Go Dinos, a line of toys that transform between dinosaurs and vehicles.^[26]

Contract manufacturing services (CMS)

VTech started manufacturing products for other brand names on an original equipment manufacturing (OEM) basis in the 1980s and CMS became one of the company’s core businesses in the early 2000s.^[27]

VTech has been identified as one of the world’s top 50 electronics manufacturing services providers,^[3] providing electronics manufacturing services for medium sized companies. VTech’s CMS has focused on four main product categories: professional audio equipment, switching mode power supplies, wireless products and solid-state lighting.^[27]

In November 2011, manufacturing capacity of VTech's CMS was increased by 40% and the manufacturing facility was enhanced to enable it to manufacture products with stringent safety and quality requirements, including those requiring U.S. Food and Drug Administration (FDA) approval.^[28] VTech's CMS has expanded into new product categories in recent years, including medical and health care products, and testing and measurement equipment.

Criticisms

A June 2012 report from the Institute for Global Labour and Human Rights^[29] said the working conditions in the VTech factories in China failed to meet the legal standards and could be described as sweatshops. VTech strongly rejected the allegations and issued a statement on 22 June 2012 reiterating that it is a responsible and caring employer which abides by the legal requirements relating to employment in all jurisdictions where it operates.^[30]

References

External links

• VTech official website
• VTech Phones website (US)
• VTech Toys website (US)
• VTech Phones & Toys website (CA)

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