23.04.2016

Lower costs open up new markets for LED screens

In the space of three decades, our lives have been impacted upon by technology to a greater extent than at any time in the previous three centuries. Medical advances apart, word processing, personal computers, the mobile phone, the smartphone and the commercialisation of the Internet, have all contributed to fundamental changes in the way we run our businesses and personal affairs.

Underlying the impact of these ‘disruptive’ technologies have been changes in the economics of production which have been accompanied by – or have been the consequences of – new and improved manufacturing processes. Lower cost electronic components have helped reduce end user prices and made those technologies available to a larger and more diversified audience.

It is not just the latest technologies which benefit from an improved price-point, however. Getting the price right for a ‘solution’ which has been around for a decade or more can suddenly transform an application from one that is accessible only by users with bottomless pockets, to just another device in the business toolbox.

Video imaging is a case in point. LED screens are established features at large scale events such as sporting fixtures and pop concerts; the scale of the application justifying the cost of manufacture and installation. The economics of building LED panels, however, precluded this technology from use at smaller scale ‘community’ events where the inherent flexibility of the medium had a potentially huge but unrealisable future in communications to many different audiences.

The business model changed quickly when developers in the Far East started producing LED display panels at a much lower price than in Europe.

Taking large LED screens into new market areas

One company in the West Midlands was already in the entertainment and media sector and had identified the revenue-earning applications for video panels. It had purchased a single large-format LED screen which it was using for events. While mobile, it was nonetheless unwieldy to move between venues.

What the directors of the business had identified was the need for an LED system that could be re-configured for almost any size of ‘community application’, from perhaps one metre across right up to ten metres – and in configurations that could be changed to suit the application.

Multiple panels would fit together like a collection of dominoes; the image on each panel under software control to present a coherent image across the display. Whatever the merits might be of being able to create a solution to fit any given application, there was the benefit that the display area could be broken down into rectangular panels that did not require a furniture van to move them between sites.

The cost of LED display panels manufactured in China may have fallen but the company still had to to import a consignment of panels and integrate them with the controllers in the UK. It had successfully sought the backing of BCRS Business Loans, the specialist lender serving the West Midlands. But making the stage payments to the manufacturer and covering the cost of transporting the panels to the UK was outside the remit of BCRS. It sought the co-operation of Trade & Export Finance which has had considerable success in financing the purchase and importation of stock and materials for other clients and has collaborated with BCRS on a number of deals involving SMEs in the region.

Constructive approach to funding assists UK client

Agreement was reached between the UK promotions company, BCRS and UK EXIM Finance, one of the finance specialists within the TAEFL organisation. UK EXIM Finance agreed to pay for the purchase and importation of ten LED panels. Once these were in the UK, the finance team was able to invoice BCRS and recover the funds it had provided. The $20,000 involved was then part of the amount loaned by BCRS to its LED screen client.

In the bigger picture of international trade finance, that $20,000 is not a large sum. But without that purchasing facility from within TAEFL, BCRS would not have been in a position to provide its client with a medium term loan to take the business forward, and a demonstrably sound commercial idea could not have been turned into a revenue stream. It illustrates how a comparably small amount of funding can have a multiplier effect many times greater.

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